VAT in Hungary - a complete guide

Are you shipping goods to customers in Hungary? Check whether you need to register for VAT in Hungary and what the VAT rates are in Hungary. Read on to find out more.

VAT in Hungary - table of contents:

In Hungary, the value-added tax (VAT in Hungary) was introduced in 1988. Locally, it is referred to as Általános forgalmi adó (ÁFA).

In Hungary, the main act regulating VAT is the “Act CXXVII of 2007 on Value Added Tax.” This law outlines the rules and regulations regarding VAT, including registration requirements, tax rates, invoicing, and compliance procedures. Additionally, Hungary’s VAT legislation is influenced by relevant European Union directives and regulations.

The management of the VAT system is the responsibility of the Hungarian Ministry of Finance and the National Tax and Customs Administration. Based on the VAT Act, the Tax Authority Bulletin is issued, containing information on all matters related to Hungarian VAT.

Foreign companies that are not Hungarian residents, selling goods or services in Hungary, may be required to register as VAT payers.

Should you register for Hungarian VAT?

Hungary requires non-residents to register if they perform activities such as:

importing goods to Hungary to other European countries,
selling or buying goods from another European country (within intra-Community sales),
domestic supplies (understood as the purchase and sale of goods in Hungary),
consignment warehousing of goods in Hungary under agreements for their sale to local customers,
online sales to Hungarian consumers after exceeding turnover of 42,000 PLN (the limit applies cumulatively for all sales to EU countries).

IMPORTANT!

After reaching 10,000 euros in turnover, online sellers to Hungarian consumers have the option to register for VAT OSS. This allows them to file a single VAT return covering all EU member states, paying foreign tax at the buyer’s rate. They’re then exempt from most Hungarian tax rules, except for foreign VAT rates. Alternatively, if not registered for VAT OSS, they must adhere to Hungarian rules solely for online sales.

What information is required to obtain a Hungarian VAT number and registration?

Hungarian tax authorities require filling out the appropriate registration forms and submitting them along with the relevant documentation, such as:

Firmy zarejestrowane w UE, które sprzedają towary węgierskim konsumentom za pośrednictwem Internetu zobowiązane są do przestrzegania progu rejestracji wynoszącego 8 800 000 forintów rocznie.

a copy of the VAT certificate (translated into Hungarian) to prove that the company is registered for VAT in another location within the European Union (if applicable),
the company’s articles of association,
an extract from the national trade register of the company (also in Hungarian),
the signature of the company’s representative,
a power of attorney (if the company is using the services of a fiscal representative).

What is the format of the Hungarian VAT number?

Registration for Hungarian VAT must be completed within 30 days. If the correct documentation is provided, it may take as little as one working day.

After registration, the company receives its unique Hungarian VAT number. All EU member states have a predefined format for VAT numbers. In Hungary, this consists of the prefix HU followed by an 8-digit identification number.

Country code: HU

Format: 12345678

Number of characters: 8

How often are Hungarian VAT returns required?

The quarterly period is the default time for filing Hungarian tax returns. All new companies are required to submit monthly returns until the last day of the calendar year following the date of establishment of the company. From that moment on, the frequency of filing tax returns depends on the amount of VAT paid by the company.

Businesses are subject to a monthly settlement period if the tax due (we are talking about the net amount) exceeded one million forints in the second year preceding the current tax year.

Small businesses that do not have an EU VAT number and pay less than 250,000 forints of VAT per year can file annual VAT returns. Most Hungarian VAT returns are filed electronically. However, a foreign business can file a paper return (if it does not have an EU VAT number).

What are the final deadlines for filing Hungarian VAT returns?

Each Hungarian VAT declaration, whether monthly or quarterly, must be submitted by the 20th day of the month following the end of the respective period.

The Hungarian annual declarations should be submitted by February 25 following the end of the respective year.

Compliance with Hungarian VAT

Obtaining a Hungarian VAT number means following local accounting rules and tax rates. This includes:

specifying on all invoices information about suppliers and customers, as well as transaction costs,
issuing invoices for goods or services in accordance with Hungarian regulations regarding their delivery time,
processes, and control issues related to the use of electronic invoices,
keeping a ledger that must be retained for at least eight years,
handling credit notes, VAT declaration corrections,
translation rates for foreign currency invoices.

Invoicing in Hungary

Basic information that must be included on invoices:

date of issue,
unique, consecutive number,
supplier’s VAT number,
full names and addresses of supplier and buyer,
full description of goods or services provided,
details regarding quantity of goods,
delivery date, if different from invoice date,
taxable value of supply (net),
information about applied VAT rate and VAT amount (in forints, if the invoice is issued in any other foreign currency),
confirmation of zero VAT rate – export, reverse charge, or intra-Community supply,
total gross value of the invoice.

Rates of VAT in Hungary

RATE	TYPE	TYPE OF GOODS OR SERVICES
27%	standard	all goods and services not subject to a lower VAT rate,
18%	reduced	some food products, some takeaway food, admission to certain outdoor concerts,
5%	reduced	some food products, pharmaceutical products (intended for human use), some medical devices for the disabled (excluding repairs), books (excluding e-books), newspapers and magazines, some social housing, district heating, some deliveries of new buildings, catering and restaurant services (food prepared on-site and non-alcoholic beverages), Internet access services, some services of writers and composers, accommodation services in hotels, guesthouses, and rental houses,
0%	zero	intra-Community and international transportation.

Similar VAT rates apply in Greece. Read more about VAT in Greece.

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Author: Lucy Adams
She has extensive knowledge in the field of accounting and constantly gains experience working for both small businesses and larger corporations. Her mission is to explain complex financial and accounting issues and teach business owners and those interested in the subject how to manage their finances effectively. She enjoys giving practical advice, discussing current accounting issues, and analyzing legislative changes that may affect business operations. She enjoys a straightforward approach to finance that helps entrepreneurs focus on growing their businesses. She translates complex issues into easy-to-understand language so that anyone can confidently make decisions that impact the success of their business.
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