Indirect tax ebook - Hungary

Registration

There is no threshold in Hungary for registration, i.e. if a person or entity makes taxable supplies in Hungary, it has to register at the Hungarian tax authority and submit declarations. Taxpayers with their head office in Hungary are entitled to opt to be tax exempt annually for the given tax year, provided that their revenue is below a certain threshold. This threshold is HUF 5,000,000.

Foreign companies have to register at the Directorate of Exclusive Taxpayers of the Hungarian Tax and Financial Authority (APEH Kiemelt Adózók Igazgatósága, H-1077 Budapest, Dob utca 75-81). Foreigners may appoint fiscal representatives for their Hungarian tax issues. Foreigners from non-EU countries are obliged to appoint fiscal representatives.

VAT on e-services; one registration for all sales in EU
Non-EU entities providing electronic services to EU member private individuals or entities without Hungarian VAT identification may register and file their declarations in Hungary. In this case there is no need to register anywhere else in the EU in connection with this service. The declarations have to be made for the services provided all over the EU. 

Distance sales
Companies of other member states supplying goods to non-VAT registered Hungarian private individuals or entities are not obliged to register in Hungary. The requirement that the company arranges for the goods to be delivered to its buyer in Hungary and the total value of these sales to Hungarian customers do not exceed €35,000 in the given year and in the preceding year. If the sales of the given company exceed €35,000 in a calendar year, the foreign company has to register in Hungary and to charge Hungarian VAT on these transactions.

Even if the threshold is not exceeded, the foreign supplier can opt to register, however, the decision is binding for two calendar years. The procedure for distance sales also applies in the opposite situation, in which a trader sells goods from Hungary to private individuals or non-taxable entities who resides in other EU member states. 

Group registration
Taxpayers established within Hungary can decide to create a VAT group for VAT purposes. They need to fulfil the following criteria:

• they are established in Hungary (resident companies or branch offices) 
• they are related party taxpayers.

The group shall have at least two members. Related taxpayers can create one or more groups, but one company may be the member of only one group at the same time. On the other side, companies can opt to remain out of the group taxation.

The VAT group starts to exist based on the approval by the tax authorities.

Each company is jointly and severally liable for the VAT liabilities of the group including non group member ones.

Establishing such a group the transactions effected among the group members are out of the scope of VAT.

• Introduction
• Scope
• Registration
• Tax rates
• Reporting & filing
• General tax application/Time of supply