Hungarian VAT rates and VAT compliance

Hungary introduced value added tax (VAT) — known locally as ‘Általános forgalmi adó’ (AFA) — in 1988. The Hungarian Ministry of Finance and State Tax Authority are responsible for its administration.

It’s important that the correct Hungarian rates are used in accounting records and on invoices as companies are held directly liable for any errors.

All businesses that carry out a taxable activity in Hungary must register for VAT. There is no turnover threshold. Non-resident businesses selling in Hungary must appoint a fiscal representative.

The European Union (EU) sets the framework for the use of rates, but countries are still free to set their own headline rates.

The current Hungarian rates are:

To complete a VAT registration in Hungary, businesses should submit the T201 form, which is available for download on the Hungarian Tax Administration’s website. Businesses will need to provide: original certificate of VAT payer status, an extract from the company registrar that nominates the representatives and signatories, the deed of foundation, and power of attorney.

Businesses will be issued with their tax number within approximately two weeks. This number is valid from the date of submission of the application.

In Hungary, the return frequency depends on turnover:

• Less than HUF 250,000 — annual filing

• More than HUF 250,000 but less than HUF 1 million — quarterly filing

• More than HUF 1 million — monthly filing

  
  

For monthly and quarterly returns, the submission and payment deadline is the 20th of the month following the reporting period. For annual returns, the filing deadline is February 25 of the following year.

Once in possession of a Hungarian VAT number, there are compliance rules which must be followed. These include:

• Detailing information about the supplier, customers, and transaction costs on all invoices

• Issuing full invoices in accordance with the Hungarian VAT Act

• Issuing invoices in accordance with the Hungarian time of supply rules

• Processes and control issues for the use of electronic invoices

• Maintenance of books, which must be retained for at least eight years

• Treatment of credit notes, correcting VAT returns, etc.

• Translation rates for foreign currency invoices

Invoices in Hungary must include the date of issue, date of when the goods were supplied, unit price, supplier’s name, address, and registration number, name/address of the customer, the quantity and description of the saleable items or service, the rate VAT and VAT payable.

For intra-community supply of goods, a note must be added to the invoice that the transaction is ‘intra-community supply’.

For triangulation, a clear reference to EC triangulation simplification should be included. It should be indicated clearly that the recipient is liable to account for the VAT due on the supply.

The tax point (time of supply) rules in Hungary determine when the VAT is due. It’s then payable to the Hungarian tax authorities 20 days after the VAT reporting period ends (monthly or quarterly).

The tax point is the time of delivery or passage of title for goods, or completion of a service.