We would like to summarize the VAT law changes in the bill passed on July 12 by the Hungarian parliament.
The bill contains legal harmonization steps in line with Council Directive 2018/1910 regarding VAT, which are primarily aimed at simplifying certain transactions affecting intra-Community goods, supplies and standardizing practices among Member States. These new rules, effective from January 1, 2020, are the following:
The simplification is subject to strict conditions; for example, when transporting goods, the potential customer and their tax number in the Member State where the goods are delivered has to be known. The fact that the goods are transported has to be indicated in the IC summary report, while both the entity transporting the goods and the potential buyer must have detailed records on the goods. The twelve-month rule is also introduced, i.e. the goods have to be withdrawn from the stock within a twelve-month time period.
Call-off stock rules were in force in Hungary before, and so transitional rules should be investigated carefully with respect to goods already transported to call-off stock.
Similarly to call-off stock, chain transaction rules also existed in Hungary previously. The rules to be applied before the quick fixes enter into force are relatively similar to the new rules to be implemented, i.e. only minor changes will be added to the currently existing regulations.
Based on the current rules, in the event that the intermediary party orders the transport of the goods, it should be deemed as the buyer of the goods. The intermediary party, however, could decide that it takes part in the chain of transactions as the seller and this decision should be supported by proper evidence. Based on the new rules, however, this fact could be verified by providing its tax number in the Member State of dispatch.
Having the buyer’s EU VAT number in the case of a VAT-exempt IC sale will be a substantive condition rather than a formal requirement. This means that it would not be possible to issue a VAT-exempt IC sale invoice without the buyer’s EU VAT number. Furthermore, the IC summary report would have to be submitted with the correct date in order to apply for the exemption.
The Global VAT Newsletter focuses on changes in compliance duties in various EU and non-EU countries