As of 2021, important changes being introduced to the Hungarian legislation will come into effect, such as the relief in EKAER (electronic road transport monitoring system linked to intra-Community and domestic shipments) or concerning the administration and simplification in the fulfilment of tax obligations related to distance selling, extensions of online invoice data reporting and the introduction of the e-VAT return.
The most important change in the EKAER rules is that, as of 2021, the obligation of requesting an EKAER number exists only regarding goods deemed to be risky under the previous regulations. These typically include food products, clothes as well as other products defined in a decree.
The Hungarian VAT law will be amended to be in line with EU regulations effective as of July 2021 relating to the registration of companies in the One Stop Shop (OSS) system performing distance selling to non-taxpayers.
The essence of OSS, as of 1 July, is that, if a taxable person would have to register, issue invoices, and pay VAT in more than one country as a result of B2C sales to several member states, it will be enough registering with the OSS in the home country and fulfilling tax obligations through this registration (as of 1 April, taxpayers can initiate the registration in the OSS).
The online invoice data reporting system moved to the next level from 1 January 2021, extending the online data reporting obligation even to sales to non-taxpayers, intra-Community tax-exempt sales, or export sales. This means that practically all invoices issued have to be reported from this date to the Hungarian tax authority. The system is ready to be used from 4 January. However, due to the pandemic, no default penalty is levied until 31 March 2021.
It is important to mention that invoices issued under the registration in the OSS system are exempt from online data reporting obligation.
Further technical innovation was introduced to the online invoice data reporting system which facilitates e-invoicing in Hungary. This means that the coming months will be a good time to move with the times for Hungarian invoice issuers by switching to e-invoicing.
Based on the current status, the Hungarian tax authority will prepare a draft VAT return for taxpayers from the 12th day of the month following the tax assessment period. This will be available based on VAT data for July 2021. The VAT return proposed by the tax authority will not qualify as a comprehensive VAT return, i.e. it would not include intra-Community transactions. For this reason, the draft return will not automatically become a valid tax return and it is up to the decision of the taxpayer to use it.
It is now clear that the aim of the Hungarian tax authority is to feed its system with as much information as possible in order to make risk assessment easier, gain as much information as possible about the transactions and make the operations of the companies more transparent in reducing the VAT gap very effectively.
In return, the tax authority is providing several new features that may make taxpayers’ lives easier, at least for those not having many cross-border transactions.
The Global VAT Newsletter focuses on changes in compliance duties in various EU and non-EU countries.
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