In the previous parts of our series on financial representation we looked at the importance and the necessity of financial representation. In the first article we dealt with the notion of VAT-registered taxpayers in Hungary, while in the second article we examined who can be a financial representative. In this article we examine the possibility and advantages of company representation at the NAV more generally, and see how a representative can really help with managing tax affairs.
Company representation
Companies are generally represented by their senior executives in various procedures, and the same applies for tax matters at the NAV. The company representation method is always clearly stated in the certificate of incorporation: a person entitled to represent the company can act independently, but often the joint approval of more than one representative is necessary for any given decision.
In practice, this frequently means a very complicated authorisation procedure, particularly in the case of joint signature rights of several managing directors, so most of the time, companies (and this applies for foreign VAT-registered companies too) engage employees of legal age as well as lawyers, tax consultants, tax experts, certified tax experts, accountants, auditors or an employee of a business organisation authorised to perform accounting, bookkeeping or tax consultancy activities to manage their tax affairs. Generally this means permanently engaging or authorising an external firm performing bookkeeping and tax consultancy activities.
Permanent authorisation
First of all, when the VAT-registered taxpayer is registered, the persons authorised to represent the company must be reported on Hungarian form no. T201. Subsequently, the representatives reported on form T201 submit an EGYKE form with the information about the person to be authorised, the legal grounds for the authorisation, and the issues that the authorisation applies to. Let us take a look at how company representation at the NAV looks like in this case, and how foreign companies can benefit from the permanent authorisation given this way.
Digital tax declaration
The registered, authorised and permanent representative can submit the company’s tax returns and other forms for the NAV online, through the government portal; data on forwarded forms can subsequently be queried online as well.
Master data and tax account queries
Additionally, and at any time, the authorised representative can request the master data of the represented company, the detailed company data reported to the NAV, it can receive information on the frequency of tax returns to be submitted by the company and on whether the company qualifies as a reliable or risky taxpayer based on the automatic quarterly rating by the tax authority in Hungary.
One of the most important advantages of company representation at the NAV is the ability to query tax accounts at any time; the company’s authorised representative can therefore continually monitor the status and receipt or booking of individual tax payments, and give prompt information on any potential tax shortfalls or payment obligations of the company, or on the amount of any default charges imposed by the NAV on the tax account.
Why is this good in practice?
As is clear from the example above, a tax consultant or accountant that can speak Hungarian or a service provider involved in such an activity can offer many specific advantages.
Authorisation for a given company simplifies life in terms of fulfilling domestic tax liabilities as well as in grasping and evaluating the company’s tax situation.
If there is a problem, the authorised representative can contact the competent tax authority administrator directly through the NAV’s call centre. This is particularly important for VAT-registered taxpayers, where the most “visible” sign of their economic presence in Hungary is a domestic tax number, and they have no employees of their own who can carry out these administrative tasks in Hungarian.
Articles related to the topic:
VAT-registered taxpayer now also defined in law: how can they interact with the NAV?
Obligation or opportunity? Who can be a fiscal representative?
Generalised reverse charge mechanism – growing administration?
