Send Invoice in Hungary

Hungarian law outlines specific requirements for invoices issued by VAT-registered businesses to ensure tax compliance and transparency. All VAT-registered businesses, including foreign entities operating locally, must adhere to these regulations. Invoices must generally be issued within 15 days following the date of the taxable supply, or immediately if the payment is made in cash or a cash equivalent.

Key elements that must be present on a Hungarian invoice include:

• Date of issuance.
• A unique, sequential invoice number.
• The full name, address, and VAT number of both the supplier and the customer. For intra-community transactions, the customer's EU VAT number must be indicated.
• A comprehensive description of the goods or services provided, including quantities and units, if applicable.
• The date of supply, if it differs from the invoice issuance date.
• The net taxable value of the supply, the applicable VAT rate, and the VAT amount. If the invoice is issued in a foreign currency, the VAT amount must also be shown in Hungarian Forints (HUF).
• The total gross value of the invoice.
• A reference to any VAT exemption or the reverse charge mechanism, if applicable.
• The bank account number to which payment should be sent.

Hungary has a standard VAT rate of 27%, which is among the highest in the European Union. Additionally, there are reduced VAT rates of 18% and 5% for specific goods and services. Invoices must be retained for a minimum of eight years. While invoices can be issued in Hungarian or any foreign language, the tax authority may request an official Hungarian translation during an audit. Furthermore, any invoicing software used by a Hungarian company must be reported to the tax authority.

Real-Time Invoice Reporting (RTIR) in Hungary is a crucial system requiring businesses to electronically transmit invoice data to the National Tax and Customs Administration (NAV) immediately upon issuance. This system, also known as Online Számla, was introduced by NAV to significantly combat VAT fraud and enhance overall tax compliance within the country.

RTIR has broad implications for businesses operating in Hungary:

• It is mandatory for all VAT-registered businesses, including foreign entities with a Hungarian VAT registration.
• Since January 1, 2021, the obligation extends to all domestic business-to-business (B2B), business-to-consumer (B2C), business-to-government (B2G), intra-community, and export transactions, irrespective of the VAT amount. This effectively replaced previous periodic VAT reporting requirements.
• Invoice data must be transmitted in a specific XML format via the Online Számla platform.
• The reporting must occur immediately after the invoice is issued and before it is delivered to the customer.

To comply with RTIR, businesses should follow these steps:

1. Register on the Online Számla platform provided by NAV.
2. Integrate their accounting or Enterprise Resource Planning (ERP) software with the NAV system, typically via an Application Programming Interface (API), to enable automated data transmission.
3. Ensure their software is capable of generating invoices in the required XML format (currently version 3.0 is mandatory, with version 3.2 being the most recent system update).
4. For businesses that do not use integrated software or issue paper invoices, data can be manually entered via the Online Számla platform.

To effectively use the NAV Online Invoicing System, businesses must first register with the system to gain access to its features. Registration involves setting up an account on the Online Számla platform, which is mandatory for all VAT-registered businesses in Hungary.

Once registered, businesses can submit invoices through the NAV system. This can be done by integrating accounting software with the system, which allows for automatic submission of invoice data in the required XML format. Alternatively, businesses without integrated software can manually input invoice data into the system.

Common challenges when using the NAV system include ensuring the correct format for data submission and maintaining compliance with frequent updates to system requirements. Businesses are encouraged to stay informed about these updates and to seek technical support if needed to efficiently use the system.

The landscape of e-invoicing in Hungary is set to evolve with upcoming changes in regulations. These changes aim to streamline the invoicing process and improve tax compliance further. A significant shift towards mandatory e-invoicing is anticipated, with a phased implementation plan expected to roll out over the next few years.

The transition to mandatory e-invoicing will require businesses to adapt their invoicing processes to comply with new standards. This includes ensuring their systems can handle e-invoices and integrate seamlessly with the NAV system. The impact on businesses is expected to be significant, with increased efficiency and compliance benefits.

Failing to comply with RTIR requirements in Hungary can lead to substantial penalties. Businesses that do not report invoices in real-time may face fines, which can be costly and impact their financial operations.

Common compliance issues include incorrect data formats, delayed submissions, and failure to register with the NAV system. To avoid these penalties, businesses should adopt best practices such as regular system checks, timely updates of their invoicing software, and thorough staff training on compliance requirements.