Indirect tax ebook - Hungary

General Tax Application/Time of Supply

Supply of goods

Chargeable event
VAT is the tax charged on the supply of goods and services. The supply of goods is the right to dispose of tangible property by the owner for a consideration. Every activity for consideration, which is not regarded as a supply of goods, is a supply of services. In compliance with the Act on VAT, certain transactions are regarded as the supply of goods regardless of whether they are performed free of charge or for consideration. Utilisation for own purposes may also be classified as VATable transaction.

The following are examples for the supply of goods: 

• the handover of goods against a rental fee or on hire purchase if the lessee or customer acquires ownership at the latest by the payment of the last rental fee or on expiry of the contract;
• surrendering the right of disposition between the principal and the commission agent;
• handover of goods on the basis of a construction contract;
• mortgage enforcement.

Time when tax is due as a main rule
Generally, VAT is due and payable by reference to the date of supply of a VAT invoice. The VAT of the supply of goods and services is to be shown in the tax declaration period containing the date of supply. As a general rule the date of supply of goods is the date when the goods are supplied.

Exceptions to main rule
The general rule is, however, subject to a number of exceptions:

• In the case of rental transactions or hire purchase whereby the customer acquires ownership by the payment of the last instalment, the date of transfer of possession is to be regarded as the date of supply.
• Should the parties have a contractual agreement on a periodical settlement of the supplies of goods or the determination of the consideration for a specific repetitive period, the date when the payment is due is regarded as the date of supply.
• For advance payments the day the advance is received (credited) is regarded as the date of supply. 
• In the case of the movement of own goods within the Community (deemed supply) the date of supply is the day when the goods are dispatched or transported. 
• For reverse charge taxation the tax liability shall be established based on the earliest date of the followings: 
• date of receipt of the invoice
• settlement of the price
• the 15th day of the month following the month of the supply.
• In case of Intra-Community acquisitions the tax liability occurs on the date when the invoice is issued but at the latest on the 15th day of the month following the month including the date of supply. 
• In case of import of goods from third countries the VAT liability occurs on the day when goods are put into duty free circulation.

Cash receipts basis/moneys received basis
Taxpayers without double-entry bookkeeping or with cash flow type double-entry bookkeeping are entitled to tax liability deferment. In such cases, deferments expire when the consideration is paid or in 45 days at the latest, even if the consideration is not paid by this deadline.

Time when tax is payable
The VAT of the supply of goods and services is to be shown in the tax declaration period containing the date of supply. A taxable period is normally quarterly or monthly and sometimes annual. The deadline to submit the VAT return and to pay VAT when the balance of the VAT is positive is the 20th day of the month following the return period. If tax is not paid within the proper time, interest will be and penalties may be charged.

Supply of services

Chargeable event
Every activity for consideration, which is not regarded as a supply of goods, is a supply of services.

Time when tax is due as a main rule
Generally, VAT is due and payable by reference to the date of supply of a VAT invoice. The VAT of the supply of goods and services is to be shown in the tax declaration period containing the date of supply. As a general rule the date of supply of services is the time when the service is completed.

Exceptions to main rule
The general rule is, however, subject to a number of exceptions:

• Should the parties have a contractual agreement on a periodical settlement of the supplies of services or the determination of the consideration for a specific repetitive period, the date when the payment is due is regarded as the date of supply.
• For advance payments the day the advance is received (credited) is regarded as the date of supply.
• For reverse charge taxation the tax liability shall be established based on the earliest date of the followings:
• date of receipt of the invoice
• settlement of the price
• the 15th day of the month following the month of the supply.
  

Cash receipts basis/moneys received basis
Taxpayers without double-entry bookkeeping or with cash flow type double-entry bookkeeping are entitled to tax liability deferment. In such cases, deferments expire when the consideration is paid or in 45 days at the latest, even if the consideration is not paid by this deadline.

Time when tax is payable
The VAT of the supply of goods and services is to be shown in the tax declaration period containing the date of supply. A taxable period is normally quarterly or monthly and sometimes annual. The deadline to submit the VAT return and to pay VAT when the balance of the VAT is positive is the 20th day of the month following the return period. If tax is not paid within the proper time, interest will be and penalties may be charged. 
 

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