The Public CbCR

Public CbCR is a public, country-by-country report containing the tax and financial information of multinational corporate groups. These companies have already provided similar data to tax authorities (CbCR), but until now, the data provided has been used exclusively for the internal control and risk analysis purposes of the tax authorities. Public CbCR, on the other hand, is a public document.

Who is subject to the reporting obligation?

The Public CbCR must be prepared and published by companies and groups of companies whose consolidated revenue exceeds EUR 750 million (HUF 275 billion in Hungary) in two consecutive financial years. In the case of a corporate group, the obligation generally falls onthe ultimate parent entity. However, if the ultimate parent entity is not subject to EU jurisdiction, EU-based subsidiaries and branches may also become obliged. This means that a Hungarian subsidiary may become directly subject to the obligation if it has a non-EU parent company and the group’s consolidated revenue reaches the EUR 750 million threshold – even if such an obligation does not exist in the parent company’s country of residence.

What must the Public CbCR include?

The report must present, on a country-by-country basis, among others, the name of the company, the currency used, the revenues, the profit or loss before tax, the corporate income tax paid and accrued, the retained earnings, the number of employees, the list of group entities and the description of main business activities. The report must be prepared using a standard template provided by the European Commission and submitted in a machine-readable format.

Which Public CbCR reporting deadline applies to whom?

The obligation applies for the first time to financial years starting on or after 22 June 2024. Accordingly, for companies with a calendar financial year, the first affected year ends on 31 December 2025. Based on this, the Public CbCR reporting deadline is as follows:

• for parent companies: 30 June 2026
• for standalone entities: 31 May 2026

The report must be made publicly available on the company’s website for at least five years.

Who is responsible?

The auditor is required to verify whether the report has been prepared and whether it complies with legal requirements. If the obliged company fails to file or publish the report, it may face consequences under the Hungarian Accounting Act. The executive officers and members of the supervisory board bear joint responsibility for compliance.

Steps to take before the Public CbCR reporting deadline

1. Identifying the obligated entities: Within the group, it must be identified which entity is obligated. If the ultimate parent entity is located outside the EU, the obligation of the Hungarian subsidiary may arise – considering the EUR 750 million consolidated revenue threshold.

2. Coordination with the parent company: In the case of a Hungarian subsidiary or branch of a third-country parent company, data requests must be initiated in time. The subsidiary or branch is required to prepare the report based on the data available to it even if the parent company does not cooperate. In such cases, the Public CbCR must be supplemented with a statement indicating that the ultimate parent entity did not provide the necessary information.

3. Assessing data sources: The report is typically compiled from the consolidated financial statements, internal CbCR reporting and local corporate income tax returns. These data sources recommended to be checked now for consistency and availability.

4. Preparation for reputational risks: After the Public CbCR reporting deadline, the data will be publicly accessible. Investors, business partners and the media will analyse how reported profits in each country compare to the corporate income tax actually paid.

5. Ensuring publication: The report must be prepared in a machine-readable format and made available on the company’s website for at least five years.

The tax consulting team of WTS Klient Hungary has more than two decades of experience in supporting the tax affairs of international corporate groups, including cross-border tax planning and structuring, taking into account EU regulations, bilateral tax treaties and the specific features of the Hungarian tax environment. If the Public CbCR reporting deadline affects you as well, and you need assistance in interpreting or fulfilling the obligation, please contact us with confidence.

A The first Public CbCR reporting deadline is approaching! bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

What is Public CbCR?

Public CbCR is a public, country-by-country report containing the tax and financial information of multinational corporate groups. These companies have already provided similar data to tax authorities (CbCR), but until now, the data provided has been used exclusively for the internal control and risk analysis purposes of the tax authorities. Public CbCR, on the other hand, is a public document.

Who is subject to Public CbCR?

The reporting and disclosure obligation applies to companies and corporate groups with consolidated annual revenues exceeding EUR 750 million for two consecutive financial years. As a general rule, the ultimate parent company is responsible for submitting the report. However, if the parent company is not governed by EU law, then any EU-based subsidiaries or branches must also comply and publish the report themselves.

What must be included?

The Public CbCR must disclose, on a country-by-country basis, the following information:

• name of the ultimate parent undertaking or standalone entity
• relevant financial year and the currency used
• revenues generated
• profit or loss before tax
• corporate income tax paid
• corporate income tax accrued
• retained earnings
• number of employees
• list of group entities
• description of main business activities

The report must be prepared using a standard template provided by the European Commission and submitted in a machine-readable format. Alternatively, companies may use the structure defined in the existing CbCR guidance used for tax authority submissions.

When must it be published?

The EU Public CbCR Directive was published in December 2021 and implemented into Hungarian law in May 2023. The first financial years subject to the obligation are those starting on or after 22 June 2024.

The report must be prepared and published together with the annual or consolidated financial statements and made publicly available on the company’s website for at least five years. The relevant publication deadlines are:

• For parent companies: by the last day of the sixth month following the balance sheet date
• For standalone entities: by the last day of the fifth month following the balance sheet date

For companies with a regular calendar fiscal year, the end of the first reportable year will be 31 December 2025, and the reporting deadline:

• for parent companies: 30 June 2026
• for standalone entities: 31 May 2026

Who reviews the report and who is responsible?

The company’s statutory auditor is required to verify whether the report has been prepared and complies with legal requirements. Failure to publish or file the report may result in consequences under the Hungarian Act on Accounting. Responsibility for compliance lies jointly with the company’s executive officers and members of the supervisory board.

Why is this important for companies?

The EU’s goal with Public CbCR is to improve transparency in corporate tax practices – beyond tax authorities – to the public at large. Enhanced transparency is also a matter of corporate reputation. Publicly disclosed data can influence investor decisions, shape consumer perception, and impact public trust. Companies within scope should take steps now to ensure compliance for the 2025 financial year, including reviewing internal data collection, financial systems, and communication strategies.

The tax consulting team at WTS Klient Hungary has over two decades of experience supporting international corporate groups with cross-border tax planning and structuring. We provide tailored solutions that take into account EU regulations, bilateral tax treaties, and specific provisions of the Hungarian tax system. If you need assistance interpreting or complying with Public CbCR requirements, don’t hesitate to contact us.

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

A Public CbCR: A new era in corporate tax transparency bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Why Is the Pay Transparency Directive necessary?

According to the to the reasoning of the directive, women in the EU earn on average 13% less than their male counterparts. That gender pay gap has largely stagnated over the past decade. This disparity is not only unjust but also distorts economic efficiency. The directive’s core objective is to increase pay transparency, thereby reducing unjustified gender pay gaps.

What are employers’ obligations under the Pay Transparency Directive?

The directive imposes significant new responsibilities on employers, including:

• Mandatory pay gap reporting: One of the directive’s central elements is the obligation to report on gender pay differences. Companies will be required to regularly disclose gender pay gap data, depending on their size. If a pay gap of more than 5% exists within the same role and cannot be justified by objective, gender-neutral criteria, employers must conduct a pay assessment and develop an action plan to reduce the gap. Importantly, “pay” includes not only base salary but also bonuses, allowances, benefits in kind, and even study leave entitlements.

• Transparency in recruitment: Employers will be required to inform job applicants of the pay range for the advertised position during the selection process. At the same time, it will be prohibited to ask candidates about their current or past salary.

• Pay transparency in internal communication: Employers must clearly communicate the criteria used to determine pay levels and progression. Employees will have the right to request information on how their salary compares to the average pay of colleagues performing equal or equivalent work. Perhaps most significantly, employers will no longer be allowed to prohibit employees from disclosing their own pay – a major cultural shift in many workplaces.

Strengthened enforcement and legal protections

The directive also introduces enhanced legal remedies for employees. Workers may be represented by external organisations in legal proceedings, and the burden of proof in pay discrimination cases will shift to the employer.

If gender-based pay discrimination is established, the directive mandates full compensation, covering both material and non-material damages. Member States will also be required to implement dissuasive penalties to ensure compliance.

How can employers prepare?

Compliance is not only a legal requirement but a strategic opportunity. Organisations also in Hungary should begin by evaluating their current practices: What would a role-by-role, gender-based pay analysis reveal? Do they have quantifiable data on all types of compensation, including bonuses and benefits?

To ensure compliance, employers may need to:

• review and revise job classification systems,
• formalise salary determination procedures,
• redesign recruitment and other HR processes.

They should also prepare to handle internal and external reporting duties, update employee communications, and review contracts and internal policies. Legal alignment with forthcoming national legislation will be critical.

The Pay Transparency Directive as an opportunity

While the directive certainly imposes new administrative and operational burdens, it also offers a unique opportunity to build a more equitable, transparent, and competitive workplace culture – one that can be a key advantage in today’s labour market. Early preparation is essential. The earlier employers begin, the smoother the transition will be.

The experienced teams at WTS Klient Hungary and WTS Legal Hungary offer comprehensive support in all payroll, HR, and labour law matters related to the Pay Transparency Directive. If you need expert assistance, please don’t hesitate to contact us.

This article provides general information and does not constitute advice.

A EU Pay Transparency Directive bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

The EU’s VAT reform is built on three key pillars.

Pillar 1: E-invoicing and digital reporting

• From 2025: Member States may mandate e-invoicing for domestic transactions.
• From 1 July 2030: E-invoicing will be mandatory for all cross-border B2B (business-to-business) and B2G (business-to-government) transactions, in a standard EU format. Digital reporting will also be mandatory.
• From 2035: Full EU-wide harmonization is expected.

Impact on businesses

Companies must prepare for substantial IT and administrative adjustments, including overhauling their invoicing systems.

Pillar 2: Platform economy

From 1 July 2028: As Pillar 2 of the EU’s VAT reform, platforms offering passenger transport and accommodation services (e.g. Uber, Airbnb) may be considered deemed VAT payers in certain situations.

However, these platforms do not have to pay VAT if the actual service provider provides a valid VAT number and declares that it will account for the VAT itself. The rules primarily target cases where the original provider would not otherwise be subject to VAT.

Member States may postpone the introduction of the rule until 1 January 2030. SMEs can be an exception to this rule.

Other obligations:

• The place of supply of B2C (business-to-consumer) facilitation services from platforms will be where the basic supply takes place.
• Customers who do not provide VAT identification will automatically be treated as non-taxable persons.
• Platforms that facilitate the sale of goods and store goods owned by a third party (e.g. in a warehouse) will be obliged to notify the owner if the goods are transferred to another country.

Impact on businesses

Pillar 2 of the EU’s VAT reform is sector-specific. In particular, it represents a major change for platforms that provide passenger transport and accommodation services. Service providers who offer these services through platforms but are currently not obliged to charge VAT will also be affected. In the future, the obligation to pay VAT may be shifted to the platforms, which could have an impact on prices and revenues.

The “deemed supplier” rule may be applied differently by Member States, which may complicate compliance, in particular when checking the VAT status of suppliers. The definition of short-stay accommodation may also vary from one Member State to another.

Pillar 3: Single VAT registration

• Extension of OSS (from 1 July 2028): Simplified VAT return (OSS) for intra-EU B2C supplies will be extended to new services (e.g., electricity, natural gas, installation contracts, domestic supplies).
• Energy supply (from 1 January 2027): OSS will be extended to energy supplies (e.g., EV charging in another Member State).
• Movement of own goods (from 1 July 2028): There will be a new OSS module for intra-EU movement of own goods – avoiding VAT registration in the country of destination if the goods qualify for full deduction. The new rule will replace the simplification rule for call-off stock which will be abolished at the same time.
• Reverse charge mechanism (B2B): Member States will be obliged to apply reverse charge mechanism where the seller is not but the buyer is VAT registered in the destination country – this will reduce the registration obligation for foreign companies.
• Live streaming and virtual events: As of 1 January 2025, new rules on the place of supply for B2C will apply, following the rules for electronic services.

The original EU’s VAT reform proposal included a country of destination taxation for margin supplies (e.g. works of art), but this has been removed from the final text.

Impact on businesses

Although the new rules in Pillar 3 of the EU’s VAT reform reduce the need for foreign VAT administrations, they do not eliminate them completely. A non-established vendor, for example, will still have to register in the Member State from which they carry out an intra-Community supply.

The failing to register can lead to cash flow disadvantages, as input VAT can only be reclaimed through a foreign VAT refund procedure. Companies should consider whether to maintain their existing registrations or take advantage of the new simplifications.

Why is it important to plan now?

Although many regulatory changes will not come into force for years, the developments required by the EU’s VAT reform – such as e-invoicing and real-time reporting – will require major financial and technological overhauls. This affects not only accounting, but also legal, tax and IT.

Key actions for businesses to take now include:

• Designing e-invoicing and digital reporting systems
• Reviewing the contractual protection of platforms to transfer VAT risks
• Thorough checks on the status and location of customers
• Conduct liability and risk analysis to avoid penalties

Not all Member States waiting for ViDA deadlines

Several Member States – such as Hungary, Germany, Belgium, Poland, Spain or France – are not waiting for the EU’s VAT reform to come into force as planned, but are already introducing or planning to introduce mandatory e-invoicing and reporting in certain areas. It is therefore advisable to monitor national regulatory changes in the short term to allow businesses to react in time.

What to expect in the coming years?

The EU’s VAT reform is reshaping EU VAT legislation to meet the expectations of the digital age. The new rules will affect not only e-commerce but almost all businesses.

Preparation cannot be delayed: it is worth starting now to review business processes, improve IT systems and assess the legal environment so that businesses do not risk future fines, delays or disruption to their operations.

The VAT experts at WTS Klient Hungary drawing on decades of professional experience can effectively support their clients not only with Hungarian but also international VAT regulation. Do not hesitate to contact us if your company is engaged in international or intra-EU transactions, and you have questions about what changes you need to prepare for under the EU’s VAT reform.

A The EU’s VAT reform enters into force on Monday bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Therefore taxpayers are recommended to review the methods and settlements applied in their transfer pricing and to prepare detailed and supporting transfer pricing documentation in the light of the transfer pricing rules in force in Hungary.

For what and how much default penalty can we pay?

Companies whose financial year is the same as the calendar year and are subject to the transfer pricing documentation requirement should also this year comply with their transfer pricing documentation obligation latest by the date they submit their 2024 corporate income tax returns, i.e. by 31 May 2025. Also, from that date onwards the Hungarian tax authority is entitled to request it for tax audit purposes. In addition, there is also an obligation to provide TP related data in the 2024 corporate tax return. The NAV may also examine the existence and adequacy of the data reporting in detail.

A clear sign of the increasing transfer pricing tax audits is that, based on the previous year’s half-yearly statistics, the Hungarian tax authority completed 126 compliance investigations, and transfer price risk was identified in 61% of these investigations.

In several cases, the tax authority found that transfer pricing documentation and transfer pricing data reporting were either missing or incomplete, for which the NAV imposed a default penalty.

A default penalty of HUF 5 million (HUF 10 million in case of repeated violations) might be imposed for missing or incomplete transfer pricing documentation according to the stricter rules. In this context, it is important to note that from 2023 transfer pricing documentation must be prepared on a transaction-by-transaction basis, so if a taxpayer fails to prepare a local file for more than one transaction, a multiple of the above-mentioned default penalty could be imposed. In addition, the obligation of transfer pricing documentation preparation also includes the master file, which is considered separate documentation.

Also the penalty for failure or incompletion of transfer pricing data reporting obligation was increased, to the maximum penalty of HUF 1 million.

What exactly does the NAV check during transfer pricing tax audits?

In addition to formal compliance, the tax authority is increasingly scrutinising the content of transfer pricing documentation and related data.

In the course of transfer pricing tax audits, taxpayers who are required to prepare documentation can expect a detailed examination of the terms of transactions with related parties, including, among other things, a review of the functional profiles (characterisations) and related profitability achieved based on the functions performed and risks borne in the transactions, as well as the combinability of the transactions.

If, on the basis of the risks thus identified, it is determined that the consideration realised in the transaction being audited is inconsistent with the arm’s length principle, the Hungarian tax authority will make the necessary adjustment to the median arm’s length value, which could result in a significant tax loss and a tax penalty for the taxpayer.

Based on the experience of transfer pricing tax audits carried out in previous years, the NAV may reveal content-related issues such as the selection of the inappropriate transaction category, incorrect transaction amount, selection of inappropriate transfer pricing method, incorrect profitability ratio and inappropriate arm’s length price range.

In order to ensure that the taxpayers concerned can reliably reduce or avoid potential transfer pricing risks and penalties resulting from transfer pricing tax audits, it is recommended that they continuously monitor their transfer pricing practices on an annual basis and start compiling transfer pricing documentation in a timely manner. Our transfer pricing consultants are at your disposal to assist you in the preparation of the documentation and to answer any questions you may have.

This article provides general information and does not constitute advice.

A Increased transfer pricing tax audits in Hungary: what to look out for this spring? bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

What shares can be reported? 

Essentially any share can be reported to the Hungarian tax authority, except for shares in a controlled foreign company and the acquisition of units issued by an open-ended investment fund. The statutory minimum figure for share acquisitions (previously 10%) was abolished from 1 January 2018, meaning that the legal implications of reported shares can now apply to acquisitions of very small stakes, whether by purchase or even by way of an in-kind contribution.

When and how should new share acquisitions be reported? 

According to Hungarian Act LXXXI of 1996 on Corporate Tax and Dividend Tax, a reported share is a share that has been notified to the tax authority within 75 days from the date of acquisition. The acquisition date is the date it is registered with the Hungarian Court of Registration, or, failing this, the date on which the legal transaction takes effect.

Organisations and sole proprietorships subject to registration must use the T201T form provided by the Hungarian tax authority to report shares.

How can existing shares be reported? 

Please note that the the subsequent reporting of shares only applies to shares that existed on 30 December 2023 and do not already qualify as reported shares, provided that the share meets the definition of a reported share as per the Hungarian Corporate Tax Act at the time of reporting (i.e. not at the time of the original acquisition). Shares can be subsequently reported to the Hungarian tax authority up until the deadline for filing the corporate tax return for the 2023 fiscal year – i.e. by 31 May 2024 for taxpayers following the standard financial year. This right lapses once the deadline expires.

However, it is important to know that such an option is subject to conditions and comes at a price. Twenty percent of the gain between the market value of the share to be reported and its carrying value on 31 December 2023 constitutes the corporate tax base, no deductibles are permitted, and the relevant tax must be paid by the deadline for the 2023 corporate tax return – 31 May 2024 for taxpayers following the standard financial year.

The market value referred to above must be a market value approved by independent parties, which the taxpayer can substantiate with a report issued by an independent auditor or an expert. The taxpayer must have this report when filing the corporate tax return. From 1 January 2024, the market value thus determined will be taken into account as the acquisition value of the reported share.

What are the benefits of reported shares? 

If a company’s assets include a reported share for at least one year, and this is then sold or otherwise derecognised from the company’s books, the company will not have to pay corporate tax on the gain from the sale or derecognition, while any loss from the sale will not be deductible from the tax base.

In terms of the one-year holding period, it is good to know that a derecognition due to a transformation, merger or division does not interrupt the continuity of the holding period.

Hence it is worth considering reporting the acquisition of a share when it is acquired, since it is administratively simple, involves no additional costs for the taxpayer, and may also save tax when the share is sold or otherwise removed from the books. Feel free to contact us if you need expert advice on reported shares, the accounting advisers at WTS Klient Hungary will be glad to help you.

A Reported shares bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

What is the CBAM?

In May 2023, the European Union adopted Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism, often referred to as the carbon tax or the CBAM Regulation. Commission Implementing Regulation 2023/1773 was published in August 2023 in connection with the CBAM Regulation, and the related rules entered into force on 1 October 2023.

In accordance with the regulation, from 1 January 2026 economic operators will have to pay a so-called carbon tax on imports of certain products to the EU, and submit quarterly data via an electronic interface set up by the EU.

Which products does the CBAM reporting obligation cover?

The products concerned are listed by customs tariff code in Annex I of the CBAM Regulation, and are typically products whose manufacture involves significant carbon dioxide emissions. These products are: cement, electricity, fertilisers, iron and steel, aluminium and hydrogen. The regulation will therefore mainly affect entities in the energy, automotive and machinery sectors, as well as fertiliser, chemical, iron, steel and aluminium companies.

Although the related payment obligation will only be a factor in two years’ time, businesses importing the above products already have an obligation to fulfil during the current transitional period, i.e. between 1 October 2023 and 1 January 2026: the CBAM reporting obligation. The first deadline for the fourth quarter of 2023 is 31 January 2024. The CBAM reporting obligation includes, among other things, the quantity of the given products placed on the market in the given quarter, information on the origin of the products and the associated carbon dioxide emission data – all of this must be included in the report.

Last week of January: get ready!

Only economic operators who have pre-registered with the competent Hungarian authority, i.e. the National Climate Protection Authority may access the EU platform. However, it is not yet possible to register on the Climate Protection Authority’s website, this will only be permitted in the last week of January, once the national legislation empowering the National Climate Protection Authority to act as a national authority in CBAM matters enters into force on 22 January.

Importantly, failure to fulfil the CBAM reporting obligation or not doing so properly could bring penalties for the economic operators concerned, ranging from EUR 10 to 50 per tonne of unreported emissions.

The European Union’s economic measures to support climate protection are increasingly affecting the businesses of most economic operators, so we believe it is important that all entities are kept informed about the new obligations.  This is why tax advisers of WTS Klient Hungary are always available with up-to-date news and information.

A CBAM reporting obligation by 31 January! bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

SAF-T in Romania in two phases

From 1 January 2022 SAF-T is also rolled out in Romania. First, only large taxpayers had to declare SAF-T in Romania through mandatory monthly filings, but from 1 January 2023 also medium sized taxpayers have to submit SAF-T on monthly basis. The rest of taxpayers, including small taxpayers and non-resident companies registered only for VAT purposes in Romania, will submit SAF-T from 1 January 2025. The obligation applies to all Romanian and foreign companies with a presence in the country registered for tax purposes in Romania.

Content of SAF-T reports 

Generally, among others, data reports submitted to the National Tax Administration Agency (ANAF) within the system of SAF-T in Romania must contain the following:

1. The master files section contains subsections for more information, such as:

• accounting accounts / journal register
• customers (identification data, analytical account, initial and final balance debtor / creditor)
• suppliers (identification data, analytical account, initial and final balance debtor / creditor)
• tax table (specific tax information)
• table of units of measurement
• table of types of analysis (information on the structure of the taxpayer’s cost centers)
• table of types of movements
• products
• stocks
• owners (details regarding stock owners)
• assets

2. Accounting records / Journal Register: information on accounting records, at transaction level, including analytical accounting accounts.

3. Source documents: information about source documents such as:

• sales invoices
• purchase invoices
• payments
• movements of goods
• asset transactions

Reporting periods for SAF-T in Romania

The submission terms for SAF-T in Romania are monthly or quarterly, depending on the VAT fiscal period. Companies submitting SAF-T on monthly basis have a grace period of six months for the first return, five months for the second return, etc.

Information regarding section “Assets” will be submitted annually, at the date when the financial statements are submitted, whilst information of section “Stocks” are submitted upon the request of the tax authorities.

If you would like to know more about the SAF-T in Romania or if you have any tax related question in the country, please visit the homepage of Ensight, the exclusive representative of WTS Global in Romania.

A SAF-T in Romania bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

What had to be done by 30 April?

The deadline of 30 April applied to businesses and institutions that produce waste, and collect waste separately. The entities subject to the obligation and opting for collective fulfilment after Government Decree 80/2023 entered into force had to register on the electronic platform operated by the concession company (MOHU MOL Hulladékgazdálkodási Zrt.). These companies were typically already contracted with a service provider, and had transported packaging or other waste from their Hungarian sites. Organisations starting such activities now have 15 days to register. When registering, the necessary information for contracting must be provided on the MOHU website (what waste is generated, how it is collected, where it is collected) in order to be able to sign a contract for waste collection from 1 July. Failure to register can trigger a waste management fine of up to HUF 200,000, so it is worthwhile fulfilling this duty as soon as possible. This is still possible on the MOHU website even after the 30 April deadline.

Double registration required until the end of May!

Registration is required on two different electronic platforms by 31 May:

• As mentioned above, those who qualify as a producer under the EPR scheme must register via the MOHU electronic platform. In the case of products manufactured in Hungary, the producer is the manufacturer of the product. If the product is not manufactured in Hungary, the producer is the company that first places the product on the market in Hungary as part of its business activity. For “new” producers, registration is required before the start of the activity.

• You also need to register on the electronic platform of the National Waste Management Authority (OKIRkapu), which can be done by a person authorised to sign on behalf of the company after logging in through the government portal. The process can also be carried out by an authorised representative with a power of attorney, but in this case, please note that the authorisation process takes time, so it is worth starting now. Data has to be provided to the National Waste Management Authority with a KÜJ number requested via the OKIRkapu (for the first time by 20 October, for the quarter from July until the end of September). The KÜJ number (environmental client number) is the environmental ID for companies, organisations and individuals. 

Is the environmental product fee payment system here to stay? 

The environmental product fee obligations will remain, but there will be a new environmental product fee calculation formula to work with parallel to the start of the EPR scheme from 1 July 2023.

If someone pays the product fee, they will most likely be affected by the EPR scheme too, but the product fee system will still not be discontinued. This means returns still have to be filed and the environmental product fee still needs to be paid. It is important to be aware of which products are covered by the two schemes. However, applying the product fee calculation method in force from 1 July, when dealing with the same product the EPR fee can be deducted from the amount of the environmental product fee payable.

What do the environmental product fee and the EPR scheme have in common, and where do they differ? 

Environmental product fee returns still have to be submitted to the tax authority. For the EPR, however, data must be provided to the National Waste Management Authority (just like the product fee, this mainly relates to the quantity of products subject to the obligation).

As regards fee payments, the two systems are the same in that both fees are calculated based on the weight of the waste or polluting product, and the accounting period is the same, i.e. both fees are payable quarterly. However, the difference is that the product fee is payable by the 20^th day of the month following the given quarter, while the EPR fee is payable to the concession company based on an invoice issued by the concession company.

The invoice clauses set out in the EPR scheme have to be indicated on all invoices issued on the placing of circular products on the market, and/or on other documents that verify such placing on the market. Text that is generally used: “The seller is liable for paying the extended producer responsibility fee.” There are invoice clauses in the case of the environmental product fee too, but such do not apply to all invoices and supporting documents, and only in certain cases must information be included.

We have no stock, we do not handle packaging, we do not generate waste. Can we be subject to the scheme?

Many distribution chains in Hungary are set up in such a way that the Hungarian-registered subsidiary only invoices the products to the Hungarian customer as part of a distribution chain, the products do not arrive at the warehouse of the intermediary partner, and the end-customer receives the product directly. In this chain, such a company would be the first domestic distributor and subject to paying the environmental product fee, which is not clear at first sight.

This also shows that – prior to the launch in July – distribution chains need to be reviewed, the product ranges concerned must be identified, and the basis for the two fee payment systems established, in order to avoid paying double the fees.

As the EPR scheme and the obligations it imposes affect a wide range of businesses in Hungary, we recommend that all companies should assess as soon as possible whether or not their activity and their products will make them affected by the new administrative and fee-payment obligation. If you need specialist help with this do not hesitate to contact us.

A Another administrative burden and fee thanks to the EPR scheme bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

What does the extended producer responsibility scheme mean?

Introducing the extended producer responsibility scheme in Hungary became necessary to meet EU waste management targets and to comply with EU directives. The scheme aims to help Hungary switch as quickly as possible to a circular economy, where fewer products become waste and as much of the generated waste as possible is recycled as raw materials. The scheme places producers at the heart of the system, by making them financially responsible for waste management throughout the life cycle of the product. Consequently, the main obligation for producers will be paying an extended producer responsibility fee.

Which businesses qualify as producers?

In the case of products manufactured in Hungary, the producer is the manufacturer of the product. If the product is not manufactured in Hungary, the producer is the company that first places the product on the market in Hungary as part of its business activity.

What activities give rise to a liability for the producer?

The extended producer responsibility fee obligation essentially arises when the circular product is placed on the market by the producer. For the purposes of the extended producer responsibility scheme, it is important that placing on the market means the first transfer of ownership of a circular product in Hungary, free of charge or for consideration, or its transfer from abroad to Hungarian households or other users as part of an electronic commercial service (distance selling). In addition, use for own purposes is deemed to be placing on the market, as well as the removal of the product from a VAT warehouse or from a product fee warehouse to the territory of Hungary.

Which products are covered by the extended producer responsibility scheme?

Producers as defined above are only covered by the extended producer responsibility scheme if they carry out the activities defined above with one of the following product ranges:

• packaging,
• single-use and other plastic products,
• electrical and electronic equipment,
• (re-chargeable) batteries,
• vehicles,
• tyres,
• office paper,
• advertisement paper,
• cooking oil and fat,
• textile products,
• wooden furniture.

Since each of the above product ranges represents a broad concept, for the sake of clarity, point 1 of Appendix 1 to the Government Decree gives a more precise definition of which products within the given product range are covered by the extended producer responsibility scheme. Certain product ranges can be identified with the help of a customs tariff heading.

Obligations

Before going into the obligations in more detail, it is important to clarify that the producer responsibility obligation can be fulfilled in two ways: collectively or individually. When this is done collectively, a significant part of the producer’s waste management tasks (such as waste reception, collection, transportation, pre-treatment, trading, etc.) is performed by the concession company (MOHU MOL Hulladékgazdálkodási Zrt.) and its subcontractors. With individual fulfilment, these tasks are left to the producer.

Registration and contracting obligation 

From 1 April 2023, companies subject to the obligation and opting for collective fulfilment after the government decree enters into force have to register on the electronic platform operated by the concession company. Those fulfilling their obligations individually must conclude a concession contract with the concession company that includes specific content.

Registration 

Companies subject to the decree must register with the Hungarian waste management authority. This registration should normally be applied for before starting the activity with the circular product. Businesses that become subject to the government decree when it enters into force (from 1 April) have to submit their registration application to the authority by 31 May 2023.

Documentation and reporting obligations 

The obligated parties must keep records with the data specified in the legislation from 1 July 2023, and must report data to the national waste management authority based on these records on a quarterly basis by the 20^th day of the month following the given quarter (for the first time by 20 October 2023).

Fee payment obligation 

The obligated companies must pay an extended producer responsibility fee to the concession company quarterly based on an invoice issued by the concession company. The extended producer responsibility fees applicable to certain product ranges will be determined by a separate ministerial decree. It is important to note that the extended producer responsibility fee payable can be deducted from the environmental product fee. Accordingly, the method for calculating the environmental product fee is also being amended in the product fee law, with effect from 1 July.

Inclusion of specific text on invoices

Invoice clauses familiar from the environmental product fee regulations are part of the extended producer responsibility scheme too.  However, unlike the product fee system, the invoice clauses set out in the extended producer responsibility scheme not only have to be indicated in defined cases, but on all invoices issued on the placing of circular products on the market, or on other documents that verify such placing on the market. Text that is generally used: “The seller is liable for paying the extended producer responsibility fee.” The compulsory text changes in the event of a buyer’s statement and agreement to pay the fee.

Exemption from obligations

In the case of vehicles, producers can take on the extended producer responsibility obligation from the manufacturer of a circular product that is a vehicle accessory or component, such as electrical and electronic equipment, (re-chargeable) batteries and tyres. This requires a contract between the parties for the assumption of the fee.

Another case of exemption concerns the producer’s fee-payment obligation. Under the legislation, the given producer does not have to pay the extended producer responsibility fee if its customer declares and verifies that at least 60% of the purchased circular product is delivered abroad, either separately or incorporated into another product.

Legal consequences 

If the obligations are not met, or met but not in line with the legal requirements, the national waste management authority is entitled to impose a waste management fine, ranging from a few thousand Hungarian forints to millions of forints. In addition, in certain cases the authority can even suspend the placing on the market of the circular product by the parties concerned.

As the extended producer responsibility scheme and the obligations it imposes affect a wide range of businesses (it suffices to think just of the businesses creating packaging that are also deemed producers and thus subject to the scheme), it might be advisable for all companies to assess as soon as possible whether or not their activity and their products will make them affected. If you need specialist help with this do not hesitate to contact us.

A Extended producer responsibility scheme bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.