Autumn tax package has been published - What are the main changes?

Value Added Tax 

On 30 November 2023, the Autumn Tax Package has been published, containing a number of changes for the tax years 2023-2025. Below we have summarized the most important changes, which affect, e.g., VAT, corporate income tax, personal income tax and other tax rules, and the new rules generated from the termination of the US-Hungary double taxation agreement. The rules on the global minimum tax were presented in a separate newsletter.

Value Added Tax

Introduction of the eÁfa (eVAT) system (entry into force: 1 January 2024)

From 2024, taxpayers can fulfil their tax return obligations in the following ways:

• By submitting a form in the usual way (in this case, self-revision can only be submitted via the ÁNYK);
• completing and modifying the data provided by the Tax Authority for tax assessment on the electronic interface provided for this purpose, declaring the exercise of the right of deduction, and approving the draft return compiled from the tax records on the same interface;
• transmitting, in the manner and data structure published by the Tax Authority using a machine interface (M2M), the transaction-level data, and approving the draft return compiled from these tax records as a return by machine.

We note that the submission of the VAT return via the e-VAT system (the method of payment described in the last two points) should be considered fulfilled if the taxpayer approves it.

If the taxpayer fails to give its approval, the Tax Authority will cancel the tax register and the draft return on the last day of the month following the submission deadline, i.e. in this case the taxpayer fails to submit the VAT return.

In cases 2 and 3, self-revision will be possible only on a form until 1 July 2024.

Among the advantages of the M2M eVAT solution, self-revisions within 15 days are exempted from self-revision surcharge and a 15-day moratorium on tax audits will be introduced for reliable taxpayers. Furthermore, those using this solution are exempted from the obligation to prepare and submit a domestic purchase listing („M-sheets”).

The Tax Authority's stated objective for 2024 will be to monitor the quality of data reporting, which may include the introduction of a new tax administration procedure so that in 2024 the primary task of the businesses concerned will be to examine the compliant invoice data reporting.

Changes to the place of performance rules for online events (entry into force: 1 January 2025)

Currently, for services supplied to taxable persons and non-taxable persons which provide access to cultural, artistic, scientific, educational, entertainment, sporting or similar events, the place of supply is the place where the event is actually take place.

In the future, this rule will be changed so that for events where participation is virtual, the place of supply rule will be not applicable, as in such cases the place of supply will be the place where the taxable person/non-taxable person using the service is established or, in the absence of establishment, where the permanent address or usually resides is.

Rules on tax exemptions (entry into force: 1 January 2025)

Significant changes are being made to the system of tax exemptions in order to harmonise Community law.

Resident taxpayers will be able to opt for exemption in another EU country for transactions carried out in that country. In the same way, foreign taxpayers will also be able to opt for the exemption for their transactions in Hungary.

The amendment also contains detailed rules and clarifications in this respect. These include the conditions for the choice, the procedural rules, the mandatory content of the declaration and the details of the data report.

New tax exemptions and reduced VAT rates (entry into force: 1 January 2024)

The amendment clarifies the application of the tax exemption to services provided in the course of the activities of human dentists and dental technicians, by extending the exemption to the supply of services and the sale of dental prostheses by human dentists and dental technicians acting in such capacity.

The VAT rate for dessert cheeses (i.e. „túró rudi”) will be changed to 18%, while a 5% rate will apply to imports of certain works of art.

Clarification and extended declaration requirements for building installation and other installation works (entry into force: 1 January 2024)

In the case of reverse charge mechanism applicable in the case of construction, installation and other assembly work for the construction, extension, alteration or other change of immovable property, provided that the construction, extension, alteration or other change of immovable property is subject to a permit or notification to a public authority, the law previously imposed the obligation to declare the permit requirement on the customer in all cases. In the future, the legislator will also impose an obligation to make a declaration on the supplier.

Receipt and e-Receipt (entry into force: 1 January 2025)

With a view to the introduction of the e-cash regiter system, new provisions will be introduced in the VAT Act on receipts.

For e-receipts, the range of mandatory data is extended, for example, the name of the product or service, a reference to the tax exemption must also be included on the document.

The amendment also introduces the concept of a document being treated as a receipt, allowing taxpayers to issue an amending document for receipts, just as in the case of invoices.

Simplified invoice option extended (entry into force: 1 January 2025)

The possibility to issue a simplified invoice will also be extended, allowing taxable persons exempt from VAT to issue a simplified invoice in the future.

Should you have any questions regarding the autumn tax package, please contact our experts.