Worldwide VAT, GST and Sales Tax Guide
Budapest
EY
Váci út 20 1132 Budapest
Hungary
Indirect tax contacts
Tamás Vékási
Áron Nagy
Zsófia Kelemen
Ágnes Nagy
Attila Fülöp
Zsófia Pohner
Virág Oroszlány
Csaba Firkala
Nikolett Nánási
A. At a glance
Name of the tax
+36 30 515 5013 tamas.vekasi@hu.ey.com
+36 70 375 3855 aron.nagy@hu.ey.com
+36 30 677 6979 zsofia.kelemen@hu.ey.com
+36 30 559 1077 agnes.nagy@hu.ey.com
+36 30 559 1364 attila.fulop@hu.ey.com
+36 30 559 1312 zsofia.pohner@hu.ey.com
+36 30 373 1897 virag.oroszlany@hu.ey.com
+36 30 598 9685 csaba.firkala@hu.ey.com
+36 30 586 5539 nikolett.nanasi@hu.ey.com
Value-added tax (VAT)
Local name Általános forgalmi adó (ÁFA)
Date introduced 1 January 1988
Trading bloc membership European Union (EU)
Administered by Ministry for National Economy (https://kormany.hu/) National Tax and Customs Authority (www.nav.gov.hu)
VAT rates
Standard 27%
Reduced 5%, 18%
Other Zero-rated (0%) and exempt
VAT number format 12345678-2-34
VAT return periods
Quarterly General
Monthly
Newly registered taxable persons, large taxable persons and VAT groups
Annual Small taxable persons with no EU VAT number in at least the third year of registration
• The customer shall not have any legal status that hinders acting as successor.
• The going concern is limited to supply of goods and services giving rise to VAT deduction (i.e., the going concern cannot relate to VAT exempt or out of scope activities).
• Joint and several liabilities arise on the recipient and transferor of the business line with respect to VAT.
The wording of the law is not specific enough to be able to safely determine whether a transaction can indeed be regarded as a TOGC. Therefore, it is highly recommended to request a binding ruling from the Ministry of Finance on the VAT implications of the transaction up front.
Transactions between related parties. For a transaction between related parties, the tax base adjustment may only be applied if any of the parties does not have a right to full input tax deduction and the consideration of the goods or the services are disproportionately high or low compared to the arm’s-length price. In such cases, the tax base should be at arm’s length.
C. Who is liable
A taxable person is any business or individual that makes taxable supplies of goods or services for consideration in the course of its business in its own name.
Every entity or individual that undertakes a business activity in Hungary must register for VAT before beginning the activity in question. Retroactive VAT registration is possible but may trigger significant penalties. Obtaining Hungarian VAT numbers for intra-EU transaction purposes with retroactive effect is not allowed.
Exemption from registration. The following types of taxable persons may be exempted from registering for VAT in Hungary:
• Any importer who employs an indirect customs representative in connection with the importation of goods and the subsequent intra-Community supply of goods, shall be exempted from the obligation of registration if it is not engaged in any other taxable activities in Hungary.
• Taxable persons that are considered non-established according to the Hungarian VAT Act, and the taxable persons to whom the requirement of establishment does not apply, shall be exempted from the obligation of registration if engaged in Hungary solely in the supply of goods under VAT warehousing arrangements as provided for in the Hungarian VAT Act. The condition is that the goods have not ceased to be covered by these arrangements as a direct consequence of such supply, or that the goods are exited by the state tax and customs authority from the territory of the EU.
• Any non-established taxable person who provides telecommunications, broadcasting and electronically supplied services in Hungary to nontaxable persons shall be exempt from the obligation of registration, provided that it is entitled to apply the Mini One-Stop Shop regime.
• Non-established taxable persons (including those where the requirement of establishment does not apply in Hungary, but who are established in another EU Member State) shall be exempted from the obligation of registration. This is only where the taxable person wholly makes supplies of exempt goods in Hungary under the VAT warehousing arrangements.
Voluntary registration and small businesses. If a taxable person’s turnover did not exceed HUF12 million in the preceding VAT year, it may request VAT exemption status. The request for exemption must be filed before the end of the VAT year preceding the year in which the exemption is to take effect. A new business may request exemption from registration if its anticipated turnover is not expected to exceed HUF12 million a year. The request for exemption must be filed at the time of registration.
If exempt status is granted, the business must still register for VAT, although it may not charge VAT on its supplies and it may not recover input tax on its expenses and purchases. In addition, such businesses are generally not required to file any VAT returns.
The uniform EU VAT scheme for small businesses proposed by the EU VAT Action Plan has been implemented in Hungary and will be effective as of 1 January 2025. For further details, see the subsection Special schemes, then Small enterprises below. For supplies of goods or services made by a nonresident supplier to a final consumer (B2C), the supplier is generally responsible for charging and accounting for the VAT due at the rate applicable in the customer’s country (unless the supplier’s sales fall beneath the distance selling threshold of EUR10,000 with effect from 1 July 2021). This VAT can be reported using a single VAT registration, using a “One-StopShop” mechanism (voluntary VAT registration is applicable to taxable persons supplying goods or services to nontaxable persons).
Taxable persons not established in the EU also can use the One-Stop-Shop system, provided that they already hold an EU VAT number for other reasons (see the One-Stop-Shop subsection below). Taxable persons using the One-Stop-Shop system should issue their invoices in accordance with the rules in their country of establishment.
Group registration. VAT group registration is available for all industries. Companies that qualify as related parties and that have a fixed establishment in Hungary from a VAT point of view may opt for VAT grouping when the participating entities are regarded as being a single taxable person and the group regime applies to all transactions performed by every group member. Practically, this means that the supplies performed between the group members fall out of the scope of VAT, whereas any supplies performed outside the group are subject to VAT. In addition, the group members are obliged to file joint VAT returns with the tax authority.
As outlined above, companies that qualify as related parties can opt for VAT grouping. Every company that is considered as a related company has the option not to join to the VAT group (i.e., a nonmember). However, if the company is not a member of the VAT group, it still needs to accept certain liabilities, and if the nonmember does not accept the liabilities, the VAT group cannot be formed).
There is no minimum time period required for the duration of a VAT group. It exists until withdrawal, provided that the relevant conditions are continuously met by the members.
All members of a VAT group in Hungary are jointly and severally liable for VAT debts and penalties. In the period of the existence of the VAT group and also subsequently, the members and nonmembers (related parties) are jointly responsible for the members’ tax liabilities indicated in the closing VAT returns (incurred before the establishment of the VAT group), and all tax liabilities determined by the VAT Act incurred during the existence of the VAT group.
Holding companies. In Hungary, a pure holding company can be a member of a VAT group, as long as the holding company is established in Hungary and is a related party to the group members. It should be noted that the VAT deduction ratio of the VAT group can change if the holding company is involved.
Cost-sharing exemption. The VAT cost-sharing exemption, in accordance with VAT Directive 2006/112/EEC Article 132(1)(f), has been implemented in Hungary. This provides an option to exempt support services that the cost-sharing group supplies to its members, providing certain conditions are met (in accordance with specific requirements laid out in Hungarian VAT law).
However, the Ministry of Finance (unofficially) declared that they would not like any taxable person to apply this scheme. Consequently, in practice, no taxable person meets the criteria outlined in the VAT law, and as such the exemption is not applied.
Fixed establishment. In Hungary the term “fixed establishment” means a geographically isolated and durable facility away from the registered office established or intended for conducting economic activities, where the conditions for the economic activity are in fact available independent from the registered office, including the taxable person’s commercial representations insofar as
Effective 1 July 2021, VAT is due on all commercial goods imported into the EU regardless of their value. The actual supply is subject to VAT in the country where the goods are imported (the country of destination). The IOSS facilitates the declaration and payment of VAT due on the sale of low-value goods (i.e., consignments valued at less than EUR150 per consignment). It allows suppliers selling low-value goods dispatched or transported from a non-EU country to customers in the EU to collect, declare and pay the VAT due. If the IOSS is used, the importation into the EU is exempt from VAT.
In Hungary, taxable persons can register themselves to the OSS electronic portal online (https:// oss.nav.gov.hu/index.xhtml).
For more details about the IOSS, see the EU chapter.
The use of the IOSS special scheme is not mandatory. If VAT is not collected via the IOSS scheme, the importation of goods into the EU is subject to import VAT in the country of final destination, and the Member State can decide freely who is liable to pay the import VAT, which could be the customer or the seller (or an electronic interface).
Postal services and couriers scheme. If the IOSS is not used and the customer is liable for the import VAT due on the supply (and importation) of consignments with a small intrinsic value (i.e., less than EUR150), the VAT can be collected using the special scheme for postal services and couriers.
For more details about the special scheme for postal services and couriers, see the EU chapter.
Online marketplaces and platforms. Under the new EU VAT e-commerce rules, effective 1 July 2021, taxable persons that “facilitate” certain B2C sales of goods are deemed to have purchased and then supplied those goods themselves. This means that the single supply from the “underlying” supplier to the final consumer is split into two deemed supplies:
• A supply from the supplier to the facilitator (deemed B2B supply).
• A supply from the facilitator to the final customer (deemed B2C supply). Any intermediation service provided by the facilitator is disregarded for VAT purposes.
This provision does not cover all sales facilitated via the facilitator. It only covers distance sales of goods imported from non-EU jurisdictions in consignments with an intrinsic value not exceeding EUR150. The jurisdiction of residence of the supplier using the facilitator is irrelevant. The supply to the facilitating platform is VAT exempt and the supplies made by that platform follow the e-commerce VAT rules as described above. In addition, the provision also covers sales within the EU, if the supplier is not established within the EU. This applies to both local shipments within one Member State as well as intra-Community shipments. In both cases, the final customer must be a nontaxable person.
In Hungary, online marketplaces and platforms can register themselves on the OSS electronic portal online (https://oss.nav.gov.hu/index.xhtml).
For more details about the rules for online marketplaces, see the EU chapter.
Vouchers. According to the Hungarian VAT Act, there are two types of vouchers. There are “single-purpose vouchers” (SPV), issued when the place of supply of the goods and/or services to which these vouchers relate, and the VAT due on those goods and/or services is known at the time of issuance of the voucher.
Additionally, the Hungarian Act on VAT provides for “multipurpose vouchers” (MPV), which are vouchers other than a SPV.
For SPV, the tax point is the issuance date of the voucher – as it is already known by the issuance date, for which goods/services the vouchers can be applied, and as such the consideration paid at
each transfer is VAT inclusive. For the MPV, the tax point is the date of the voucher’s redemption – the date when the voucher is accepted by the supplier as consideration for the supplied goods/ services.
The transfer of the different types of vouchers is also treated differently from a VAT point of view. Whereas each transfer made for consideration of an SPV made by a taxable person acting in their own name shall be regarded as a supply of the goods or services to which the voucher relates, the transfer of a MPV for consideration shall not be regarded as a supply of the goods and/or services.
Registration procedures. To register for VAT purposes in Hungary, two copies of the application form (available only in the Hungarian language) should be submitted on paper together with several corporate documents (translated into Hungarian). The following documents are required for the VAT registration application process:
• Copy of the passport of the person(s) authorized to sign documents on behalf of the taxable person
• Up-to-date excerpt from the Court of Registry in the taxable person’s country of incorporation (no older than 30 days)
• Original and stamped VAT registration certificate issued by the foreign tax authority justifying that the Company is registered for VAT purposes (no older than three months)
• Original notarized specimen(s) of the signature of the company’s authorized representative(s)
Beside these required documents, the tax authority may also request additional proofs, depending on the quality of the documents and the legislation of the country where the taxable person has its registered seat.
Deregistration. Foreign entities that cease to perform transactions subject to Hungarian VAT can deregister, canceling their Hungarian VAT number. The necessary steps for deregistration are the following:
• Checking the tax account statement of the company and paying any underpayments or reclaiming any overpayments
• Preparation and submission of the deregistration form within 15 days from the effective date of the deregistration
• Preparation and submission of a closing VAT return covering the period not covered by previous tax returns within 30 days from the effective date of the deregistration (submission together with the deregistration form is advisable)
The tax authority usually performs a tax audit related to the deregistration.
Changes to VAT registration details. Taxable persons must notify the tax authorities of any changes affecting their tax liability, within 15 days of the effective date of such changes on a designated form. In most cases, this form should be filed electronically (with very few exceptions).
The following changes should be reported:
• Company data (name, registered seat) change
• Change of authorized representatives
• Place of archiving accounting data
• Change in business activity
• Application to specific VAT schemes
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.
assets upon the payment of the last installment) qualify as sale of goods where the tax point is the delivery date of the asset, i.e., the total value including VAT has to be invoiced at the beginning and no separate invoices have to be issued on the installments (that are not subject to VAT).
Imported goods. The tax point for imported goods is either the date of acceptance of the customs declaration or the date on which the goods leave the duty suspension regime, if the taxable person is not entitled to self-account import VAT.
Intra-Community acquisitions. The tax point for intra-Community acquisitions of goods is the date of issuance of the invoice or the 15th day of the month following the month in which the supply takes place, whichever is earlier. For services, generally, it is the date on which the supply is made.
Intra-Community supplies of goods. The date of supply for intra-Community supplies of goods is the date of issuance of the invoice or the 15th day of the month following the month in which the supply takes place, whichever is earlier. For services, it is the date on which the supply is made.
Distance sales. There are no special time of supply rules in Hungary for supplies of distance sales. As such, the general time of supply rules apply (as outlined above). According to the general time of supply rule, VAT shall become chargeable when the legal conditions prescribed for the occurrence of the transaction are fulfilled.
F. Recovery of VAT by taxable persons
A taxable person may recover input tax, which is VAT charged on goods and services supplied to it for a taxable business purpose. A taxable person generally recovers input tax by deducting it from output tax, which is VAT charged on supplies made.
Input tax includes VAT charged on goods and services supplied in Hungary, VAT paid on intraCommunity acquisitions and imports of goods, and VAT self-assessed for reverse-charge services received from outside Hungary and for certain reverse-charge domestic transactions.
The amount of VAT reclaimed must be supported with a valid VAT invoice.
Under the general rule, input tax is deductible from output tax charged in the same VAT period. If the amount of input tax exceeds the amount of output tax in the period, the excess can be carried forward to the next filing period, offset against the taxable person’s other Hungarian tax liabilities or refunded to the taxable person’s bank account.
The time limit for a taxable person to reclaim input tax in Hungary is five years, following the last day of the calendar year in which the given tax return is due or the tax liability should be settled. However, without self-revision, the input tax deduction right can be exercised in the year they arise and during the next calendar year based on the decision of the taxable person.
Nondeductible input tax. Input tax may not be recovered on purchases of goods and services that are used for nonbusiness purposes (e.g., goods acquired for private use) or exempt transactions (e.g., assets used for providing financial services). In addition, input tax may not be recovered for some items of business expenditure.
The following lists provide some examples of items of expenditure for which input tax is not deductible and examples of items for which input tax is deductible if it relates to a taxable business use.
Examples of items for which input tax is nondeductible
• Nonbusiness expenditure
• Purchase of cars (private use)
• Taxi services
• 50% of car maintenance service costs
• 30% of telecommunication services
Examples of items for which input tax is deductible (if related exclusively to a taxable business use)
• Transport
• Purchase, lease or hire of cars, vans and trucks
• Books related to business activities
• Conferences
• Advertising
• Accommodation
• Attending exhibitions
Partial exemption. Input tax directly related to making exempt supplies is generally not recoverable. If a Hungarian taxable person makes both exempt supplies and taxable supplies, it may not deduct input tax in full. This situation is referred to as “partial exemption.”
The amount of input tax that may be deducted is calculated in the following two stages:
• The first stage is the direct allocation of VAT to exempt and taxable supplies. Input tax directly allocable to exempt supplies is not deductible, while input tax directly allocable to taxable supplies is deductible. Exempt with credit supplies are treated as taxable supplies for these purposes.
• The second stage is the proration of the remaining input tax that relates to both taxable and exempt supplies based on the percentage of taxable supplies to total supplies made (called the deduction ratio). This treatment may apply, e.g., to input tax on business overhead. The deduction ratio is calculated up to two decimal places. The amount of VAT recoverable must be rounded up to units of HUF1,000.
There is no requirement to report the pro rata to the tax authority. There is a “standard” method of calculation for the pro rata, but taxable persons can deviate from that if the deductible input tax can be determined more precisely by using another calculation method. Approval from the tax authorities is not required to use the partial exemption standard method or special methods in Hungary. However, the use of a special method is strongly recommended to be discussed and approved by the tax authority up front. It is also possible to ask for a binding ruling on the calculation method.
When calculating the proration, a taxable person may initially use the deduction ratio amounts for either the current tax year or for the preceding tax year. However, if the preceding year’s amounts are used, the calculation must be adjusted at the end of the VAT year, using the relevant information for the year in question.
Capital goods. Capital goods are tangible items of capital expenditure that are used in a business over several years. Input tax is deducted in the VAT year in which the goods are acquired. The amount of input tax recovered depends on the taxable person’s partial exemption deduction ratio in the VAT year in which the acquisition took place. However, the amount of input tax recovered for capital goods must be adjusted over time if the taxable person’s partial exemption deduction ratio changes during the year under review and if the difference with respect to a particular capital asset exceeds HUF10,000.
In Hungary, the capital goods adjustment applies to the following assets for the number of years indicated:
• Land and buildings: adjusted for a period of 20 years
• Tangible capital assets: adjusted for a period of 5 years
• Intangible rights related to capital goods: the same adjustment period as the underlying capital asset
The adjustment is applied each year following the year of acquisition, to a fraction of the total input tax (1/20 for land and buildings and 1/5 for other tangible capital assets). The adjustment may result in either an increase or a decrease in the deductible input tax, depending on whether the ratio of taxable supplies made by the business has increased or decreased compared with the year in which the capital goods were acquired.
If a Hungarian taxable person sells an asset on which no input tax was deducted, a proportion of the input tax becomes deductible. The qualifying period for this treatment is the same as the capital goods adjustment period, which is 60 months (5 years) for tangible assets and 240 months (20 years) for land and buildings.
In Hungary, the capital goods adjustment also applies to rights in rem, provided that the right is in the taxable person’s books for at least one year.
Refunds. If the amount of input tax recoverable in a monthly period exceeds the amount of output tax payable in that period, the taxable person has an input tax credit. A taxable person may request a refund of the credit if this excess exceeds the following amounts:
• HUF50,000 if the taxable person files VAT returns annually
• HUF250,000 if the taxable person files VAT returns quarterly
• HUF1 million if the taxable person files VAT returns monthly
If a taxable person is not allowed to request a repayment, the excess input tax may be carried forward to the following period to offset output tax payable.
Taxable persons significantly not complying with tax rules (risky taxable persons) will receive the VAT refund within 75 days; taxable persons properly complying with the tax rules (trusted taxable persons) will receive the VAT they reclaim within 30 days.
Taxable persons not qualifying as either risky or trusted will continue to receive the VAT refund based on the following rules: If a repayment is claimed, the VAT authorities must pay it within 75 days after the due date of the return. However, if all the supplier invoices that are recorded as deductions on a given VAT return have been paid by the time of filing of the VAT return and this fact was indicated on the filed VAT return, the tax authority must refund VAT repayment claims that exceed HUF1 million within 45 days. Repayment claim amounts under HUF1 million will be transferred within 30 days (if all supplier invoices have been paid).
If the repayment is not made within the time limits indicated above, the VAT authorities must also pay late payment interest, calculated from the due date of the repayment.
The late payment interest from 2019 equals the prime rate of the Hungarian National Bank plus five percentage points, which should be prorated on a daily basis. The late payment interest applicable for the periods before 2019 equals the double of the prime rate prorated on a daily basis.
Pre-registration costs. Input tax on pre-registration costs is deductible as long as the (future) taxable person can demonstrate that the goods or services were issued in preparation of a future economic activity. In practice, this means that the VAT on these costs can be deducted in the first VAT return of the taxable person becoming VAT registered.
Bad debts. As a result of a legislative change, recovery of output tax related to bad debts becomes possible under certain conditions from 2020. This applies to B2B invoices in which the date of supply falls after 31 December 2015. From 1 January 2021, recovery can also apply to B2C invoices under certain conditions.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Hungary.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses that are not registered for VAT in Hungary is recoverable. The Hungarian VAT authorities refund VAT incurred by businesses that are neither established nor registered for VAT in Hungary. Non-established businesses may claim Hungarian VAT to the same extent as VAT-registered businesses, assuming VAT refund reciprocity applies.
EU businesses. For businesses established in the EU, refunds are made under the terms of the EU Directive 2008/9/EC. The VAT refund procedure under the EU Directive 2008/9 may be used only if the business did not perform any taxable supplies in Hungary during the refund period (excluding supplies covered by the reverse charge and certain VAT-exempt transportation services). This is because if a non-established business performed any taxable activity in Hungary in the period in question, they should have been registered for VAT and requested the VAT refund in their Hungarian VAT returns instead of foreign VAT refund procedure. For full details, see the EU chapter.
Find below specific rules for Hungary:
• Refunds are paid in Hungarian forints into the bank account notified by the claimant. This account may be either a bank account in Hungary or in the country in which the claimant is registered. If the claimant provides the tax authority with a foreign bank account number, the costs related to the bank remittance and exchange are the claimant’s responsibility and the refunded amount is reduced accordingly.
• Hungarian law provides that repayments must generally be made within four months of the date on which the claim is submitted, in line with the provisions of the EU Directive 2008/9/EC. The refund procedure cannot be made any longer than eight months. If the VAT authorities do not repay the claim within this time limit, the claimant is entitled to interest. The late payment interest from 2019 equals the prime rate of the Hungarian National Bank plus five percentage points, which should be prorated on a daily basis. The late payment interest applicable for the periods before 2019 equals the double of the prime rate prorated on a daily basis.
Non-EU businesses. For businesses established outside the EU, refunds are made under the terms of the EU 13th Directive. For full details, see the EU chapter.
Hungary applies the principle of reciprocity; that is, the country where the claimant is established must also provide VAT refunds to Hungarian businesses. Hungarian VAT is only refunded on the condition of reciprocity to taxable persons of the Principality of Liechtenstein, Switzerland, Norway, Serbia, Türkiye (with certain restrictions) and the United Kingdom.
Find below specific rules for Hungary:
• The deadline for submitting applications is 30 September following the claim year.
• Non-EU claimants must file a form issued by the Hungarian VAT authorities together with the relevant documents, including the original invoices.
• The claimant must also submit a certificate issued by the VAT authorities in the country in which it is established, certifying its status as a taxable person.
• The applicant must prove that it paid the gross amount of the invoices. Hungarian suppliers may also provide a declaration that the invoices have been paid in full.
• The minimum claim period is three months, and the maximum claim period is one calendar year (except if the period is less than the last three months of a calendar year).
• The form may be completed in Hungarian, English, German or French. However, all correspondence with the tax authorities must be in Hungarian.
• A non-established claimant may appoint a lawyer, legal advisor or tax consultant resident in Hungary to represent it in any dealings with the VAT authorities. If a representative is used, the original power of attorney appointing the representative must accompany the repayment claim form.
• All documents relating to the VAT reclaim must be sent to the tax authorities and can be done via the official email address of the authority or via post to the following address:
NAV Kiemelt Ügyek Adó- és Vámigazgatósága
1077 Budapest
Dob Utca 75-81
Hungary
Late payment interest. The Hungarian tax authority is liable for late payment interest if the refund is not processed in a timely manner (for both EU and non-EU businesses). The late payment interest rate charged (with effect from 2019) equals the prime rate of the Hungarian National Bank, plus 5 percentage points, which should be prorated on a daily basis.
H. Invoicing
VAT invoices. Generally, a Hungarian taxable person must provide VAT invoices for all Hungarian taxable supplies made, including exports and intra-Community supplies, in line with the Hungarian invoicing provisions. If the supplier is not established in Hungary and (i) the supply is subject to the reverse-charge mechanism or (ii) the place of supply is outside the EU, Hungarian invoicing standards are not applicable (except for cases falling under option (i) if the invoices are issued by the buyer within the self-billing process).
Invoices must be issued no later than eight days after the date of supply (or, for intra-Community supplies, no later than the 15th day of the month following the month in which the supply took place) (see Section E). If the consideration is paid by the date of supply, the supplier is obliged to issue the invoice immediately.
Credit notes. A VAT credit note may be used to reduce the VAT charged and reclaimed on a supply. The document must be clearly marked “credit note” and refer to the original invoice. A credit note must also indicate the date on which it was issued, the reason for and the numerical result of the correction and any new items arising from the correction.
Electronic invoicing.
Electronic invoicing is allowed, but not mandatory in Hungary for B2B and B2C supplies. No threshold is applicable; the choice is entirely up to the parties to the transaction.
For B2G supplies, acceptance of electronic invoices is mandatory as of 18 April 2019 in line with EU Directive 2014/55/EU.
In addition, as of 1 January 2025, natural gas traders, transmission system operators and gas distributors, electricity traders and distributors may only issue electronic invoices to nonresidential customers, regardless of whether the customer consents to e-invoicing in accordance with the general VAT rules.
Electronic receipts are to be introduced as of 1 January 2025. The issuance and distribution of electronic receipts can be done electronically only. The electronic receipt will be deemed to be issued when it is received by the receipt depository operated by the tax authority.
For the EU VAT in the Digital Age (ViDA) proposals, refer to the EU chapter.
Simplified VAT invoices. Simplified VAT invoicing is allowed in Hungary in the following cases:
• When the customer is a taxable person or a nontaxable legal person, who makes advance payment (except for VAT-exempt EU supplies of goods) and the amounts are expressed in HUF on the invoice layout.
• When the customer is a nontaxable person (other than in the above point), who makes advance payment and the payment exceeds HUF900,000, or does not exceed this threshold but the cus-
Records. Record-keeping obligation applies to each accounting document based on which of the transactions performed can be identified and verified. In Hungary, examples of what records must be held for VAT purposes include invoices, contracts, purchase orders, proofs of supply, transportation documents, customs documents, etc.
In Hungary, VAT books and records can be kept outside of the country. However, the taxable person needs to report the place of record keeping to the tax authority in advance and it needs to make sure that upon request these documents can be presented to the tax authority within three working days.
Record retention period. Records (including invoices and the related supporting documentation based on which the VAT can be assessed) should be kept until the end of the statutory limitation period, which – from a tax perspective – is five years from the last day of the calendar year in which the VAT return related to the given invoice was due. The statutory limitation can rest or can be interrupted under certain conditions. For accounting purposes, the statutory limitation is eight years.
In the case of paper-based documents, the record keeping obligation applies to the copies of invoices in the case of the issuer, and to the original document in the case of the recipient, or in the absence of the original, to the authentic copies of the invoices.
Electronic archiving. Electronic archiving is allowed in Hungary. Paper-based invoices may also be stored in electronic format. Electronically issued documents must be stored in electronic format. Decree nr. 1/2018 issued by the Ministry of Innovation and Technology determines the specific archiving rules that the taxable person should fulfill in this regard (image quality, metadata to be indicated in the copy to guarantee the authenticity of origin and the integrity of the content, etc.).
I. Returns and payment
Periodic returns. In general, Hungarian taxable persons must file quarterly tax returns. However, the below categories of taxable persons must file monthly returns (and EC listings):
• Newly registered taxable persons during the first two calendar years after registration
• Taxable persons whose net VAT payable in the tax year in question, or in the second year before the year in question, exceeds HUF1 million
• VAT groups
• VAT warehouse operators and indirect customs representatives in special cases
Taxable persons whose VAT payable or reclaimable for the second year preceding the year in question does not exceed HUF250,000 may file VAT returns annually if they were not given an EU VAT identification number and the consideration received in relation to their taxable supplies does not exceed HUF50 million. However, they may opt to file quarterly returns.
Monthly and quarterly VAT returns must be filed by the 20th day of the month following the tax period. If the taxable person meets the requirements to file VAT returns on an annual basis, the due date is 15 February in the year following the tax year in question. Note that annual returns are not to be filed in addition to the monthly/quarterly VAT returns. It is just an additional filing frequency option, based on certain criteria (see above).
Periodic payments. Payment of VAT due is required in full on the same date as the VAT return submission deadline, i.e., by the 20th day of the month following the tax period. VAT liabilities must be paid in HUF. Payment should be made via bank transfer to the tax authority’s designated bank account. In the case of domestic payments, the payment can be initiated by the latest on the submission deadline. In the case of international transfers, the VAT amount needs to be credited at the tax authority’s bank account by the submission deadline.
Electronic filing. Electronic filing is mandatory in Hungary for certain taxable persons. If a taxable person performs any intra-Community transactions or is required to submit Domestic Summary Reports in Hungary, it must file all its tax returns electronically with the tax authority. To be able to file the tax returns electronically, a tax representative or employee of the taxable person must fill out a special registration in Hungarian and submit it in person in Hungary. Tax representatives can also be authorized to file the tax returns electronically on behalf of the taxable person.
Even though the current return filing procedure will remain valid, as of 1 January 2024 eVAT returns have been introduced in Hungary. The tax authority auto-generates draft VAT returns using already available data. The auto-generated draft VAT returns may be modified on the tax authority’s website or via an application programming interface (API). The submission of the draft VAT return is not automatic; the taxable person should provide confirmation.
Intrastat reports should be filed with the official system of the Central Statistics Office (websitebased).
Payments on account. Payments on account are not required in Hungary.
Special schemes. Small enterprises. This is for businesses who have an annual threshold of turnover of less than HUF12 million. Domestic taxable persons with an expected net sales revenue below HUF12 million can opt for VAT exemption (previous two tax years also need to be taken into account). This means that they do not have to charge VAT on their supplies (with certain exceptions). In turn, they do not have to deduct input tax either. Application needs to be made up front before the beginning of the calendar year and can no longer be applied if the taxable person exceeds this threshold during the calendar year. The application needs to be renewed annually. The uniform EU VAT scheme for small businesses proposed by the EU VAT Action Plan has been implemented in Hungary and will be effective as of 1 January 2025.
Investment gold. By investment gold, the VAT exemption applies by the supply, intra-Community acquisition, importation of investment gold, including:
• Investment gold represented by certificates (documents) referring to allocated or unallocated gold or trades on gold accounts.
• Gold loans and swaps ensuring the right of ownership or claim in respect of investment gold.
• Transactions concerning investment gold involving futures and forward contracts leading to a transfer of right of ownership or claim in respect of investment gold.
Exemption shall also be granted for the services of agents who act in the name and on behalf of another person, when they take part in the supply of investment gold.
Taxable dealer of secondhand goods, works of art, collector’s items and antiques. A taxable dealer should mean a taxable person who, with a view to resale, purchases, owns or imports secondhand goods, works of art, collectors’ items or antiques or acts as a commissionaire for the same purpose. Taxable dealers can opt for applying a margin scheme for trading with the above listed goods. Under this scheme, the taxable person only pays VAT on the difference (margin) between the purchase and sales price of the goods. In this case, the margin must be considered as a gross amount (i.e., which already includes the VAT) and the taxable person cannot indicate the VAT amount separately in its sales invoice, while the taxable person is not entitled for deducting the input VAT (if any) on its purchases either. The application of this margin scheme is mandatory if the goods are purchased from nontaxable persons. Nevertheless, the taxable person can choose not to apply the scheme to its entire business activity; this choice must be reported to the tax office in advance before 31 December of the previous calendar year. Taxable dealers have special record keeping obligations.
Correcting errors in previous returns. Retroactive correction of the VAT returns is possible in Hungary. In this case, the taxable person can file the same tax return (in most of the cases electronically) via ticking a specific box in the return and reporting the corrected data. Depending on the nature of the mistake, the correction can be regarded as a “self-revision” (usually, where the correction has a numerical impact on the taxable person’s VAT position) or can be a simple correction.
In the case of self-revision, a self-revision surcharge should also be paid if the correction results in additionally payable VAT. The self-revision surcharge is the prime rate of the Hungarian National Bank, apportioned per day. In the case of a second self-revision of the same period, the surcharge is already higher; it is 1.5 times the prime rate.
Digital tax administration. Invoicing software. Taxable persons using invoicing software should possess detailed documentation of the software in Hungarian, English, German or French (such as a user manual) and retain it until the expiry of the software license. The manual does not have to be submitted to the tax authority but must be available for review during a tax audit. The documentation should contain a detailed description of the software’s operation and functions. The invoicing software should be able to perform only those functions detailed in the user documentation.
The invoicing software should furthermore comply with Hungarian invoicing rules, and the user documentation should contain descriptions accordingly, even if the issuer of the invoice is a foreign enterprise having only a VAT number in Hungary or uses the company group’s invoicing software developed abroad.
Invoicing software and ERP systems of taxable persons with Hungarian VAT numbers must have a special data export function. Taxable persons will need to use this function to perform data queries concerning invoicing-related information upon the request of the tax authority. The range of data to be included in the report created by the ERP system or invoicing software and the data structure of the report are predefined by law.
Live invoice data reporting. Taxable persons have to provide the tax authority with prescribed invoice data electronically and in real time, directly from their invoicing system. Since 1 April 2021, the data of practically all invoices issued under a HU VAT number must be reported to the tax authority in real time (except for outgoing OSS invoices and invoices reported via online cash registers). This obligation is mandatory for all taxable persons.
J. Penalties
Penalties for late registration. If a taxable person fails to register for VAT, a default penalty up to HUF1 million applies. In addition, the VAT authorities may notify the taxable person of its obligation to register. The fine is doubled if the taxable person fails to register within the deadline specified by the tax authority.
Penalties for late payment and filings. A default penalty (maximum of HUF500,000) applies to the late submission of a VAT return, Intrastat return, Recapitulative Statement or Domestic Summary Report. Penalties of similar amount can be levied for other mistakes as well (e.g., for not complying with the invoicing rules; for a missing or inaccurate VAT return or Domestic Summary Report).
If the VAT liability is paid late, late-payment interest is charged. The interest rate is the prevailing prime rate of the Hungarian National Bank plus 5% multiplied by 1/365 for each day late.
If the VAT liability is not reported by the due date and this is discovered during a tax audit, the tax penalty is 50% of the tax arrears, plus late-payment interest.