Hungary: 2021 to further digitize tax administration interactions with Hungarian VAT taxpayers

In short

2021 brings important developments in eVAT in Hungary, indicating that the Hungarian tax administration is a pioneer in innovative tax administration measures.

Since January 2021, to better monitor business transactions and improve VAT collection, Hungary has introduced a general real-time invoice declaration obligation for Hungarian taxpayers. The new rules are controversial as they impose an administrative burden on non-Hungarian online stores doing B2C sales to Hungary by threatening them with a penalty from April 1, 2021. Another unique development in the region is the Tax administration Hungarian will prepare draft VAT returns for Hungarian taxpayers from July 1, 2021.

On January 4, 2021, Hungary introduced a real-time invoice reporting obligation applicable to taxpayers holding a Hungarian VAT number and making sales subject to Hungarian VAT. This obligation applies to both business-to-business (B2B) and B2C sales. Due to the COVID-19 situation, Hungary has granted a grace period for businesses to comply with the obligation to report real-time invoices, and penalties for non-compliance are applied from the 1st. April 2021.

The law provides for an important derogation from this rule. No real-time invoice reporting obligation applies for businesses reporting and paying VAT through the EU’s One Stop Shop (OSS) system. This rule is relevant because on July 1, 2021, the EU Mini One-Stop-Shop (MOSS) scheme will be extended to all types of B2C services as well as intra-EU distance sales of goods and some domestic supplies. facilitated by electronic interfaces (OSS regime). As such, the Hungarian OSS exemption was designed to grant an exemption to non-Hungarian businesses – mainly online stores – doing B2C sales to Hungary.

The only problem with this exemption is the timing. The Hungarian regime became applicable on January 1, 2021, but the OSS is not put into operation until July 1, 2021. Therefore, non-Hungarian companies that will apply the OSS from July 1, 2021 may nevertheless fall under the Hungarian declaration of invoices in real time. obligations before that date.

Failure to comply with the obligation to report invoices in real time may result in a penalty of up to EUR 1,400 per unreported invoice. It remains to be seen how and to what extent the tax administration will assess and apply the sanctions in practice.

Based on the new rules, non-Hungarian online shops may need to find a way to comply with Hungary’s real-time invoice reporting obligations until July 1, 2021, when they can qualify for the exemption. OSS. One potential solution could be to hire a Hungarian service provider to comply with real-time invoice reporting obligations on behalf of online stores in the meantime (or even beyond July 1, 2021, if l ‘OSS is not applied).

Another important development, from the second half of 2021, the Hungarian tax administration will prepare the draft Hungarian VAT returns for businesses and make this project available to businesses on a designated online platform. The first VAT declaration to be established by the tax authorities will relate to the declaration period which begins on July 1, 2021. Companies will be free to modify the project or to choose not to use it. For many companies, this development will represent a significant reduction in their administrative obligations, and it is a real sign that the Hungarian tax administration is offering a more efficient service to Hungarian taxpayers.

Originally posted in CEE Legal Matters