Hungary’s tax authority announced in late 2016 that it would implement mandated real-time reporting starting July 1, 2017. As that date draws near, one certainty exists – companies with VAT liability in Hungary need to prepare now so they can nimbly adapt to new process and reporting requirements. As European governments trend toward electronic invoicing mandates to gain visibility into corporate tax liability, all eyes are watching Hungary. The NAV, Hungary’s tax authority, announced in late 2016 that it would implement mandated real-time reporting starting July 1, 2017. As that date draws near, technical specifications for the program have yet to be released, but one certainty exists – companies with VAT liability in Hungary need to prepare now so they can nimbly adapt to new process and reporting requirements. What we do know about this program from Hungary’s initial announcement is that business-to-business transactions in which VAT of at least HUF100,000 (approximately €320) is charged will be impacted. Hungarian businesses, as well as foreign entities that are VAT registered in Hungary, must comply with the legislation. These taxpayers will be required to have a direct data connection from their ERP to the NAV, as they must report sales invoice data in real time. It is likely that Hungary will require businesses to submit e-invoices to the NAV for approval before issuing the final invoice with a verification ID. We also know that the penalties associated with errors are going to be stiff. Failure to adequately comply with the legislation may result in a fine of up to HUF500,000 (approximately €1,700) per invoice, the loss of “trusted” taxpayer qualification and/or even the Authorized Economic Operator (AEO) classification – which would cause a severe disruption to business processes. Hungary, like many countries throughout the E.U., has been inching toward this legislation for a few years now. It began by placing requirements on the invoicing software that Hungarian businesses use, most recently requiring the ability to export data both by invoice issue date and by invoice number. The goal of these requirements, of course, was to make it easier for the government to gain access to tax liability details in addition to its regularly required tax reports. As this new real-time reporting compliance mandate in Hungary looms, businesses are relying on Sovos’ depth and breadth of experience in VAT reporting and determination, e-invoicing and fiscal reporting to maintain compliance around the globe.
Take ActionStay tuned to our blog as details about Hungary’s legislation emerge and to learn about our pilot program. Contact us with any questions.
About the AuthorMore Content by Steve Sprague