VAT in Hungary

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Hungarian VAT

Hungary comes under the EU VAT regime, and is part of the EU single market economy. VAT Directives are issued by the EU which lay out the principles of the VAT regime to be adopted by the member states. These Directives take precedent over the local legislation.

Hungarian VAT law

Hungarian VAT law is administered through the Ministry for National Economy and the National Tax and customs authority.

Hungarian VAT registration

Foreign companies may register in Hungary for VAT without the need to form a local company; this is known as non-resident VAT trading. There is no VAT threshold in Hungary for the registration of non-resident traders; a VAT number must be in place before the commencement of taxable supplies. You are able to back-date a registration in Hungary.

There are strict rules on the situations where a registration is permitted. Common scenarios which require a Hungarian VAT registration include:

• importing/exporting goods into/out of Hungary
• acquiring goods/services from other EU states into Hungary
• organising live events, conferences, etc, in Hungary
• holding goods in a warehouse in Hungary as stock for resale
• 'supply and install' services
• distance selling to private individuals in Hungary, e.g. internet retailing; the distance selling threshold within Hungary is €35,000 per year.

Hungarian VAT compliance

There are detailed rules controlling the recording and processing of Hungary transactions. These include guidelines on:

• Hungarian invoice requirements
• use of the 'reverse charge' procedure
• foreign currency reporting and translation
• correcting errors from prior returns
• credit notes and corrections
• what accounting records must be maintained.

Hungarian VAT rates

The standard VAT rate in Hungary is 27%. There is a reduced rate of 5% and 18%.

There are many variations to the rates above, including exempt taxable supplies.

Hungarian VAT returns

Companies with a Hungarian VAT number must submit periodic returns detailing all taxable supplies (sales) and inputs (costs). VAT returns filed by non-resident traders in Hungary are generally submitted monthly by the 20th of the month following the reporting month-end.

Hungarian taxable persons must file quarterly tax returns. However, taxable persons whose net VAT payable in the tax year in question, or in the second year before the year in question, exceeds HUF 1m must file monthly. Taxable persons whose VAT payable for the second year preceding the year in question does not exceed HUF 250,000 must file VAT returns annually if they were not given an EU VAT identification number. However, a taxable person in this position may opt to file quarterly returns.

Late submission of a VAT return attracts a maximum penalty of HUF 500,000 and late payment interest. If the return is filed on time but the VAT is paid late, late payment interest is charged. The interest rate used is double the prevailing prime rate of the Hungarian National Bank multiplied by 1/365 for each day late.
If a return has been filed but the VAT liability is not reported, the penalty is 50% of the tax arrears, plus late payment interest. Late payment interest is not imposed if the taxable person is able to justify the default. Based on the circumstances of the individual case, the default penalty may be reduced or cancelled by the tax authorities.

Hungarian fiscal representative

While it is not necessary to appoint a fiscal representative in Hungary for EU businesses wishing to VAT register in Hungary, it is necessary to have an agent based in Hungary who can act for the company and where the Hungarian tax authority can, if required, communicate, conduct tax inspections, and examine invoices and book records.

It is a requirement that non-EU businesses appoint a fiscal representative.

Hungarian recapitulative report and Intrastat

In addition to VAT returns in Hungary, companies may be required to submit additional statistical information.

The Hungarian EC sales list, which is part of the recapitulative report, must be completed and submitted monthly by the 20th of the month following, to account for intra-community despatches of goods and services.  The recapitulative report also includes a reporting requirement for acquisitions (receipt of goods and services received from other EU states).

For goods only, if certain thresholds are exceeded either for despatches or arrivals, an Intrastat report must be completed and submitted to the Hungarian statistical office. The report must be submitted monthly by the 15th of the month following the reporting month. The Intrastat threshold is 100m  HUF for both dispatches and arrivals.

Hungarian VAT refunds

A taxable person may request a refund of the credit if this excess exceeds the following amounts:

• HUF 50,000 if the taxable person files annually
• HUF 250,000 if the taxable person files quarterly
• HUF 1m if the taxable person files 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 VAT payable.

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, the tax authority must refund VAT repayment claims that exceed HUF 1m within 45 days. Repayment claim amounts under HUF 1m will be transferred within 45 days (if all supplier invoices have been paid). If the repayment is not made within these time limits, the VAT authorities must also pay interest, calculated from the due date of the repayment.

If the amount to be reclaimed is fairly significant, then tax authority usually carries out a tax revision before transferring the money.

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