Now that the draft decree containing the rules of live invoicing has been updated on the Hungarian government’s website, it is worthwhile reviewing the rules of live invoicing entering into force from 1 July 2018, along with the changes made compared to the previous concept.
Just as a reminder: what is live invoicing?
With real-time data reporting through live invoicing, the NAV requires taxpayers to provide immediate access to invoices issued with invoicing software and having a VAT amount equal to or more than HUF 100,000 (approx. EUR 320), provided the recipient of the invoice is a taxpayer registered in Hungary.
Although not real time, the online data reporting of hand-written invoices or those issued using a printed document also fall within the category of live invoicing in Hungary. If the amount of the tax payable by a taxpayer registered in Hungary equals or is more than HUF 100,000 (approx. EUR 320), but is less than HUF 500,000 (approx. EUR 1,600), data must be reported within 5 calendar days of the invoice issue date, while if the amount of VAT equals or is more than HUF 500,000 (approx. EUR 1,600), the data must be provided within 1 calendar day of the invoice issue date, on the online platform.
Will live invoicing replace the domestic summary report?
With the introduction of live invoicing, there will no longer be any point to reporting domestic, outgoing invoices in the summary report (known as “sheet M”), however, this reporting obligation still applies to incoming invoices.
Access to incoming invoices
According to information provided by the government, a new service developed by the NAV in the system is that we will also be able to access the invoices issued to us which fall within the category of online data reporting.
VAT-registered entities also subject to law
All taxpayers registered in Hungary are subject to the data reporting obligation, so this includes foreign – i.e. not Hungarian resident – taxpayers registered for VAT. Entities with a reporting obligation must register at the NAV in advance to use the service.
What changes have been made to the draft decree compared to the previous concept?
The live invoicing rules have essentially been integrated into the VAT Act and the so-called invoicing decree. Based on information from the government, the aim of the amended decree is to define
- the data reporting process,
- the confirmation sent for successful and unsuccessful reports,
- how to re-send information once errors have been corrected,
- and the procedure to be followed in the event of shutdowns or malfunctions.
A number of specific rules have been changed compared to the previous draft, but the most evident change is probably that the data structure of the data reporting is not integrated into the schedule of the invoicing decree as previously planned, the NAV must publish a statement on this instead. It’s also good news that invoices can be recorded manually in case of lengthy problems or system shutdowns.
What are the penalties for incorrect data reporting?
Unfortunately, the penalties prescribed are quite strict: in the event of incorrect data reporting the tax authority may impose a default penalty amounting to HUF 500,000 (approx. EUR 1,600) per invoice. However, when defining the default penalty, the tax authority always has the option, and indeed the obligation, to weigh up the circumstances and assess the severity, frequency and duration of the default.
What should companies and taxpayers prepare in advance for in connection with online invoicing?
The transition obviously requires the developers of invoicing software programmes to make further IT developments. Relevant technical information is available (also in English) on the website of the NAV. It is easy to see that this change particularly affects foreign, and as already mentioned VAT-registered, companies, as they have to adapt their ERP systems to comply with the Hungarian requirements.
So it is advisable to consult with an IT specialist, and if necessary a tax expert too.
Taxpayers can already be required to perform an IT data export for inspection purposes in Hungary, i.e. to provide electronic data in a specific data structure to the tax authority. As we see that there are many questions regarding this topic, WTS Klient Hungary has set up an expert team to solve any upcoming problems.
