Amendments in the rules of invoicing and invoice data feed in 2020, from 1 July

This newsletter was written as part of our series about the most important tax amendments in 2020. In this current Newsletter we would like to draw your attention the changes invoicing and real-time data feed again – because of 1 July 2020 deadline is coming!

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 – independently from the VAT content of is – 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.

In addition to the introduction of related IT solutions, in particular the fact that the mandatory data content of the invoice will change from 1 July 2020, it is also necessary to take into account the following:

• Unlike the previous rules, it is necessary for Hungarian taxpayers to indicate the tax number of both the issuer of the invoice and the recipient of the invoice on our invoices, regardless of the VAT value limit.
• In connection with this, it is worth preparing the accounting system of the Companies for this new rule, checking its databases and updating them so that they contain real and valid partner data,
• If the accounting system used is suitable for performing the control functions related to the VAT return, it is worth reviewing whether these functions fully serve the compliance with the new regulations.
• Given that the scope of data provision included in the VAT return will be significantly expanded from 1 July, it is worthwhile to prepare the accounting systems for the automated M-sheet filling-in, if this has not already been done.
• It is also worth reviewing the date management of the accounting systems used, it is important that the actual fulfillment date on the invoices can be extracted from the system, as this should be included in the summary report. Thus, if a Company uses only an actual accounting date (for example, in the case of continuous services, the fulfillment date on the invoice usually differs and the date is the same as the accounting period to which the account relates), the date management in the program also needs to be reassessed. and amended accordingly.

The following must be reported on the data provision form M of the VAT return per partner, to be prepared for each partner:

o The name and tax number of the taxable person issuing the invoice,

o the serial number of the invoice,

o the date of completion of the invoice,

o the tax base and the amount of VAT on the invoice.

The VGD Hungary in cooperation with its IT partner can provide your company an automatic declaration service also, if your company's current accounting system doesn’t able to support this function.

Key changes in real-time data feed

• 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.

In addition to IT support, we are also happy to help your accounting work with other related solution proposals, and we are also available to find your needs in it.