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Our tax and accounting advisory services are intended to companies selling products to foreign individuals involving deliveries from Hungary (or any other member state which is different from the state of the shipment’s destination).
Lower foreign VAT rates substantially decrease the competitive disadvantage of Hungarian webshop sellers applying the single highest VAT rate in the EU. Companies should consider the advantages of voluntary foreign VAT registration: competitive sales prices, a simple, transparent and effective sales process, lower foreign VAT and lower Hungarian corporate income tax. With our experienced tax and accounting advisory team we assist our clients in identifying and applying the most efficient taxation scheme in a due and compliant way.
Our tax and accounting advisory services are intended to companies selling products to foreign individuals involving deliveries from Hungary (or any other member state which is different from the state of the shipment’s destination). Such transactions, professionally labelled as ‘distant sales’ do not require that orders or payment should be made online – so, if the supply involves delivery to another Member State and to a private individual, the distant sales context applies. Practically, in these cases it is worth finding out how much is the benefit of invoicing it from under a foreign VAT registration number.
Distant sales are always B2C transactions and thus must be invoiced with VAT – all 28 Member States have set a threshold above which their local VAT rates must be charged. The EU and the national VAT legislations allow for the seller’s deciding whether, before reaching the threshold, the VAT of the country of dispatch or that of the arrival is charged (ie. the VAT of the country from where the goods are shipped or to where they are shipped).
Foreign tax liabilities related to such supplies are limited to VAT. The webshop seller does not incur foreign corporate income tax liabilities by merely selling and shipping goods to foreign individuals – neither below the threshold nor above it.
We have quantified the tax advantages available to a Hungarian webshop seller shipping goods to German private individuals, opting for an early foreign VAT registration (ie. before reaching the threshold for Germany, net EUR 100.000 / year) in the table below.
|Country of dispatch (member state)||Delivery address (member state)||German VAT registration before the threshold||Yearly net value of supplies to private individuals (EUR)||Applicable VAT|
|Tax rate||Tax amount|
|Hungary||Germany||No||EUR 99.900||27% (Hungarian)||EUR 26.973|
|Hungary||Germany||Yes||EUR 99.900||19% (German)||EUR 18.981|
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