Hungarian VAT

Hungary introduced Value Added Tax (VAT) in 1988, and is termed Általános forgalmi adó locally (AFA).

The current VAT Act 2008 is based on the European Union’s EU VAT Directive, which all member states must implement. This includes the rules for Hungarian VAT registrations, returns, compliance, Intrastat and EC Sales Lists.

The Hungarian Ministry of Finance and State Tax Authority are responsible for the administration of the VAT regime. In support of the VAT Act, they produce the Tax Authority Bulletin, which provides non-binding guidance on day-to-day Hungarian VAT compliance issues.

If a foreign company is selling goods or services in Hungary, then it may have to VAT register as a non-resident VAT trader. Typical examples of where this is required include:

• Importing goods into Europe through Hungary.
• Intra-community sales (dispatches) or purchases (acquisitions) of goods from another European Union member state.
• Buying and selling goods in Hungary, known as domestic supplies.
• Storing goods under consignment stock arrangements in Hungary for sales to local customers.
• Sales over the internet to Hungarian consumers, subject to a local distance selling threshold.
• Holding live events, exhibitions etc with paid admission on the door
• If a company is otherwise a non-VAT trader, but is receiving services in Hungary under the reverse charge rule.
• The self supply of goods.

After the implementation of the 2010 EU VAT package, there are now very limited circumstances where a foreign business supplying only services must VAT register in Hungary.

Note that providers of electronic, broadcast or telecoms services to consumers in Hungary only have to VAT register in one EU country under the MOSS scheme to file a single return covering all 27 member states.