Amendments in the rules of invoicing and invoice data feed in 2020

As we mentioned in our previous newsletter, VGD Hungary is launching a series of newsletters about the most important tax amendments in 2020. In this current newsletter, which is the first in the series, we would like to highlight the upcoming changes in invoicing and real-time data feed.

Amendments of the rules of invoicing in 2020

• From 1 July 2020 the time limit for issuing an invoice will be reduced from 15 days to 8 days, which is worth paying attention to, as taxpayers who are overdue may be fined up to HUF 500,000 (approx. EUR 1,500).

• Also from 1 July 2020 the first eight digits of the customer’s VAT number (group ID number for group taxpayers) will be required to be reported by the issuer of the invoice, in line with changes in real-time data feed.

• Similarly, from 1 July 2020 invoices must be issued concerning the following tax-exempt activities:
  • services provided by human health enterprises (i.e. non-public service providers);
  • dental services;
  • sale of real estate;
  • other education (trainings according to “OKJ” or the Adult Education Act);
  • services provided to the member by a cooperative community.

Data feed of incoming invoices

From 1 July 2020, there will be also a change in the data feed on the invoice recipient side: not only invoices with a VAT content above HUF 100,000 (ca. EUR 300) should be included on the so-called M sheets of the VAT return, but all received invoices should be included. As this may impose a significant administrative burden on some taxpayers, it may be worthwhile to begin developing appropriate IT solutions to facilitate this reporting obligation.

Key changes in real-time data feed

• From 1 April 2020, at 0:00, the Hungarian Tax Authority (“HTA”) will introduce the 2.0 Invoice Reporting Interface for real-time data feed, which will result that reporting with the current, version 1.1 interface being considered unsuccessful. We would like to emphasize, that using the – until 31 March completely perfect – version 1.1 on 1 April, could result in a fine of up to HUF 500,000 (approx. EUR 1,500) per invoice.

The development documentation and schemas for the new (2.0) interface have been available since 31 August 2019, also in English, on the official website of the Online Invoice System. Test opportunities of the new interface is expected to start in February 2020, but the exact date is not yet known. We strongly recommend that you test the 2.0 interface on your system, because many bugs, errors and incorrect adjustment can be revealed without the risk of a fine.

• From 1 July 2020, the reporting obligation shall include, without limitation, the supply of goods and services effected within the territory of Hungary, where the customer is a domestic taxpayer and applies its right of tax deduction in connection with the transaction. This means that as of 1 July, it will be mandatory to provide information on the tax-exempt sale of goods and services as well as reverse charge transactions (assuming, of course, that the transaction has been invoiced).

• From 1 January 2021, the issuer of invoices will be obliged to report invoices issued to non-taxable persons (e.g. private individuals) and Intra-Community and export-exempt sales.

There is a transitional provision for both the 1 July 2020 and 1 January 2021 amendments, whereby the date of invoice issuance (not the date of performance!) determines whether the “old” or the “new” rules will have to be applied, i.e. whether or not invoice data feed is required.

As a result of the above-mentioned changes in two steps, the entire invoicing system will be transparent to the HTA, which also minimizes the risk of tax evasion and VAT fraud, causing an expected budgetary plus.

In addition, according to the plans they have already communicated, the HTA will be able to draft a VAT return for all taxpayers registered in Hungary from 2021, as they have done personal income tax returns for private individuals since 2017.

We would like to draw your kind attention, that if you issue your Hungarian invoices with the usage of a non-Hungarian invoicing program (e.g. using a program within your company group or a program developed by your parent company), that you should immediately start the transition to the above changes. Based on our experience, depending on the complexity of your invoicing program, your IT transition may take up to several months. Domestic invoicing programs have to be redesigned by their service providers’ developers, so the taxpayers, who use such an invoicing software, do not have to bother with the IT part of the amendments. Of course, it is worth reviewing and if necessary, modifying for instance their invoicing processes.

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If you need IT help during your transition, VGD Hungary will be happy to assist you with IT developments related to real-time data feed.