Regulatory updates - Hungary

Mandatory e-invoicing

Government Decree No. 273/2007 mandates energy traders to issue only e-invoices to non-residential users (Section 21/B), which are Hungarian taxpayers participating in largely B2B economic activity.

Government Decree No. 19/2009 mandates gas suppliers to issue only e-invoices to non-residential users (section 115/E).

The new requirements require business entities engaging in transactions with energy and gas suppliers to be capable of receiving e-invoices and archiving them electronically, per the latest legislation. 

With no explicit requirements on formats for electronic invoicing mentioned, it is assumed that previous formats acceptable by the Hungarian Tax Authority, such as those conforming to EN-16931 standards, will continue to be sufficient.

The main purpose of the data reconciliation procedure for the Hungarian Tax Authority (NAV) is to regularly compare the data from the real-time invoice reporting system with the information on the VAT returns, in particular the M sheets, submitted by companies.

In case NAV discovers discrepancies in the data provided by the taxpayer, a request for clarification will be sent to that taxpayer. The taxpayer has 15 days from the request's receipt to clarify discrepancies; otherwise, a fine of 300,000 HUF (ca. 730 EUR) will be paid. 

This new procedure will be in place from January 1, 2025. The amendment can be seen here, in section 133.  

As of 1 June 2022, The Hungarian Tax Authority (NAV) has introduced new ERROR, WARN, and INFO messages to the API documentation of the Online Számla Rendszer.

This update was published in the test environment of the platform and can be found in the API specifications.

Currently, the document is only available in Hungarian in the test environment but is expected to be available in the production environment in English soon.

The guidelines released by The National Tax and Customs Administration of Hungary (NAV) cover specifications and exemptions for the RTIR obligation for B2C distance sales that came into effect on 4 January 2021.

OSS and the new e-commerce regime

Foreign taxpayers intending to sign up to OSS (One Stop Shop) – the EU-wide reporting system for e-commerce – will not have to provide invoice data to the Hungarian tax authority. The OSS is a part of the new EU VAT e-commerce package entering into force on 1 July 2021.

The upcoming regulation is aimed at simplifying the VAT compliance up to 95% for e-commerce throughout the EU. It requires taxpayers to register for VAT in a single member state for all intra-EU distance sales of goods and B2C service supplies.

Furthermore, it is implied that a taxable person can declare and pay VAT on all supplies in a single electronic quarterly return and interact exclusively with the tax authority of the member state they are VAT-registered in, even in case of cross-border sales.

Exemptions from RTIR obligation

Therefore, if the taxpayer registers in the OSS system in the Member State, they do not have to complete the registration for VAT purposes in the customer’s Member State, and in case it is Hungary, they become exempt from the real-time invoice reporting obligation.

Another case of RTIR-exemption would be taxable persons obliged to VAT-register or obtain a tax identification number in Hungary only because of the distance sales to Hungarian customers.

What happens before 1 July 2021?

As previously mentioned, the new regime takes effect from 1 July 2021. Until then, under the rules of 4 January 2021, taxpayers doing cross-border sales with Hungary are still obliged to report the invoice data to the Hungarian tax authority.

However, due to the previous grace period from 1 January 2021 to 31 March 2021, the taxable persons are only required to make necessary amendments in their reporting systems in order to be able to provide invoice information for a quarterly period. In this case, NAV will also grant them an exemption from RTIR obligation until 30 June 2021.

The grace period for real-time invoice reporting (RTIR) in Hungary is coming to an end. Starting 1 April 2021, the RTIR obligation will be extended to B2C transactions and transactions issued by non-residents. To help businesses achieve and maintain compliance with the complex VAT landscape and stay ahead of developments, we’ve launched our RTIR compliance solution in Hungary.

Our service connects customers directly to the Hungarian tax authority (Nemzeti Adóés Vámhivatal, or NAV) platform, Online Számla, for a simple way to report invoices and ensure all specifications are met. Visit Hungary’s Country Profile on our e-invoicing compliance world map to view specifications and get an overview of the latest CTC requirements on our Hungary fact sheet.

Becoming and staying RTIR-compliant

In addition to fulfilling the obligation to become and stay compliant with the government’s invoice reporting regulations, finding a lasting solution for compliance brings other important benefits to businesses:

• Reducing risk – if you are not compliant, you increase your risk of fines, penalties or other financial consequences.
• Getting paid – if your e-documents are not distributed through the correct channels or do not contain accurate information, there is a risk you will not get paid on time or at all.
• Building trust – by following regulatory requirements, you are ensuring your company’s good reputation and strengthen relationships with your trading partners.

Pagero: More than just an RTIR solution

Pagero is a global service provider backed by the power of an open business network. We provide a single service that lets your business not only become and stay compliant in Hungary but also connects you with a worldwide network of private companies, governmental hubs, as well as other service providers and networks.

Pagero’s in-house regulatory affairs department closely monitors changes to regulatory frameworks. We dedicate ourselves to staying informed, anticipating obstacles and providing immediate solutions so your business stays compliant no matter what. In addition to invoicing services, we support multiple areas, including e-documents, e-archiving, e-reporting, indirect tax and data privacy.

More than a compliance service, we also specialise in AR and AP Automation and solutions for the complete digitalisation of P2P and O2C processes. These services are available to all businesses, regardless of size, industry or digital capabilities.

With all the moving parts involved when an e-invoicing mandate comes into effect, seemingly simple options for compliance often come with unexpected complications. That’s why we offer more than compliance vendors and closed networks; our ever-growing global network and service offering are built with our customers in mind so we can take care of technical and regulatory requirements for you.

1. Background

In July 2018, Hungary introduced a real-time invoice reporting (RTIR) model, whereby each taxable entity shall perform data reporting for each invoice to the National Tax and Customs Authority's (NAV) platform Online Szamla.

2. CTC model overview

Under the RTIR model, e-invoicing is not strictly regulated. Still, the supplier must report a subset of the invoice to the tax agency in a predefined format shortly after issuance and distribution to the buyer. NAV will validate each transaction and either accept or reject it.

3. Technical requirements

The section below outlines the most important technical requirements that must be followed under the HU RTIR schema:

Format:

NAV XML V3.0

I&A/eSignature:

To be able to report invoice data to the Hungarian government, the taxpayer must have a valid registration in Online Szamla and obtain access tokens that are used to identify the taxpayer when submitting reports to the platform.

Connection with mandatory infrastructure:

Taxpayers must connect with the platform via restAPI and submit the data automatically, electronically, immediately, and without human intervention after the issuance of the invoice.

Governmental validations:

Online Szamla will perform real-time validation of the submitted data and revert with a response in the form of rejection or approval.

Upon successful validation, the platform returns a Transaction ID.

In case of rejection, the data will have to be re-submitted within 3 days after the original submission took place.

4. Type of businesses in the scope

RTIR is mandatory for both Hungarian taxpayers and non-established businesses with VAT registration in the country.

5. Type of transactions in the scope

B2B domestic transactions, B2B intra-community transactions, B2C domestic transactions, Exempt domestic transactions, Export transactions, B2C distance sale transactions.

6. Document exchange

The document exchange is not regulated under the RTIR schema.

7. Timelines

RTIR has been introduced in several phases:

• 1 July 2018 for domestic B2B sales exceeding HUF 100.000 (ca EUR 320,00);
• 1 January 2021, the scope was further extended (1) to all Hungarian VAT registered entities (incl. non-established) supplying to Hungarian consumers (B2C) and (2) for invoices on intra-community and export transactions;
• The grace period from 1 January 2021 to 31 March 2021 was granted to comply with the expanded obligation due to introducing the new version 3.0 technical specifications;
• As of 1 April 2021, it will still be optional to exchange B2B e-invoices with the central platform.

8. Archiving

Under the RTIR obligation, the following components must be archived:

• VAT invoice subset submitted to Online Szamla, and
• Responses, primarily positive, with the Transaction ID.

9. Other

It is important to note that e-invoicing is not strictly regulated in Hungary, so the technical requirements for RTIR do not apply to e-invoicing. At the same time, starting from 1 April 2021, the taxpayer will be able to exchange full invoices via Online Szamla. This would, however, require the following:

• From the AR perspective, the taxpayers would have to upgrade the current integration with Online Szamla, which besides the content changes, entails some other modifications,
• From the AP perspective, it would be a brand new setup for the taxpayers, and
• An explicit documented agreement is required between each supplier and buyer who want to exchange e-invoices via Online Szamla.

10. Penalties

In cases of non-compliance, a fine up to HUF 500 000 (EUR 1600,00) per invoice will be imposed on taxpayers.

Initially, the extension of the scope was planned for 1 January 2021. However, in order to establish a smooth transition for businesses during the COVID-19 outbreak, a three-month grace period was applied. The obligation is imposed on both domestic and foreign organisations registered in Hungary for VAT purposes.

Submission requirements

Taxpayers will have to submit data on issued invoices in real-time to the National Tax and Customs Administration of Hungary (NAV) via the Online Szamla platform.

Data on invoice transactions can be submitted both individually and in batches of up to 100 items at a time. Before submitting invoices, taxpayers will be granted an RTIR submission token that will have to be used while providing the data to Online Szamla. Furthermore, an electronic reference number will be issued by the platform in return (upon successful submission) to be kept for potential future audits. In case of errors, documents will have to be re-submitted within 3 days after the original submission took place.

It is important to note that the RTIR obligation requires submission of invoice subset, i.e., not of the supplier's complete invoice. In order to ensure compliance with the GDPR (the General Data Privacy Regulation) for B2C transactions specifically, Online Szamla will reject the submission if certain personal data elements will be identified.

Technical changes

As of 1 April 2021, the taxpayers are further required to upgrade to the new NAV XML schema v3.0. for reporting.

Transactions to be included in the extended scope

Under the new schema, the following types of B2B and B2C transaction will have to be reported:

• B2B domestic transactions;
• B2B intra-community transactions;
• B2C domestic transactions;
• Exempt domestic transactions
• Export transactions
• B2C distance sale transactions.

Penalties

In cases of non-compliance, a fine up to HUF 500 000 (EUR 1600,00) per invoice will be imposed on taxpayers.

Find the most important provisions connected to the Online Invoicing System in Hungary here.

This new requirement derives out of the fact that since the end of the Brexit transition period on 31 December 2020, the UK is considered a third country from the VAT point of view of the European Union.

The fiscal representative will have to act on behalf of the company they represent, which includes representing it during VAT audits, preparing and filing the Hungarian VAT returns and assuming joint liability for the company’s obligations for VAT.

The three-month grace period will run between 1 January 2021 and 31 March 2021. During this time, no penalties will be imposed in the case of non-compliance with the extension of the RTIR obligation. This grace period will aid businesses through a smooth transition to the new system during the difficult times of the pandemic.

Extension of real-time invoice reporting in Hungary

As of 1 July 2018, it has been obligatory to provide real-time data on invoices containing VAT amounts of at least 100 000 HUF, issued for transactions between domestic taxpayers. The files are directly transmitted through The National Tax and Customs Administration of Hungary (Nemzeti Adoes Vamhivatai (NAV)) online invoicing portal, KOBAK.

The threshold has since been eliminated, and as of 1 July 2020 it has been obligatory to submit all invoices from domestic B2B transactions in real-time. Thus, all invoice data must be reported to the tax authority regardless of VAT values.

From January 2021, the RTIR obligation will be extended to include domestic B2C transactions, B2B intra-community supplies of goods and services and other export sales. Businesses will have a three-month grace period to comply with the new requirements.

New RTIR Schema

The data structure will be changed for the extended reporting obligation. Detailed invoice schemas and sample files for the updated version of the RTIR obligation are published on NAV’s website. During the grace period, XSD v2.0 schema will be allowed. As of 1 April 2021, all taxpayers will be required to comply with the XSD validation schema, v3.0.

Hungarian businesses will be required to report sales invoice data if the total invoice amount is within the following thresholds:

• Invoices with a transferred VAT amount of HUF 100,000 / EUR 320 or more within five days
• Invoices with a transferred VAT amount of HUF 500,000 / EUR 1,600 or more within 24 hours

Furthermore, a direct data connection to the Hungarian tax authority, via certified software, is required. Also, an invoice must be created no later than the 15th day after the services or goods have been delivered, and finally, reports must be transmitted immediately after the “technical creation” of an invoice.

The Hungarian Tax authority announced a short grace period for the penalties associated with a failure to submit correct reports or reports delivered outside of the allocated time. This grace period was set for 30 days, thus, ending on July 31.

The grace period is now over, and penalties for non-compliance can be issued. However, penalties can be avoided for companies acting in good faith and notifying the tax authority of any delays that are not caused by the taxpayers' own negligence.

Want to find out more?

Please do not hesitate to get in touch to know more about how Pagero can help you achieve and maintain compliance with local VAT/tax regulations.