Hungary: Online invoice reporting and self-billing

Anyone who deals with Hungarian tax or commercial issues is probably aware of the Hungarian online invoice reporting obligation and the administrative and IT obstacles that come with it. The online invoice data reporting system moved to the next level on 1 January 2021, extending this obligation to almost all sales invoices issued by Hungarian taxpayers, practically meaning that most invoices issued have to be reported from this date. Based on our experience, the Hungarian Tax Authorities use the data fed into the system and cross-check them with VAT reports submitted by the invoice recipients.

An interesting topic in this regard is the online reporting of self-billing, which can be an even bigger deal if two Hungarian entities are involved in the self-billing structure, taking into consideration that the parties have joint and several liability according to Hungarian VAT law regarding invoice issuance as well as online invoice reporting.

As online invoice reporting has been part of our lives for some time, usually Hungarian companies’ invoicing systems are provided with online invoice reporting features. This means that adding a solution that deals with the online reporting of self-billing does not require a huge effort from the Hungarian taxpayers. The question arises about how self-billing transactions should be treated from an online reporting perspective if a non-Hungarian party is involved.

Let us investigate first the case where a non-Hungarian (EU or third country) company supplies to a Hungarian taxpayer, and they agree on self-billing. This means that the Hungarian party would issue the invoices on behalf of the foreign supplier. Such invoices do not fall under Hungarian invoicing regulations, meaning that such invoices do not have to be reported to the Hungarian Tax Authority by either party.

However, complications arise in cases that are exactly the other way around, i.e. when a Hungarian supplier sells goods or provides services to a non-Hungarian customer, and they agree on self-billing. This means that the foreign entity would issue invoices falling under Hungarian invoicing regulations, thus resulting in a reporting obligation. However, it is not that obvious which entity is obliged to perform the reporting. Based on the corresponding legal provisions, the party selling the goods or providing the service must meet this obligation. Since, in the cases described above, the invoices are issued by the foreign entity, reporting would have to be carried out from this entity’s invoicing system automatically, immediately and without any human intervention. This approach certainly creates technical issues, as the foreign companies’ invoicing software may not be prepared for Hungarian online invoice reporting.

To resolve this conflict, a new regulation was introduced providing that, if invoicing is assumed by a customer who has neither a registered seat in Hungary nor a Hungarian VAT registration with respect to the transactions invoiced, online invoice reporting does not have to be performed by the invoicing software of the customer. In such cases, reporting can be conducted by a different software, provided that this other software has a machine-to-machine connection and transmission is being performed electronically. In such cases, online invoice reporting must be conducted within six days calculated from the issue date of the invoice.

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