What is the VAT rate in Hungary?
The standard VAT rate is 27 percent. This is the highest VAT rate in Europe and possibly in the world. There is also a reduced rate of 5 percent and 18 percent for certain goods and services.
Filing deadlines
Newly VAT registered businesses are required to file VAT returns on a monthly basis. VAT returns, ESPL, itemized VAT report and Intrastat as well as tax payment are due on the 20th day following the subject month.
Itemized VAT report
If your transactions involve supplies or purchases with VAT exceeding HUF 1 M (approximately EUR 3 200) for individual transaction or for an individual business partner, you may need to file itemized VAT report, detailing these transactions one by one. Credit/debit notes issued or received should also be considered in the count and reported, if needed.
VAT recovery
VAT reclaims are submitted as part of the VAT return. The Hungarian Tax Authority (HU TA) may carry out tax audits before executing VAT reclaims – typically, these are initiated within two weeks from the filing the VAT return requesting the VAT reclaim. The standard duration of a tax audit is 45 days, which can be extended for an additional 90 days. Depending on conditions, the HU TA will refund VAT is due within 45 or 75 days from the filing. EU entities may receive VAT reclaims from the HU TA to any European target bank account they have. Payments can be done from any bank account but must arrive to the HU TA before the filing deadline (estimate at least 3-4 days before the deadline).
Imports
Imports from outside the EU to Hungary are taxable transactions and thus only VAT registered entities may be importers. Imports may be carried out in Hungary only in case the importer holds a VPID/EORI registration number, identifying the importer during customs procedures. Exception applies to businesses that rely on indirect customs representatives. We do not provide customs representation but can recommend local customs experts.
Record keeping
If you are registered for VAT in Hungary you are subject to other local obligations, such as recordkeeping, invoicing rules (including requirement to use invoicing software with electronic communication link with HU TA),statistical reporting and potentially EKAER. Termination of the fiscal or tax representation service agreement does not affect your Hungarian tax liabilities. If you cease to carry out business activity in Hungary, you may wish to deregister from VAT in Hungary. If you apply zero-rating in relation to exports or Intra-Community supply of goods, you will need to support the zero-rating with additional documentation, such as transport documents or customs exit documents.
Invoicing requirements
From 2016 you are required to use invoicing software that is capable of sending pre-defined reports to the HU TA. Software must comply with other requirements too, such as sequential invoicing, closed audit trail, etc. If you issue invoices, you are required to report to the HU TA the invoicing software you use. Failure to report invoicing software may result in penalties and more frequent tax audits.
