At present taxpayers registered in Hungary are required to provide additional information on invoices which include at least 1,000,000 HUF VAT. This is an obligation for both the taxpayer registered in Hungary issuing such an invoice and the registered taxpayer accepting …
Real time data service and summary statement
Radical change in the obligation to provide a summary statement
At present taxpayers registered in Hungary are required to provide additional information on invoices which include at least 1,000,000 HUF VAT. This is an obligation for both the taxpayer registered in Hungary issuing such an invoice and the registered taxpayer accepting such an invoice, if the acceptor is deducting the input VAT included in the invoice. This requirement has to be fulfilled retrospectively together with the VAT return on the so called “M sheet”.
At present 5% of the taxpayers submitting a VAT declaration are involved with this obligation.
According to a new proposal of the Hungarian Government from the 1st January 2017 the limit of this obligation will be lowered to 100,000 HUF meaning that the scale of the taxpayers involved with this obligation will grow significantly.
According to the proposal, all invoices issued by a taxpayer registered in Hungary which include at least 100 000 HUF VAT will have to be included in the summary statement (M sheet) of the issuer. On the receiver’s side, all taxpayers registered in Hungary accepting an invoice which includes at least 100,000 HUF VAT, will have to include this invoice in their summary statement if they are to deduct VAT on the basis of this invoice.
New requirements for invoicing software
Parallel to the changes in the obligation to provide a summary statement, the requirements regarding invoicing software will also change according to the new government proposal.
As you may know from 2014 businesses issuing invoices from their Hungarian VAT number are required to inform the authorities about the invoicing software they use. The invoicing software used must comply with strict requirements such as sequential numbering of the invoices, etc. Failure to use the appropriate software and failure to report it results in administrative penalty of up to EUR 1,700. Examples of inappropriate invoicing software include the use of Microsoft Excel or Word.
From 2016 the invoicing software must also be capable of collecting data in a pre-defined format to the Hungarian Tax Authority in case of the tax audit. The Hungarian Tax Authority has issued a detailed guidance on how the standard accounting file (SAF) should look like, more specifically which fields should be reported and how.
You may find more information about the structure of the SAF in Schedule 3.
As the continuation of this process, according to the new proposal of the Hungarian Government, businesses issuing invoices using an invoicing software will be required to provide real time data regarding these invoices. The real time date provision will have to include all transactions in which another business with a Hungarian tax number is involved and the invoice includes at least 100,000 HUF VAT.
The new real time data providing requirement will be introduced in two steps. As the first step from the 1st January 2017 (as a test phase) it will be optional to provide the additional data. The system will go live and the new requirement will become an obligation from the 1st July 2017.
The new requirement assumes additional IT development in terms of the invoicing software on the side of the taxpayers issuing invoices. Since the invoicing software is supposed to be able to provide data for the Tax Authority in case of an audit since the 1st of January 2016, the new requirement is not supposed to put an excessive administrative burden on the taxpayers.
As these rules are in the proposal phase right now, nothing is certain until the Hungarian Parliament approves them. What is certain is that it is never too early to start preparing for these changes, which will affect the administrative obligations of a great number of business.
What this means potentially to your business
If you are already obliged to hand in summary statements at present, the only change in this respect will be that you will have to include more data on these sheets. If you issued, or accepted invoices with at least 100,000 HUF VAT, but less than 1,000,000 HUF VAT, you will have to start handing in summary statements (“M” sheets) as part of your VAT declaration.
Regarding the new requirements for the invoicing software, you will need to make your invoicing software capable of real time data transfer by 1st of July 2017 at the latest.
Dániel Sztankó
RSM DTM International VAT Services LLC
