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Real time invoice data reporting – What is easier for the Hungarian Tax Authority (HU TA) to inspect?

According to the current state of affairs, as from 01 July 2018, all invoices issued to domestically registered taxable persons, the VAT content of which exceeds HUF 100,000, are subject to data reporting to the tax authority. All this in real time or nearly real time. But what will the HU TA actually see?

As from July, real-time data shall be received by the HU TA on the invoices issued and sent by the invoicing systems of taxable persons. 

 Thus, the tax authority can precisely see to what extent the invoices of a company comply with the content and form requirements related to invoices, whether the invoicing software operates properly, or which companies reliable or risky taxpayers are in a business relationship with based on their invoices. 

What invoicing obligations are inspected? 

Real-time invoicing data reporting has its precedents, and it is expedient to review them, primarily from the viewpoint of requirements for invoicing software. 

Domestic summary report 

The domestic summary VAT report is a legal institution existing since 2012; it refers to domestic invoices both in case of invoice issuers and invoice recipients. Its limit amount has decreased continuously, amounting to HUF 1 million at present. As from 01 July 2018, this threshold will be HUF 100,000. 

The requirement of continuous serial numbering, without omissions and repetitions 

There has been a rule for nearly two decades, stipulating that an invoicing software is required to ensure continuous serial numbering, without omissions and repetitions (Section 8, Decree 23/2014 (VI. 30.) by the Ministry for National Economy). In case of issuing an invoice under a non-Hungarian tax number of the taxable person, the invoicing software must provide a range of serial numbers separated from domestic ones. 

The continuity of serial numbering shall not be impaired if:

  • The issuance of other accounting documents not deemed as invoices in the internal relationships among members involved in a tax group, and  
  • the issuance of invoices in the external relationships with third parties of members involved in a tax group is carried out within the same range of serial numbers. 
  • The continuity of serial numbering shall not be impaired, either, if the issuance of invoices, any other accounting documents as per the Accounting Act, and any other accounting documents on transactions outside the substantive scope of the VAT Act is carried out within the same range of serial numbers. 

Obligatory registration of invoicing software 

Registration with the HU TA of invoicing software is a fairly recent requirement, in effect from 2015. According to Decree 23/2014 (VI. 30.) by the Ministry for National Economy, a taxable person is required to report the following data of the invoicing software used by them: 

  1. name, identifier 
  2. developer’s name and tax number, if any 
  3. name and tax number of the party selling it / making it available 
  4. date of purchase, commencement of use or putting into proper use in case of a software of own development. 

Registration is required to be carried out within 30 days after the date in paragraph 4, using the designated report form. Taxable persons are also required to report to the tax authority, using the designated form, the data of invoicing software withdrawn from use and the date of withdrawal from use within 30 days. 

Invoicing software are only required to be reported to the tax authority; they are not required to be licensed. 

Obligatory data export function 

A new requirement in place since 2016 is to set up a data export function in invoicing software. An invoicing software is required to have an independent function named “data reporting for tax authority inspection”, integrated in the software, enabling data export. Data on invoices issued within a period to be determined by specifying start and end dates and within a serial number range to be determined by specifying two invoice serial numbers must be possible to be exported. The tax authority may also inspect the process of issuing an invoice in a way that the invoice issuer – tentatively – issues an invoice in the presence of the tax authority. 

What will change in terms of the obligations above by reason of real-time invoice data reporting? 

The  real-time invoice data reporting obligation  to enter into effect from 01 July 2018 will probably not affect the following: 

  • the requirement of invoice serial numbering, without omissions and repetitions, 
  • invoicing software registration, and 
  • the data export obligation is also expected to be unchanged since data export must be enabled to be performed for all invoices issued, while real-time invoice data reporting applies only to transactions subject to domestic taxation, carried out for domestically registered taxable persons where the amount of VAT is at least HUF 100,000. 

Nevertheless, the new system requires summary data reporting from invoice issuers (with summary data reporting by invoice recipients remaining unchanged).

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