Tax digitalisation, including the digitalisation of VAT has become a top priority in corporate financial processes. In recent years, the Hungarian tax authority (NAV) has taken significant steps toward automating VAT returns. As part of this digital transformation of Hungary, the e-VAT system was introduced last year, including the e-VAT web interface and the option for machine-to-machine, i.e. M2M VAT return.
With the phase-out of the General Form Completion Program (ÁNYK) and NAV’s new digital transformation plan, these solutions are no longer optional. The use of the e-VAT system is expected to become mandatory soon, meaning every company must undergo the digital transformation. Since this requires thorough preparation, waiting until the last minute is not advisable. Which solution is optimal for your business, and how should you prepare? Our article explores these questions.
The e-VAT system
End of October 2025, NAV announced that as of 1 January 2027, the widely used ÁNYK program will be discontinued for VAT return submissions in Hungary. After this phase-out, VAT returns can only be filed through the e-VAT system.
Compared to traditional form filling (similar to the previously introduced e-PIT system), e-VAT offers several advantages:
- NAV performs validation on submitted or approved data.
- Significantly less administration and data collection.
- Eliminates manual errors.
- Provides more accurate data to the tax authority.
However, unlike the e-PIT system, e-VAT returns do not become automatically accepted after the deadline – they must always be explicitly approved.
The e-VAT web interface: ideal for smaller businesses
Within the e-VAT system, the web interface is the optimal solution for smaller companies with fewer transactions because it is quick and simple. Similar to e-PIT, NAV generates a VAT return draft based on available data (online invoices, cash registers, customs data, master data). The taxpayer can approve the draft, add missing items (e.g., intra-community acquisitions) and modify details (e.g., decide whether to exercise the deduction right immediately or later for incoming invoices – NAV cannot determine this from its data).
Advantages of filing VAT returns via the web interface:
- Much less administration and manual work compared to ÁNYK form filling.
- Requires less preparation than M2M VAT return via machine-to-machine interface. Drafts are already available online – no development or transition time needed.
M2M VAT return: the choice for larger enterprises
For companies with high volumes of complex transactions, submitting VAT return data via a machine-to-machine interface – M2M VAT return – is the right solution. In their case, reviewing the web-based draft can be time-consuming and may lack critical data (e.g., intra-community acquisitions or services), as NAV does not have this information.
A well-developed M2M solution automates VAT returns in a tailored way, integrating all necessary data for a complete VAT return, including cross-border transactions. To do this, you need to prepare VAT analytics based on a predefined structure compile and then generate an XML file and submit it to the tax authority. The NAV validates the data and creates a draft return, which is sent back for approval. The taxpayer can still modify or supplement the draft before acceptance.
Implementing M2M VAT return and related costs
Before switching to M2M VAT return, companies must assess their current VAT reporting processes. Key questions include:
- How many accounting, ERP, and invoicing systems are in use?
- Which data comes from which system?
- How are incoming data sets consolidated?
- Are transactions coded with the correct VAT codes?
To build the required XML structure, you need accurate data, keys, authorizations, and technical key integration. VAT codes must be aligned with NAV’s coding, then develop the program to create XML packages, establish API connections, and set up automation. This implementation process can take one to two weeks for smaller companies and up to one to two months for larger companies, and of course, it involves costs. The costs are as follows:
- Initial costs: Process assessment, consulting fees, and IT development (internal or external). Each company requires a customised solution for data integration.
- Ongoing costs: Monthly fees are much lower, typically covering licenses and maintenance.
- Future updates: If NAV changes XML schemas or releases new versions, the M2M solution must be updated – these incur additional costs.
The entire filing process can be automated through machine-to-machine communication, so although it may be time-consuming and require process assessment and development initially, it can yield significant savings in the long term.
M2M VAT return and tax audits
NAV’s long-term goal is to automate tax processes as much as possible. To encourage adoption, the tax authority offers a 15-day penalty-free self-revision window for M2M VAT returns. This means that when the NAV finds any discrepancies while validating the data received, i.e., comparing it with its own data, it allows a 15-day period for interest-free self-revision. The tax authority cannot audit the returns submitted by reliable taxpayers via M2M connection for 15 days from the due date, meaning that taxpayers can correct their VAT data without legal consequences or costs.
When should you start?
Most companies are understandably cost-sensitive and only invest in expensive developments when absolutely necessary – usually when required by law. However, implementing the M2M VAT return system early offers several advantages:
- Cost optimisation: Every step towards automation reduces time and administration in the long term, allowing colleagues involved in preparing tax returns to spend their time on truly useful, high value-added work rather than unnecessary and time-consuming data browsing. In addition, due to the changing legal environment, i.e., with the approaching mandatory implementation of e-VAT, interest in M2M VAT solutions is expected to increase, and prices may rise as demand increases.
- Avoid time pressure: NAV provides time and testing opportunities for companies to prepare. A test environment is already available, so experimenting now is wise before deadlines become tight.
- Error prevention: Testing helps identify common issues (e.g., incomplete data such as missing addresses or tax IDs, incorrect XML structure, wrong VAT coding). Implementing internal validation before submission ensures errors are caught early, reducing risks and delays.
The experienced tax and IT experts of WTS Klient Hungary can assist you in transitioning to the e-VAT system and preparing for M2M VAT return implementation. Our own M2M VAT solution can be tailored to your company’s unique needs. Don’t wait until the last minute – start planning now and secure expert support for a smooth transition!
This article provides general information and does not constitute advice.
