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04.12.2018

Hungary: Online invoice data reporting – first impressions

New reporting system seemed to be the most challenging amendment introduced in recent years for almost all companies and accountants

Key Facts
  • The aim of the Hungarian government was to reduce the VAT gap and the administrative burden of the taxpayers as well as to increase the efficiency of the tax inspections.
  • The effected entities are taxpayers issuing VATable invoices under their Hungarian VAT ID to another entity having a Hungarian VAT ID and non-resident companies having only Hungarian VAT registration.
  • Although live invoicing has been in force since July 1, 2018, there was a one-month long grace period announced by the Finance Minister.
  • It is highly advised to comply with the new requirement, otherwise significant penalties can be expected to be levied.

It has been some months now since the online reporting system was launched in Hungary. We can say that this obligation seemed to be the most challenging amendment introduced in recent years for almost all companies and accountants. It required huge efforts from the companies to create the technical background of this new obligation in time, not to mention the costs of IT development and external advisors. T

The gist of the real-time invoice data reporting is that the NAV (Hungarian tax authority) requires taxpayers to provide immediate information about invoices issued with invoicing software and having a VAT amount equal to or more than HUF 100,000 (approx. EUR 320).

Although not in real-time, online data reporting of handwritten invoices or those issued using a pre-printed invoice layout also fall within the scope of live reporting. Depending on the VAT amount, taxpayers have five days or only one calendar day to report these invoices as well.

The aim of the Hungarian government with this measure was to reduce the VAT gap and the administrative burden of the taxpayers as well as to increase the efficiency of the tax inspections. The entities effected by this legislative act are taxpayers issuing VATable invoices under their Hungarian VAT ID to another entity having a Hungarian VAT ID. Accordingly, this obligation also includes non-resident companies having only Hungarian VAT registration. Such companies have neither human resources nor other physical presence in Hungary making the fulfilment of the technical requirements of the online invoice reporting a big challenge for these foreign taxpayers. Furthermore, foreign companies did not intend to invest a huge amount of money in their Hungarian administration.

Although live invoicing has been in force since July 1, 2018, there was a one-month long grace period announced by the Finance Minister. According to this measure, the Hungarian tax authority did not levy penalties until July 31 if the company registered in the online invoice reporting system and the required data of the invoices issued from July 1 was sent to the tax office by July 31 at the latest.

It is highly advised to comply with the new requirement, otherwise significant penalties can be expected to be levied. Non-compliance with this regulation may be penalized up to HUF 500,000 (approx. EUR 1,600) per invoice not or incorrectly reported.

When using the system, we experienced some technical deficiencies and difficulties. For example, it may happen that we receive a failure notice back from the system even if the invoice is issued properly in line with Hungarian regulations, only the reporting went wrong. Based on the promises of the tax administration, taxpayers can check invoices issued to them and reported by other taxpayers and import this data directly to the VAT return. This is not an easy task for the time being since the data verification works only on a limited level, no combined database on invoices can be downloaded from the system, importation to the VAT return does not work at all. Unfortunately, some functions which may make the use of the online reporting system easier do not work.
In summary we can say that the system in its current form is not so user-friendly. However, we truly hope that there will be a constructive discussion between the tax administration and the users of the system very soon, since there is plenty of room for improvement. 

Article published in WTS Global VAT Newsletter Q4/2018
Recent or expected changes in VAT and GST regulations and compliance duties in various EU and third countries
View publication
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