The incorrect or incomplete submission of M-forms may result in serious penalties for non-compliance, especially in the new, stricter regulatory environment. Let's look at why the precise completion of M-forms is important, how the data from the NAV Online Invoice system can be used, and what the most common errors are that should be avoided.
Why is it important to prepare the M-forms accurately?
Many companies prepare M-sheets manually or using macros, or software solutions to generate the return format. These methods alone do not ensure the accuracy of the data reporting as required by the tax authority, as they usually do not include automatic reconciliation with the NAV Online Invoice System.
To detect data entry errors, an increasing number of companies choose automated systems that integrate the tax authority's online invoice database with their internal accounting system. Alternatively, details of the online data reporting are imported into the accounting system, where invoices go through approval and verification processes, avoiding manual data entry. This method not only speeds up the process, but also provides greater certainty in meeting the requirements expected by the tax authority. In addition, when preparing domestic recapitulative statements, several companies use cross-checking with NAV online invoice data to ensure complete accuracy.
An important change is that as of 1 August, the amount of the default fine has increased to HUF 1 million under Government Decree 181/2024 (VII. 8.). This is particularly important for domestic recapitulative statements and online invoice data reporting services. Also, for online invoice data reporting, each incorrectly reported invoice may be subject to a separate fine, which means that the HUF 1 million fine may be incurred per invoice. To avoid this, companies should pay particular attention to providing accurate and complete data.
Automated data reconciliation solutions not only save time, but also minimise the possibility of human error. These systems help identify data recording discrepancies and ensure that invoices are correctly recorded and reported.
What is the purpose of the NAV Online invoice reconciliation?
The tax authority's modern risk analysis system compares the data on the M-sheets with the online invoice data reported by business partners, making the system highly accurate and filtering out even the smallest discrepancies. If the tax authority detects a discrepancy, a data reconciliation or a compliance audit may be carried out. It is important for businesses to conduct their own checks to identify and eliminate errors in their own accounting systems. There may also be errors in the data reporting of business partners, or the NAV online invoice data reporting may be missed altogether.
In case of discrepancies, it is advisable to decide based on the invoicelayout whether to accept the data from our own system or the data found in the online invoicing system as correct. Reconciliation with the NAV online invoice system can significantly reduce the risk of errors and allow us to better assess the accuracy of our partners' data.
By automatically reconciling data and managing discrepancies, the risk of a default fine from the tax authority can be significantly reduced.
10 typical mistakes when preparing the domestic recapitulative statements (M-sheets)
1.Mistyped invoice numbers
Due to data entry errors or the character limit of the accounting software, incorrectly recorded invoice numbers may occur.
2.Inclusion of internal reference number instead of invoice number
The internal reference number is included in the report instead of the invoice number.
3.Incorrect performance dates
Dates that differ from the actual VAT performance date are mistakenly entered into the data set, such as the invoice date, payment deadline, date of recording, or the beginning of the month for late invoices.
4.Incorrect data in case of partial tax deduction
The deductible VAT and the corresponding tax base are recorded instead of the total tax base and tax amount.
5.Only the taxable tax base and VAT are included
For invoices that contain non-taxable items, only the taxable tax base and VAT are shown in the report.
6.Inclusion of irrelevant source documents
Documents are included for which VAT deductions are not claimed, or which are not subject to data reporting obligations.
7.Incorrect handling of final invoices
Final invoices are not recorded according to the filling instructions but as general invoices.
8.Lack of original invoice number references
In the case of corrective invoices, references to the original invoice number are missing.
9.Incorrect identification of entities subject to group taxation
In case of a partner subject to group taxation, the group member's tax number is indicated instead of the group identification number – group tax number.
10.M-sheets prepared solely based on online invoice data for the given period
M-forms are prepared exclusively based on retrieving online invoice data for the specific period, without further verification.
All of the listed errors can result in inaccuracies. The consequences may include fines for non-compliance, the tax authority may require the correction of errors, initiate data reconciliation, or even start an audit procedure. It is particularly important to provide the performance date accurately, as in the case of a previously claimed VAT deduction, the legislation allows the tax authority to impose a tax penalty in addition to the default fine due to VAT shortage.
I am interested in automated M-sheets preparation
Efficient preparation of M-forms: Tips and advice
AI reconciliation
To reduce the administrative burden, you should consider automated solutions. AI-based systems are capable of recognizing typing errors, inaccurate entries, and comparing invoice numbers with online invoice data, thereby minimizing the possibility of human errors and ensuring regulatory compliance.
Applying reverse comparison
When preparing the domestic recapitulative statement, the obvious method is to compare the invoices listed in the VAT analytics with the data from the online invoice reporting. This cross-checking method helps identify any discrepancies. However, it may also be worthwhile to perform a reverse check: to examine whether all the invoices recorded in the online invoicing system can be found in our own VAT analytics.
This reverse comparison can help uncover any invoices that may have been overlooked, which would entitle us to tax deductions for the given period.
This is especially important if the company processes a large volume of invoice data. This way, we can recognize invoices that we already have but may not have been recorded yet.
Options for data supplementation from the NAV online invoicing system
Data from the online invoicing system can be an important tool to complement internal data. For example, in the case of corrective invoices, they can help to ensure that the original invoice numbers are correctly recorded or that final invoices are accurately reported. In addition to the examples mentioned above, NAV Online Invoice System data can also be useful for filling in other missing data, such as the date of fulfilment or the total VAT amount.
By using data from the online invoicing system, we can correct the deficiencies in our records. A common issue is that, in the case of correction invoices, the reference to the original invoice number is not recorded, which prevents the creation of a proper invoice chain. This potential for error can result in serious penalties for non-compliance, which can be easily avoided by using the online system data. This deficiency can be compensated for from the tax authority’s system, provided that the supplier has correctly reported the data to the tax authority.
In addition, final invoices can be identified from the online invoice reporting data. Appendix 10 to the VAT Act requires the correct reporting of final invoices. With the help of automated solutions, final invoices can be split into two lines: one for the total value of the transaction and one for the balance after the advance payment, in accordance with the VAT return filing guide.
Optimizing the tax administration process with digital solutions
Accurate and error-free preparation of M-sheets is crucial not only for regulatory compliance but also for reducing administrative costs and minimizing tax authority audits. In the long run, digital solutions save time and money for companies.
Automated systems and access to data from the online invoice system provide significant advantages and help avoid penalties for non-compliance. This allows companies to better manage the growing administrative burden while meeting legal requirements.
By consistently focusing on accuracy and utilizing the most advanced digital solutions, businesses can safely navigate through the risk analysis systems of the tax authority.
