eVAT M2M

 Why is it necessary to involve a tax advisor alongside IT developers?

There are many advantages to using the M2M system in the context of eVAT, however, problems or questions can often arise during the implementation phase, which requires competent planning and expert assistance. For example, the taxpayer is responsible for connecting the accounting software to the Tax Authority system and must carry out the necessary developments. The system must also be able to send the analytics in XML format, display the response messages received, and submit the return.

It is crucial for businesses that the establishment of Machine-to-Machine (M2M) communication systems also considers taxation aspects. To ensure that the implementation of M2M connections is smooth and optimal from a tax perspective, we recommend using the assistance of tax advisors. Expert advice ensures that implementing the new systems complies with the relevant tax rules and regulations.

The importance of VAT analytics

The development of a standardised analytics is necessary to enable the VAT return to be prepared digitally. The analytics should contain the relevant information, but at the same time, it is necessary to define tax codes that correspond to the tax codes published by the Hungarian Tax Authority.

At which stages can the work of tax advisers be of help?

The tax consultants will assist you and any external developers from phase 0 to the point of implementation.

Phase 0 

We recommend reviewing existing real-time invoice data services before deploying the system. Correct invoice reporting in RTIR is now of paramount importance, as the Tax Administration's focus in 2024 will be on incorrect data reporting (for more information on this topic, see https://vgd.hu/en/news/professional-publications-newsletters/era-of-evat-real-time-data-reporting-is-needed).

Phase 1

Once the transactions of the company have been identified, each type of transaction must be assigned to the codes defined by the Hungarian Tax Authority. We recommend the involvement of competent professionals, as it is necessary to select from several codes to identify the tax codes relevant to the Company. Moreover, special cases may also arise, such as the phone invoice, where it is necessary to split the transaction. The experts can also help you to identify the data from which M2M data is generated. The date to be entered as the tax point is essential when reporting the data.

So, according to the eVAT M2M specification, the Company must develop a standard list of tax codes, which will ensure that the correct VAT analytics are compiled. In order to ensure that all information is included in the standard VAT analytics in accordance with VAT law, we definitely recommend the help of a tax advisor.

Phase 2 

Once the tax codes and VAT analytics have been defined, the development phase can begin, during which the developers must be provided with a precise description of what requirements the system must meet. Tax advisors possess the necessary knowledge and can assist developers by transferring their expertise. The experts can support the development process in case of tax points that arise, including API communication and M2M XML generation.

Phase 3 

Once the system has been deployed, it needs to be tested to detect possible errors. Experts will help to understand the Hungarian Tax Authority’s messages, allowing developers to make the necessary corrections.

Phase 4 

Following the necessary corrections, the go-live can be implemented.

The benefits of using M2M 

• VAT analytics undergo a preliminary validation, which can be seen as a small "tax audit".  Previously, potential errors were only discovered after the submission of the VAT return.
• By using it, taxpayers are exempt from the M-sheet data reporting requirement.
• Audit moratorium for returns submitted via eVAT M2M from the due date of the return: 15 days
• Exemption from the self-revision surcharge if the Company submits the self-revision within 15 days of the submission of the return, but no later than 15 days after the due date.

How can we help you? 

• Pre-deployment advice;
• Reviewing the Hungarian Tax Authority’s online invoice data reports, verifying its completeness, interpreting the error messages received and making suggestions for improvement;
• Review
• Existing XML files for legal compliance assessment.
• Assessing the current process, examining VAT analytics and putting together a change plan;
• Advice on the development of the new system (tax codes, creation of standard VAT analytics, M2M mapping);
• Supporting developers in setting up the eVAT M2M communication link
• Implementation and test run support

If you have any questions about the above, VGD experts are at your disposal.

This newsletter provides general information and does not constitute advice.