The journey of a product often doesn’t begin where it’s sold – and doesn’t end where it’s purchased.

When a third-country company, i.e. a business based outside the EU, brings goods into Hungary through its own supply chain, this involves more than just logistics: it raises significant tax and VAT-related questions. Delivering products to a warehouse in Hungary and selling them via local retail chains creates VAT registration obligations that many foreign businesses only discover after the fact.

When is VAT registration required in Hungary for non-EU companies?

Just like companies based in the EU, non-EU companies are also required to register for VAT in Hungary in certain cases. This includes, for example, if a non-EU company:

• sells products to Hungarian customers,
• delivers goods from a rented warehouse located in Hungary, or
• imports products into Hungary and sells them there.

The obligation to register does not depend on the company’s registered seat, but rather on:

• its economic presence in Hungary, and
• whether a Hungarian VAT liability arises.

If the company carries out activities in Hungary that trigger VAT obligations, it must:

• register for VAT in Hungary,
• submit regular VAT returns, and
• pay the VAT due to the Hungarian tax authority.

VAT registration in Hungary is not only a matter of legal compliance. It also allows the company to deduct input VAT on local purchases, helping to optimise financial processes while staying in line with local regulations. Furthermore, it ensures transparency of economic activity for Hungarian authorities. Failure to register can result in tax penalties, late payment interest, and other legal consequences.

Let’s look at a specific example!

Self-managed supply chain into Hungary

A third-country company sells products – manufactured outside the EU – through a European retail chain, including stores in Hungary. The goods are first imported into a non-Hungarian EU warehouse, where customs clearance takes place. From there, the company transfers the goods to the Hungarian warehouse of the retail chain (with retention of title), and the products are ultimately sold: first to the retail chain, then to end customers in stores.

In this case, the company’s activity in Hungary starts with the intra-EU transfer of goods. Since the goods are moved into Hungary through the company’s own logistics, the transaction qualifies as an intra-Community acquisition for Hungarian VAT purposes.

Under Section 142 of the Hungarian VAT Act (Act CXXVII of 2007):

• the purchaser of the goods is liable for the VAT,
• but also entitled to deduct the VAT paid,
• so the transaction must be declared in the VAT return as both payable and deductible VAT.

Selling goods to Hungarian customers

The goods are then sold in Hungary to the retail chain, therefore the transaction generates Hungarian VAT liability. It means that the company requires a Hungarian tax number, must submit regular VAT returns and needs VAT registration in Hungary. Further justification for Hungarian VAT registration arises from the fact that the company performs economic activity in Hungary by moving goods into a local (non-owned) warehouse and subsequently selling them.

This example clearly shows that even without a physical presence (e.g. a legal entity or office), sales activity can still trigger tax obligations in Hungary if the goods are moved to and sold from a Hungarian warehouse. Therefore, VAT registration is not merely a formal step but a crucial compliance requirement for lawful operations.

The role of a fiscal representative

Importantly, if a non-EU company is required to register for VAT in Hungary, it can only do so through a fiscal representative, as required by Hungarian law. This means the company must appoint a licensed fiscal representative, registered in Hungary, who will:

• handle communications with the Hungarian tax authority,
• file VAT returns,
• fulfill VAT payment obligations, and
• ensure full legal compliance.

The fiscal representative is liable for fulfilling tax obligations and represents the non-EU company in all Hungarian tax-related matters. This structure enhances the security and transparency of the Hungarian tax system and offers guarantees to the tax authority.

A fiscal representative is not just an administrative intermediary – they serve as the company’s official face before the tax authority in Hungary. Selecting the right representative is therefore a strategic decision that can have long-term impacts on the company’s operations in Hungary.

With a strong international background and in-depth local expertise, WTS offers reliable fiscal representation tailored to the specific needs of third-country companies. We understand that fiscal representation is a matter of responsibility and trust, and our English-speaking tax advisers are happy to answer any questions you may have.

This article is for general information purposes only and should not be considered as advice.