Who are subject to real-time invoice data reporting?
The real-time invoice data reporting obligation applies to all domestically registered taxable persons, including domestic companies and the domestic tax numbers of foreign companies (registered for tax purposes).
This obligation does not apply to foreign distance sellers (webshops) if they are only involved in domestic B2C product sales, not even if the amount of output tax exceeds HUF 100,000 (EUR 320),as real-time invoice data reporting applies only to product sales or services provided to domestic VAT subjects.
The data reporting obligation also applies to domestic taxable persons which have outsourced invoicing to a foreign services centre, for example, so invoices are actually issued abroad. In this case, the taxpayer is required to comply with the invoice data reporting obligation. The technique of data reporting actually makes it possible to forward data to Hungarian Tax Authority (HU TA) from abroad as well.
What invoices does real-time invoice data reporting apply to?
Real-time invoice data reporting only applies to certain invoices. Let’s see in more detail what transactions are and are not affected by this new obligation.
The data reporting obligation:
- only applies to actually issued invoices
- only applies to domestic transactions subject to taxation
- only invoices issued to domestically registered taxable persons are required to be reported,
- only transactions subject to the ordinary tax system are required to be reported,
- only those invoices are required to be reported where the amount of output VAT is at least HUF 100,000 (EUR 320). If the invoice includes more than one item (and even several tax rates),then each item must be reported, including items exempt from tax.
Can all outgoing invoices be reported unsorted?
From a review of the criteria, it may appear that invoices are more difficult to separate according to the type of transaction and the amount of tax than to report all invoices. This is possible: the taxable person may also decide to disregard the tax value limit and – regardless of the fact whether the invoice includes any output tax and the amount of such output tax – disclose data on all their invoices issued to domestic taxable persons. HU TA shall also accept invoice data provided voluntarily.
The current concept of HU TA only refers to B2B transactions (performed to domestic taxable persons). It is not yet clear whether voluntary data reporting can be chosen for B2C transactions (performed to other than taxable persons) as well.
Although the draft decree prescribes the prompt reporting of invoices with a VAT content of at least HUF 100,000, issued to taxable persons (economic operators),it does not prohibit at all the reporting of all invoices, that is, those below the limit amount. Being aware of this, it should be considered whether it is worthwhile to devote time and technology to sort invoices based on their amount. If you are expected to regularly issue invoices in both higher and lower amounts than HUF 370,000 (EUR 1,190) net to your business partners, it is worthwhile to extend the online data reporting to all of them. On the one hand, because this way – for sure – not even one invoice subject to the decree is failed to be reported; on the other hand, because the IT solution is simplified and the margin of error is smaller.
The HU TA obviously aims to lower the limit amount on an on-going basis over time, so if the current limit of HUF 100,000 is disregarded already at the beginning, presumably no subsequent duties will need to be fulfilled in terms of compliance.
What happens to manual invoices?
In case of invoices issued manually – using printouts, e.g. invoice pads – the taxpayer is required to record invoice data through an online interface. In such a case, data reporting must be completed within up to 5 calendar days. This deadline is shortened if the invoice includes VAT in the amount of at least HUF 500,000 (EUR 1,600). The data of an invoice with a VAT content of at least HUF 500,000 (EUR 1,600) must be recorded through the online interface already on the day after issuing the invoice.
How can the company start to prepare for data reporting?
Real-time invoice data reporting can be commenced after taxpayer registration. This also includes registration of the data reporting endpoint and the invoicing software. In the course of registration, HU TA will check for the existence of authorization for representation.
What sanctions are expected in case of default?
The draft decree includes shocking sanctions even if read for the second time. Those who fail to comply or default with their duty of online reporting may be fined to as much as HUF 500,000 per invoice. Even if other than prompt penalty will be the first tool of HU TA in case of default, the expectation is clear: all invoicing software intended to be used in the long term must be provided with the expected communication functions.
Let us take an example of the severity of the sanction:
A foreign enterprise imports products from the other Member States, and sells them domestically, to domestic taxable persons, by charging 27% VAT. Ten deliveries are expected per month, and the value of each consignment is HUF 500,000. So the enterprise issues 10 invoices per month, with a net value of HUF 500,000 each, and with the VAT amounting to HUF 135,000 per invoice. The foreign enterprise is domestically registered (requested a tax number) and has paid VAT as due by the 20th day of the month following the current month. Let us presume, however, that the returns and the Community summary statement (A60) have failed to be submitted in due time on behalf of the enterprise, and the taxable person has also failed to disclose data. Let us see what sanctions the enterprise can expect in such a case.
The enterprise may expect a total penalty for default of up to HUF 500,000 by reason of failure to submit the returns and the summary statement (less than half of the total monthly VAT charge (HUF 1,080,000)). However, a penalty of up to HUF 500,000 per invoice can be expected by reason of the failure to disclose data, totalling to even as much as HUF 5 million (about five times the monthly VAT charge),in spite of the fact that the enterprise has paid the VAT amount in conformity to the budget in due time.
The actual practice of the tax authority will probably be less severe since, in the course of imposing penalties, the tax authority is obligated to consider all the circumstances of the case. Upon the introduction of this obligation, the authority is initially expected to provide a warning and to obligate taxpayers to demonstrate compliant conduct. Nevertheless, the force of maximum fines is properly illustrated by this example.
It is worthwhile to start preparations for real-time invoice data reporting; should you need any help, do not hesitate to contact our experts!