Newest developments in real-time invoice reporting
Hungarian Tax Authority has published the draft of the implementing regulation and the specification of the RTIR.
What has changed (comparing to the previous draft):
- Invoices must be reported immediately (as issued),without human intervention, not within 24 hours as suggested before. This is one of the ways the Hungarian legislation differs from the Spanish SII legislation.
- Reporting deemed to be completed when the HU TA send the confirmation of receipt of the report.
- The RTIR XML file format (new XML format) differs from the XML format previously designed for the data export function (the old XML format). Business may use only the new XML format for RTIR and can choose both formats for data export function.
What is the legislative background?
The legislation (and the draft of the implementing regulation) seemed to be final, although not formally published as final. 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.
The technical specification can be found in a separate Guidance issued by the HU TA.
Who is affected by the real-time invoice reporting?
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).
What invoices are affected by RTIR?
Not all invoices are affected by RTIR. Businesses may wish to filter our invoices that are not affected by RTIR. The affected invoices are:
- Only supply invoices are affected. This means no need to report purchase invoices.
- Only domestic supply invoices are affected. This means no need to report, for example, EU sales or exports.
- Only B2B invoices are affected. Supplies to private individuals do not need to be reported.
- Only supplies with chargeable VAT are affected. No need to report exempt supplies, zero-rated supplied, supplies with reverse charge, etc.
- Only invoices with VAT of more than HUF 100 000 (appr. EUR 320) are affected. No need to report smaller values.
- It is possible to omit filters and report all B2B invoices.
What about modification invoices (debit notes, credit notes, cancellation invoices)?
- Distinction must be made between the original invoice and modifying invoice (e.g. debit note, credit note, cancellation invoice).
- A link between the original invoice and all its modification must be created. Debit /credit note or cancellation invoice must contain reference number of the original invoice/debit or credit note.
- Debit/credit notes that modify affected invoices are also reportable
- Invoices cancelling affected invoice are also reportable
- If as a result of modification of the invoice the VAT exceeds HUF 100 000, the modification invoice and all subsequent modifications will become reportable.
What about the paper-based invoices?
RTIR is extended to the hand-written paper-based invoices issued 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 are 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 are to discourage taxpayers to use this type of invoicing as means to avoid RTIR on the invoices issued by the invoicing software.
Why RITR needs to be taken seriously/sanctions?
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. Failure to report the invoices in real time mode may attract an 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.
Does the new requirement change 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)?
Itemized report will continue to be filed on the purchase invoices involved. RTIR will replace itemized reporting for the sales transactions.
What does this mean 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.
Looking for comprehensive IT reporting solution for your business?
Possible solutions to address real-time invoice reporting 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
- Use a third-party RTIR reporting tool that works closely with your current ERP system and enable the reporting, such as RSM ConnecTAX
- RSM ConnecTAX is our stand-alone application integrated into your current invoicing software.
- Extracts necessary data from your current EPR/invoicing software
- Converts the data into XML format preferred by the HU TA
- Sends the invoice data to HU TA through secure channel
- Receives the traffic light “electronic acceptance message” from HU TA
- Interprets HU TA messages and summarizes the status of the incoming and outgoing message traffic on the web-based dash-board
- Does all that automatically, without human intervention, through the secure channel, while ensuring that data is not manipulated/corrupted/lost throughout the whole communication process.