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How does VAT in Hungary change in 2018?

January 18, 2018

VAT stands for value added tax. It is a consumption based tax, added to the net price of goods. In Hungary, VAT is included in the price of goods you can purchase at stores. The net price is indicated only if the seller expects that the customer will be another company, to which net prices matter – since companies can reclaim VAT.

Standard VAT: 27%

In Hungary, VAT is usually 27%. However, there are exceptions, with some kinds of products having a 5% or a 18% VAT.

  • 5% VAT: specific medicines and medical devices, performing arts, books, magazines, newspapers, some stock animals, poultry, eggs, fresh milk;
  • 18% VAT: dairy products and bread; district heating and commercial accommodation services.

VAT reduction 2018: 5% instead of 18%

From 1 January 2018, the VAT of the following articles will be reduced to 5%

  • internet access
  • catering in restaurants offering hot meals (not for cold meals, alcoholic beverages, or canned/bottled soft drinks)
  • fish, pork

Provide data on invoices of high value

From 1 July 2018, you will be required to immediately register online invoices where the VAT content is above HUF 100,000.

(With 27% VAT, this means invoices where the net value is more than HUF 370,000 and the gross value is more than HUF 470,000.)

  • If you are using invoicing software to issue your invoices, the program should do the reporting automatically when you issue the invoice, so you do not have to worry about it.
  • If you are using an invoice booklet to issue your invoices, you should register all such invoices online within 5 calendar days. If the VAT content of the invoice is more than HUF 500,000, you should register the invoice within 1 day.

No more VAT number suspension

Up till now, is the Tax Authority found that a Hungarian company is not compliant with regulations (e.g. failed to pay taxes or contributions), one of the more lenient penalties was the suspension or revocation of the VAT number of the company. This meant that the company was not able to issue any further invoices until it became compliant again (e.g. until they pay the missing taxes and contributions), when their VAT number was reissued to them.

From 1 January 2018, this penalty does not exist. It is be replaced by fees and, in more grievous cases, by the permanent deletion of your VAT number.

What to do?

  • If you are selling products the VAT content of which has just changed (see above), consult your English-speaking accountant.
  • If you are using an invoice booklet to issue invoices of great value, consult your accountant BEFORE you issue an invoice of more than HUF 370,000 net, so you can make sure it is registered in time.
  • If you have any questions, make sure to check with your accountant. It is always better to ask beforehand and do everything correctly than to correct mistakes afterward.

For other articles on the 2018 changes to taxation, check out the accountancy section of the Helpers blog.

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