Today, the Hungarian Tax Authority has access to an astounding quantity of digital data: the introduction of compulsory online invoice data reporting has made it possible to replace manual invoicing with online cloud-based solutions that automatically report data to the Hungarian Tax Authority. However, due to the incorrect configuration of ERP systems, the data reported by a number of companies still do not comply with the regulatory requirements, even though preliminary self-revision and error correction can help avoid an up to HUF 500,000 penalty per invoice, in addition to making administration easier in a number of ways.
In accordance with the terms of the online invoice data reporting obligation, invoicing software products are required to report invoice data to the Hungarian Tax Authority in XML format. The Hungarian Tax Authority is only able to access these XML files; therefore, these need to include the same information as the relevant invoice. Most problems arise from the fact that companies or ERP system developers create these files incorrectly.
Most frequent errors when reporting Hungarian Tax Authority online invoice data
1. The system is not reviewed at the time of an XML schema change
Currently, the Hungarian Tax Authority’s Online Invoice system uses XML version 3.0, which is already the fourth schema implemented since July 2018. Adapting the frequently changing schemas requires continuous development from the companies.
- no review is performed during deployment or development (it happens often that new fields are implemented but the operation of earlier ones is not verified);
- amending invoices are reported as normal negative invoices without indicating the serial number of the original invoice.
If the system is reviewed, it can happen to you as well that the reference number or order number is reported instead of the invoice number, which is a frequent error in the case of foreign ERP systems.
Solution: at each version change, it has to be verified whether the invoice image and the XML file created from it are consistent with each other from the point of view of both the tax advisor and the accounting or financial management because the Hungarian Tax Authority will only have access to the latter.
2. Differences in fulfilment dates
Several dates can be specified and stored in foreign ERP systems; however, these do not always include a fulfilment date as interpreted according to the Hungarian regulations.
It is a typical mistake that in the case of amending invoices, the software allocates a new fulfilment date instead of indicating the fulfilment date of the original invoice, which generally – and incorrectly – coincides with the date of the amending invoice.
Solution: in the case of modifying invoices, the fulfilment date must coincide with the fulfilment date of the original invoice (except for the rare case when this piece of information is the one subject to the amendment).
3. Discrepancies between invoice items
Whether we are speaking of inventories or hotel bookings, displaying the items to be invoiced may become more nuanced due to the complexity of records related to company operations.
It can cause a problem that while the company’s own system, and thus the XML file, include a more extensive itemised list, in a number of cases (typically because the partner does not intend to supply a detailed statement),only a summary line is included on the invoice regarding such items.
Solution: the invoice image and the data to be reported are required to be reconciled because according to the applicable legislation, the data reported must pertain to the data content of the invoice.
4. Incorrect indication of units of measure
Differences in the indication of units of measure – e.g. piece, pcs, stück, st – make data processing difficult.
A source of error is that in the course of data reporting, companies may also specify custom units of measure, and can report everything in custom quantities.
Solution: use of the standardised unit of measure list of the Hungarian Tax Authority for easier data processing that is in compliance with the applicable legislation.
5. Incorrect tax exemption code classification, inaccurate reference
A tax-exempt invoice can be issued in a number of cases, including that of tax-exempt taxpayers, activities performed in the interest of the public, and product exports.
Incorrect tax exemption code classification is a frequent source of errors, in addition to the fact that invoices and their XML files do not include regulatory or other clear references to the reason for the exemption.
Solution: use of the exemption codes defined by the Hungarian Tax Authority and an indication of special forms of taxation, e.g. differential taxation; hiring a tax expert to collaborate during the development of the ERP system.
Why is correct XML important when reporting Hungarian Tax Authority online invoice data?
- Parties notorious for reporting erroneous data are eventually included in the risk analysis system of the Hungarian Tax Authority, thus the chances that a legal compliance or tax audit is initiated against the taxpayer in the near future increase.
- The e-VAT draft of the Hungarian Tax Authority may represent considerable assistance mainly for SMEs but it can also serve as a basis for checking in the case of large corporations. The basis of an accurate VAT offer is online invoice data reporting based on correct XML files.
- More and more companies are implementing digitised invoicing solutions, switching to one of the many solutions for electronic invoicing. An XML file that is correctly filled in can also function as an e-invoice, provided that the companies issue a declaration in the course of the data reporting process that the data reporting is considered an invoice.
- Post factum error correction takes a lot of time and incurs significant expenses.
Realise your mistakes before the Hungarian Tax Authority does
Both tax expertise and developer knowledge are required for identifying data reporting inaccuracies and correcting the errors; however, communication faltering between staff members responsible for the issuance of invoices and the ERP developers is not always seamless. In addition, it frequently happens that neither of the parties knows their way around in the mysteries of legal regulations, so there may be gaps in the online invoice data reporting of the company towards the tax authority. This is why it is worth analysing risks and correcting any errors by involving experts well-versed in both fiscal matters and IT.