According to the new draft of the VAT Act, RTIR will also be extended to the hand-written paper-based invoices issues from the pre-printed invoice paper forms. Hand-written paper-based invoices need to be reported electronically
- within 5 calendar days, where the VAT on the invoice falls within the range of HUF 100,000 and HUF 500,000 (EUR 320- 1,600)
- within 1 calendar day from the issue of invoice, where the VAT on the invoice exceeds HUF 500,000
While the hand-written paper-based invoices from the pre-printed invoice form is considered an old-fashioned way of issuing invoices, it is still used in some sectors. Its use is rare in B2B cases, especially in transactions with VAT value of more than HUF 100,000. The main purposes of this regulation is to discourage taxpayers to use this type of invoicing as means to avoid RTIR on the invoices issued by the invoicing software.
What do we know so far?
The legislation related to the RTIR is not final yet. Some of the provisions of the RTIR can be found in the draft VAT Act, while other provisions are in the draft of the Implementation Regulation of the Ministry of the National Affairs.
Who is affected by the RTIR?
Any Hungarian VAT registered entity that issues invoices to another VAT registered entity with a VAT amount above HUF 100,000 (approx. EUR 320) is affected by the real-time invoicing obligation. This includes businesses established outside Hungary but registered for VAT in Hungary. RITR is not applicable to B2C supplies (distant sellers).
Why RITR needs to be taken seriously?
The potential maximum penalty for non-compliance with RTIR is much higher than the maximum penalty for failure to submit VAT return/Intrastat/ESPL together. According to the draft the failure to report the invoices in real time mode may attract administrative penalty of up to HUF 500,000 (EUR 1700) per invoice. This means that affected businesses must make complying with the RTIR legislation its highest priority.
What are the requirements of the invoicing software / Standard Accounting File (SAF)?
The invoices must be issued by a qualified invoicing software that is capable of communicating with the HU TA by electronic means in a pre-defined way. This could be either your EPR or a stand-alone invoicing software. Examples of inappropriate invoicing software include the use of Microsoft Excel or Word. The Hungarian Tax Authority operates a web portal dedicated to testing of RTIR: onlineszamla.nav.gov.hu. The xsd file format is updated on the web portal from time to time until the final legislation is out that will most likely contain the final file format.
Does the new requirement changes the layout of the invoice?
No, the layout and the minimal requirement regarding the information that needs to be on the invoice do not change. What changes is the way businesses need to collect and store invoicing data about their transactions as well as how to report this data.
How this affects domestic itemized report (recapitulative statement)?
According to the draft business affected by the real time invoice reporting obligation may be relieved from certain obligations to submit periodic domestic itemized report (recapitulative statement) on the sales invoices. However, itemized report will continue to be filed on the purchase invoices involved.
What are the penalties involved?
According to the current law draft failure to report the invoices in real time mode may attract administrative penalty of up to HUF 500,000 (EUR 1700) per invoice.
What this means potentially to business entities?
Companies will need to make invoicing software capable of real time data transfer by 1st of July 2018 at the latest. This is a one year extension comparing to the previous plans to introduce the real time reporting from 1 July 2017.
The new real time reporting obligation will be closely linked to the existing obligation to provide data in the XML format (also known as Standard Accounting File or SAF),although the xsd scheme may change over time. We recommend reviewing your SAF export function and extending it further to satisfy the new requirement.
What are the possible solutions to the problem?
Possible solutions to address RTIR challenge include the following ideas:
- Native ERP development – discuss the possibility of upgrading with your ERP developer so that your ERP includes the Hungarian RTIR package
- Third party RTIR reporting tool that works closely with your current ERP system and enable the reporting
- Outsource the invoicing and RTIR to a third party.
- Outsource the RTIR (but not the invoicing) to third party. You will continue to issue invoices from your current EPR/invoicing software, but will need to send your invoicing data from your ERP to a third party automatically. The third party will take care of the reporting on your behalf in a structures automated way.