VAT compliance basics for non-residents

Representation

Foreign companies are generally registered for VAT purposes in Hungary if they carry out VAT payable transactions in the territory of Hungary.

Non-residents registered for VAT in Hungary may appoint a tax advisor, tax expert, chartered tax expert or an employee of a company authorised to provide tax advisory and accounting services. Non-residents may appoint a fiscal representative, which may only be a Hungarian business entity that complies with strict legal requirements and has joint and several liability with the foreign company. Although engaging a tax representative is generally optional, it is mandatory for non-residents outside of the EU.

VAT reporting frequency

In Hungary, no draft VAT reporting exists. VAT returns with final figures have to be submitted on a monthly, quarterly or annual basis. Generally, VAT registered entities are required to file VAT returns quarterly. However, newly registered taxpayers are subject to monthly filing in the first two years of their operations. Filing frequency should be determined at the beginning of the tax year; however, it may change during the year. At the beginning of the year, VAT balance (payable or reclaimable) of the second year preceding the tax year should be reviewed (e.g. for 2020, VAT figures for 2018), filing frequency is

• yearly, if it has not reached HUF 250,000 (approximately EUR 760),
• quarterly, if it has reached HUF 250,000 but has not reach HUF 1,000,000 (approximately EUR 3,000) payable,
• monthly, if it has exceeded HUF 1,000,000 payable.

The quarterly frequency should be switched to monthly during the tax year, if the accumulated payable VAT reaches HUF 1,000,000. In certain cases, taxpayers with a quarterly reporting liability may request the tax authority to change to monthly filings.

Intra-Community summary reports are also to be filed quarterly. However, it should be switched to monthly if VAT reporting is switched to monthly or intra-Community deliveries or intra-Community acquisitions of goods in a period reach EUR 50,000. Monthly filing frequency for quarterly VAT reporters should be switched back to quarterly if intra-Community deliveries or intra-community acquisitions of goods do not reach EUR 50,000 in four consecutive quarters.

The VAT return and intra-Community summary report have to be submitted by the 20th day following the reporting period. Taxpayers with an annual reporting liability have to submit their VAT return by 25 February following the tax year.

VAT payment and reclaim

VAT payment should be managed by the deadline for the submission of the VAT return.In general, the deadline for the VAT refund is 75 days from the date of receipt of the VAT return. However, if all incoming invoices with VAT reported are financially settled, this fact can be marked in the VAT return and, in this case, the VAT amount would be transferred back within 30 days or 45 days (if the refund exceeds HUF 1,000,000, approximately EUR 3,000). Note that the tax authority may levy penalties if the declaration regarding the financial settlement is incorrect. VAT can be reclaimed, if it reaches HUF 1,000,000 (approximately EUR 3,000) in the case of monthly VAT reports and HUF 250,000 (approximately EUR 760) in the case of quarterly VAT reports.