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Hungary VAT country guide

VAT compliance and reporting rules in Hungary

Below is summary of the major rules provided under Hungarian VAT rules (LVAT (Act CXXVII of 2007) Hungarian VAT Act.), plus adoption of EU VAT Directive provisions.

Our VAT Calculator & VAT Filer products on a single platform, VAT Calc,  are unique in they come with all of this included out-of-the box for Hungary and scores of other countries around the world.

Hungary VAT country guide

Highlights Local term Általános forgalmi adó (ÁFA)
VAT Rates - standard 27%
VAT Rates - reduced 18%; 5%; 0%
VAT number format HU 12345678
Registration threshold HUF 12million for resident businesses on request. Nil for non-residents; €10,000 for pan-EU digital services and goods OSS return. Intra-community acquisitions €10,000.
VAT Group Permitted
VAT recovery foreign businesses Permitted, but requires reciprocity for non-EU businesses
Fiscal Representative Yes, for most non-EU established businesses
Currency Forint, HUF.  Preparing to adopt the Euro €
Administration Introduction Hungary introduced VAT in 1988. It joined the European Union on 1 May 2004.
VAT laws LVAT (Act CXXVII of 2007) Hungarian VAT Act.  Also EU VAT Directive which takes supremacy as part of EU membership
Tax Authorities Nemzeti Adó- és Vámhivatal, NAV (National Tax and Customs Administration of Hungary ). Part of the Ministry for National Economy. Not resident taxpayers can deal with NAV Adozok Igazgatosaga office
VAT Rates Standard rate 27%
Reduced rates 5%: hotel accommodation; dairy produce; residential immovable property; other basic foodstuffs; medicines; internet services 18%: basic foodstuffs
Zero-rated Intra-community passenger travel by air and sea; Exports and intra-community supplies of goods; gold to central banks; services related to vessels and aircraft.
Exempt Education; financial services; health, hospital,  and social welfare; public postal; letting immovable property; betting and gambling; welfare services; international passenger transport; certain copyrights; folk arts
Scope of VAT Scope of VAT Provision of domestic taxable goods and services; EU imports; intra-community acquisitions; Distance selling of goods B2C (OSS or IOSS); receipt of services or goods via the reverse charge
Time of supply Goods & Services (general rule) When goods delivered (or transport started) and when services provided. Payments generally create a tax point except in the case of intra-community supplies. Receipt of advance payments create a tax point, and VAT is viewed as included - except for foreign customer payments where considered exclusive and customer should record VAT via reverse charge.
Reverse Charge Earliest of payment, invoice or 15th after month of supply
Continuous  Services Earlier of contract period or payment and invoice dates
Imports Date of clearance of Customs into free circulation. Options for import VAT deferment (see separate)
Goods on approval and return Generally when customer accepts the goods in line with the contract terms.
Registration VAT registration threshold No VAT registration threshold but resident businesses with sales not exceeding HUF 12million may request an exemption. Nil for non-residents; €10,000 for pan-EU digital services and goods OSS return. Intra-community acquisitions €10,000.
Voluntary VAT registration VAT registration is automatically required of residents and non-residents. However, residents may request an exemption if their annual turnover below HUF 12million
VAT number format HU 12345678
VAT Group Resident businesses connected by ownership, management, financial or strategic objectives may combine under a single VAT identity. The nominated representative of the group files combined return and number. Intra-group transactions are zero-rated. Holding companies without a taxable income may join groups. Member are jointly and severally liable for their VAT liabilities.
Non-residents Permitted. Non-EU resident businesses must appoint a Fiscal Representative. 
Fiscal Representative Required for non-EU resident businesses. The Hungarian resident Fiscal Representative is jointly and severally liable for the VAT.
Digital Services Hungary participates in the EU single One Stop Shop (OSS) VAT return for digital, telecoms and broadcast services. This was formerly the MOSS regime until 30 June 2021
Pre VAT registration costs Permitted if clear evidence that costs incurred in establishment of taxable activity
VAT Invoices Issuance Within 15 days of supply of goods or services. Or at time of receipt of consideration if sooner. Intra-community supplies by 15th of the following month to tax point. Taxpayers must keep NAV aware of the invoice creation ERP or other software that they use, and that it should follow Hungarian invoice rules - evidenced by user guide or feature documentation. This now includes data export (see real time invoice reporting obligations see 2018)
Content Date; unique sequential invoice number; name and address of supplier and customer; Customer VAT number for intra-community supplies or reverse charge; date of supply or advance payment if different from invoice date; Description, quantity or units etc of supply of goods or services; price per unit; taxable amount; VAT charged; rate (broken out if supplies at different rates); total; explanation if zero-rated supply.
E-invoices Hungary live invoice reporting
Simplified invoices Permitted for invoices not exceeding €100. VAT amount may be omitted. Till receipts may be used for retail transactions. Or advance payments not exceeding HUF 900k.
Self-billing Permitted if both parties are in written agreement. The customer shares supplier's liability
Retention of invoices Five years from end of accounting year of transaction date. Invoices may be digitised. Records do not have to be keep available in Hungary, but must be easily available (3 days informal deadline) and location must be communicated to NAV
FX rules Foreign currencies may be used on invoices, but the taxable amount should be shown in HUF. FX rates from major Hungarian commercial banks or the ECB may be used (NAV must be informed which has been adopted).
Invoice corrections Credit notes must be used, with clear reference for reason for change and reference to original invoice number.
Compliance Right to deduct Excluded except if for resale: restaurants and entertainment; taxis; passenger cars and related costs; construction and purchase of real estate
Call-off stock Following the EU's 2020 Quick Fix harmonisation reforms, stock may be transferred from an EU state to an customer location/warehouse in Hungary without triggering a VAT registration and supply for a non-Hungarian supplier. Title has not passed until the customer takes the goods for production and sale. At which time a zero-rated transaction may be effected. This must happen within 12 months of the original movement
Reverse Charge - B2B In addition to the regular B2B reverse charge on cross-border services, the RC is also applied in Hungary on: passenger transport; admission to cultural and similar attractions; restaurant services; supply and services related to immovable property. Also supply: natural gas and electricity; construction service; scrap waste; CO2 emission certificate; certain agricultural supplies.
Cash discounts Supplier and customer report full VAT until the customer takes-up the discount payment. Then a credit note is required.
Bad debt relief Permitted with clear proof of insolvency. Allowable up to five years of debt going bad.
Import VAT deferment Import VAT deferral licence for businesses whose total sales are at least 67% zero-rated with right to deduct (eg intra-community supplies), an AEO certification and annual sales in excess of HUF 10million. Exemption is allowed in the case of an import and immediate (30 days) intra-community supply. This requires a Hungarian VAT number. A financial security may be required.
VAT warehouse EU goods kept in authorised location (warehouse) enjoy VAT exemption. A Hungarian VAT number is not a requirement. Bonded warehouses for exempt trading are also offered.
Supply & install Where a non-resident provides a supply of goods services, this should be treated under the reverse charge. The VAT registered customer should take responsibility for the VAT transaction under the reverse charge mechanism.
Use and enjoyment services Hungarian VAT is imposed rentals of means of transport in Hungary to non-EU customers
Capital goods adjustment period Movable property: five years. Immovable property: 20 years
Non-residents VAT recovery EU businesses may apply for Hungarian VAT reclaims through the electronic portal of the tax authorities of their company of residency (8th Directive). Quarterly claims above €400 permitted, with final claim above €50 by 30 Sept of following year.  Non-EU businesses must submit a paper-reclaim with supporting invoices via the Hungarian authorities directly (13th Directive). Hungary does  require a reciprocal agreement with the country of residence of the claimant. This is currently: Norway, Switzerland, Serbia, the UK (to be confirmed) and Turkey. Non-EU businesses do not have to appoint an Hungarian resident Fiscal Representative for the reclaim process
VAT on Digital Services Hungary follows the EU VAT on digital services regime, introduced in 2015. This includes participation in the One-Stop-Shop (OSS) single EU VAT return (formerly MOSS until 30 June 2021)
Live events
Distance selling threshold for goods Nil. Following the EU ecommerce VAT package reforms from 1 July 2021, local Hungarian VAT must be charged on all sales by non-Finnish EU e-commerce sellers shipping from within the EU. Imported distance sales not exceeding €150 liable to Hungarian sales VAT with IOSS return option
Cash accounting scheme Permitted for taxpayers whose taxable sales do not exceed HUF 125million. Only available to residents and only for domestic transactions. 
VAT registered cash tills Hungary fiscal cash registers
Statute of limitations Five years after reporting transaction(s) (which means filing of VAT return).
Other Hungary introduced real-time invoice reporting in July 2018 for all invoices (extended to B2C in 2021). Hungary operates a goods by road movement electronic register,  Elektronikus Közúti Áruforgalom Ellenőrző Rendszer (EKAER), for the tracking of the movement of goods at risk of VAT fraud. Covers domestic and intra-community road deliveries.
VAT Returns Frequency Quarterly. Monthly for businesses with turnover above HUF 1million and VAT groups. Monthly for newly registered businesses until third year. Annual for traders with sales less than HUF250k without intra-community trading.
Filing method Electronic, and requires local filing electronic certificate.
Deadlines (inc payments) 20th of the month following the reporting period for returns and any payments. 15th February for annual filers.
VAT credits Generally rolled over to subsequent returns. Applications for refunds above certain thresholds permitted: HUF 1million+ for monthly filers; HUF 250k for quarterly filers; and HUF 50k for annual filers.
Corrections Corrective return. Penalty of Central Bank prime rate, charged daily, due on increased VAT payment
Non-residents Permitted and similar rules to resident (see separate). Non-EU traders will require a Fiscal Representative (see separate)
Other filings Monthly European Sales Listing for goods and services supplies without any threshold at same time as VAT return.  Intrastat monthly by the 15th of the following month for supply of goods above threshold: dispatches: HUF 100million; arrivals: HUF 170million. Domestic VAT transaction listing required with VAT return for purchase and sales invoices above HUF 100k. Also Hungarian real-time invoice reporting since 2018 (see separate)
SAF-T SAF-T in Hungary?
Penalties & interest HUF 100k to HUF 500k for missed return. 1.8% interest charge, calculated daily, on late VAT payments. Misdeclared VAT subject to fine up to 50% of liability with late payment charge - which is halved for voluntary disclosures. HUF 1million fine for missing VAT invoices.
B2C Distance Selling returns Hungary participates in the One-Stop-Shop OSS pan-EU VAT return for distance selling, introduced in July 2021.

 

 

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