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Change in VAT-returns from 20 February!

A substantial change was introduced from 1 January 2021 in the recapitulative statements (M-sheet) to be submitted as part of the VAT return. The change concerns all taxable persons receiving final invoices from domestic partners, which were preceded by an advance invoice and are subject to the reporting obligation.

This change does not come with a change in legislation, which is the reason why this issue has not yet been discussed in much detail beyond the tax authority "merely" requesting more data than so far from taxpayers. If a taxable person earlier paid an advance in relation to a supply of goods or services, the taxable person must supply data on the advance paid in its domestic recapitulative statement on the invoices issued. Also, the taxable person will have to supply different data based on the advance paid. 

This change may have an impact on the accounting practice of businesses as these pieces of information have to be gathered for the preparation of the VAT-return from the company's accounting system.”

automated fill-out of M-Sheets

What does the change concerning the M-sheets mean in practice?

The most frequent question regarding a change concerning a supply-of-data process already in place concerns the options available to businesses and taxable persons. In terms of the M-sheet data supply, the following options come up: 

1. Manual filling out of M-sheets

Compliance with the new requirements may represent a substantial challenge if you choose to display data manually. Data must be supplied on all domestic invoices manually on M-sheets in respect of which the taxable person exercises its right of tax deduction. 

2. Automated M-sheet fill-out in your own system

In order to avoid an increase in administrative burdens, automated solutions may help taxable persons in the implementation of changes. 

The lucky ones use ERP systems in which M-sheets are generated automatically. For them, the only challenge is the entering of the final invoice and advance invoice data. The best solution, however, is to match these data to the data of the NAV Online Invoice system automatically to make sure that the same data is available to the tax authority as in the EPR

3. Automated M-sheet fill-out solution from NAV Online Invoice

What can companies do if their M-sheets are not matched automatically in their EPR systems? In their case, online invoice queries may be a solution, beyond manual matching. As final invoice and advance invoice data are submitted by suppliers in the NAV Online Invoice system, the searching of these cannot be a problem. 

A fully automated solution is already available in the Connectax VAT MSheets system to moderate the extra administration relating to final invoice reports with which all M-sheets can be generated after running a few automated checks. 

The substance of M-sheet changes

  • When reporting data on final invoices, the total tax base and tax amount of the transaction completed must be indicated and "V" must be entered for the final invoice in a new column of the form. 
  • In a new line, the invoice must show the deduction with the relevant indication and the remark "KÜL - the amount of final invoice reduced preliminarily”. 

Note! The above indications are only applicable if the company reports data on the final invoice. Therefore, if data is not reported on the final invoice (but, for example, on the advance invoice),the column "difference deriving from advance payment" does not have to be filled out. A zero-amount final invoice does not have to be reported on an M-sheet as the taxable person cannot apply tax deduction for these. 

What is the purpose of the M-sheet?

The domestic recapitulative statement, that is the M-sheet provides a control option for NAV (Hungarian Tax Authority). With the help of the M-sheet, the tax authority is able to compare the invoice data reported by the taxable person deducting the VAT to the data reported through the NAV Online Invoice system by the issuer of the invoice. 

If a company uses an automated solution for the preparation of the M-sheets, any difference detected by NAV in such a comparison can be avoided, which could give ground for an investigation of the legitimacy of the VAT deduction or a potential tax audit. 

automated fill-out of m-sheets

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