Hungary VAT compliance update
- Oct 28, 2012 | Richard Asquith
The latest Hungarian Value Added Tax Act, which has been approved, is introducing a range of new measures. Most of these aim to bring the Hungarian VAT regime more closely into line with the rest of the EU VAT compliance legislation.
The principle Hungary VAT changes include:
- all of the measures from the 2010 EU electronic VAT Directive are to be included in the Hungarian tax code. This includes the processes for validation of electronic signatures
- electronic invoices may only be issued if the customer is in full agreement
- the regularisation of information requirements for VAT exempt supplies and reverse charge (e.g. full disclosure of the foreign customers address and VAT number)
- VAT registered companies may now use the European Central Bank exchange rates for the conversion of invoice amounts from Forints into Euro’s
- confirmation that SME’s may switch from accrual VAT reporting to cash-based reporting
- new provisions for the deducibility of costs on the personal use of motor vehicles
Hungary operates one of the most restrictive VAT regimes in the European Union, with many requirements based on the pre-EU accession procedures. These changes represent an accelerated process of bring the VAT system in line with the EU VAT Directives, as required of all EU member states.