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UPDATE – Changes in the administrative requirements in Hungary from 1st July 2017

Real time reporting of invoices and new threshold of the domestic itemized report - key issues and potential changes for enterprises.

Real time reporting of invoices – would it be postponed to 2018?

Hungary planned to introduce real time invoice reporting from 1st July 2017. Under the adopted legislation, businesses issuing invoices using invoicing software will be required to provide real time invoice data to the HU TA if the VAT value exceeds HUF 100,000 (ca. EUR 320),including all modification invoices that relate to the original invoice. This regulation should be also applied to the Hungarian VAT registrations of the foreign entities.

According to the originally planned deadlines, the test phase for the implementation should have been launched as of 1th April 2017. 

Despite the approaching go live date the Hungarian Tax Authority and the Ministry of National Affairs have not yet published details of the new law, such as communication protocol, etc. In the same time, no official statements were issued by the authorities on whether real time invoice reporting will be postponed. Nevertheless, most professional firms in Hungary (including RSM Hungary) have accepted the view that given the current status of readiness and lack of official communication, it is more likely than not that real time invoice reporting could be postponed again.

New threshold of the domestic itemized report – 1st July 2017

Unlike real time invoice reporting, the authorities seem to be determined to go on with the reduction of the itemized report threshold from HUF 1 M to HUF 100,000.

Currently if the transactions involve supplies or purchases with Hungarian VAT exceeding the threshold of HUF 1 M (approximately EUR 3,200) for individual transaction or for an individual business partner, the company may need to file itemized VAT report, detailing these transactions one by one. Credit/debit notes issued or received should also be considered in the count and reported, if needed. It is anticipated that from 1 July 2017 the threshold will be reduced to HUF 100,000 (approximately EUR 320).

Additionally, as of 1st January 2017 the customer’s tax number needs to be indicated on all invoices where VAT exceeds HUF 100,000.

What this means potentially to businesses

Although the widespread view is that real time invoice reporting will be postponed, we urge the business entities to remain alert and responsive to any future changes once they are announced. 

Based on the current law (that is likely to be postponed) failure to comply with the real time invoice reporting obligation may result in a penalty of up to HUF 500,000 (EUR 1,700) per each undeclared invoice. 

It is likely that the new real time invoice reporting obligation will be introduced (potentially 2018). Once introduced it will be closely linked to the existing obligation to provide data in the XML format (also known as Standard Accounting File or SAF). We recommend reviewing the company's SAF export function and extending it further to satisfy the new requirement. Our IT and VAT experts team can help to understand these requirements better and provide you with the details of the enhancements needed once the HU TA publishes specification of such communication.

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