Purpose and functioning of the data reconciliation procedure
In case the tax authority discovers discrepancies in the data provided by the taxpayer or another taxpayer with whom the taxpayer is connected, the tax authority will request the taxpayer to clarify the discrepancies within the framework of a data reconciliation procedure.
The main feature of the new procedure is that the Hungarian tax authority (’HUTA’) will regularly compare the data from the online invoicing system with the information contained in the VAT returns submitted by businesses, in particular the M sheets.
If the HUTA finds discrepancies between the data, it may request the taxpayer to clarify the discrepancies within 15 days. Failing to do so will result in a default fine of HUF 300,000.
How does the data reconciliation procedure affect companies?
Focus on M-sheets and real-time invoice reporting
Following a legislative amendment discussed in a previous blog, M-sheets will have to be prepared to the exact HUF from 2025, eliminating the rounding practice that has been in place until now. This amendment is also aimed at ensuring that both the issuer and the recipient of the invoice provide accurate data, as the HUTA will initiate a data reconciliation procedure in case of discrepancies.
Short response time
Taxpayers have 15 days to clarify discrepancies identified by the HUTA
Based on the experience of RSM's experts, taxpayers will only be able to meet the 15-day deadline if the data discrepancies are reconciled and the incorrect or incomplete data corrected by a software solution.
Using the electronic interface
The entire procedure is carried out electronically. It is expected that the official document will be received at the taxpayer's company gateway and the discrepancies will have to be cleared through the HUTA Customer Portal.
DATA RECONCILIATION PROCEDURE – REQUEST EXPERT ASSISTANCE
Data reconciliation procedure - what steps are proposed to prevent discrepancies?
The HUTA procedure to be introduced in 2025 encourages companies to minimise discrepancies when preparing their M sheets.
- Regular checking and reconciliation of data: regular reconciliation of data from the online invoicing system with the information on the M sheets is essential.
- Technological improvements: introduction of automated checking solutions that minimise human error and are able to detect discrepancies such as account number misspellings or abbreviations.
However, it is important to emphasise that the reason for the discrepancy may also arise on the invoice issuer side, resulting in incorrect invoice reporting. It is therefore necessary to pay particular attention to the accuracy of data reporting on both the invoicing and the receiving side.
On both sides, it is therefore reasonable to carry out checks during the invoicing and return preparation process to ensure that any errors and discrepancies are detected and corrected early, before the returns are submitted.
The maximum elimination of potential risks can be achieved by fully checking
- the correctness of the data in our own invoices and the related reporting,
- the data on the invoices received and the online invoice data available from the tax authorities
- and the data on the M sheets.
I am interested in RSM's digital data reconciliation solution
Factors leading to a data reconciliation procedure
- Data entry inaccuracies: manual errors such as typos or abbreviation of account number in ERP systems. Whether the invoice number is inaccurately entered in the accounting system or the full character length is entered, we will encounter a discrepancy with the data in the online invoice system, which may also result in a data reconciliation procedure, so we should not only focus on the invoice matching the date and amount values.
- Accurate invoice data expressed in HUF: differences in amounts between the data on the M sheets and the invoice data in the online invoice system may also mean a discrepancy if they do not fully match. HUTA is expected to apply reasonable error-tolerance principles, but M-sheets should still contain the most accurate data possible.
- Missing data reporting: can also trigger a data reconciliation procedure if the invoice issuer fails to report the invoice data, or if the data is not provided in accordance with the invoice, with data other than the invoice description.
In our previous post, you can read more about the most common types of M-sheets failures.
What are the benefits of preparing for change?
The new procedure brings not only challenges but also opportunities for those who react in time. By ensuring accurate reporting, taxpayers:
- Minimise the number of HUTA queries: automated checks can reduce the necessity for data reconciliation procedures. On the invoice issuer side, by carrying out a regular online invoice audit, and on the invoice recipient side, by reconciling online invoice data with their own records at the latest when preparing the VAT return.
- The risk of fines can be reduced: by identifying and correcting discrepancies in time, severe penalties can be avoided. Preventing data reconciliation procedures should be aimed at, however, if the data reconciliation procedure is not followed, more serious tax administrative procedure can be expected and the tax authority will order a compliance investigation or tax audit in addition to the fine for non-compliance.
- Efficiency can be increased: well-organised processes not only help to meet tax authority requirements, but also to optimise internal operations. Today, if you want to meet the requirements efficiently without increasing administrative time, it is worth considering automated solutions.
Automated data analysis and optimisation
The introduction of the new tax administration procedure is a clear sign of the HUTA's increasing emphasis on digital data analysis and transparency. Preparing in time and using the right data analytics tools is essential to comply with the new regulation, and companies that optimise their data reporting processes can not only avoid penalties but also gain a competitive advantage in an increasingly data-driven economic environment.
