Real-Time Digital Reporting is Really Hungary

The digital taxation trend is gaining even more momentum. Hungary’s tax authority has settled on new rules that require “real” real-time value added tax (VAT) invoice submissions for certain transactions, using XML messages. The rules are expected to be formally finalised in mid-April and then slated to take effect 1 July.

There are a couple of important aspects of this new legislation to keep in mind. First, the scope of the new legislation is limited to entities that are registered for VAT in Hungary. Additionally, the real-time reporting requirement only applies to B2B transactions with a VAT amount greater than HUF 100,000, (about EUR 320). In this way, Hungary’s new reporting requirements are more limited in nature than Spain’s SII near real-time value-added tax (VAT) filing rules that companies began complying with last summer, although the Spanish SII requires more data points to be transferred.

The genuinely real-time nature of the Hungary’s VAT invoice reporting requirements are big news compared to SII’s “near real-time” requirements. Once the VAT invoice is closed, it must leave the ERP system as soon as possible – in a matter of seconds, essentially. The tax management software (or middleware) that relays the VAT invoice to the government’s system must do so in an uninterrupted manner. Companies that must comply with the new rule should assess their current technology capabilities right now.

This speedy submission is designed to deny taxpayers the opportunity to alter their closed invoices. On that count, it represents a way to combat fraud and close the so-called “VAT gap.”  We’ll keep you posted on other efforts to close the VAT gap, as well as the growing global movement toward digital taxation.

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Danny Vermeiren

Director of VAT

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Danny Vermeiren is the former Director of VAT in the Chief Tax Office, where he was responsible for external positioning, VAT strategy and helping clients develop solutions to meet their needs. Danny has 20+ years of experience in VAT, both in consulting and in-house as a global director of indirect taxes for a large diversified manufacturing company. Danny is a certified lawyer with a postgraduate degree in tax law.

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