Less stringent invoicing rules for foreign self-billing taxpayers

As of 4 January 2021, the Hungarian online invoice data reporting has become full-fledged, providing the basis for the draft VAT returns to be prepared by the tax authority. Although domestic invoices issued under self-billing were already included in the scope of the online invoice data reporting, the inclusion of self-billing of intra-Community and third-country sales in the online invoice data reporting at the beginning of the year was unexpected for the foreign companies that issue invoices on behalf of their Hungarian suppliers under self-billing.

In the case of self-billing, the buyer issues the invoice on behalf of the seller by agreement of the parties. Self-billing is available not only for domestic transactions, but also for cross-border transactions, i.e. where the buyer is established in another EU Member State or outside the EU and issues the invoice on behalf of his Hungarian supplier. Such invoicing schemes are often found in contracts between large foreign multinational manufacturing companies and their Hungarian suppliers. 

The inclusion of such invoices in the scope of the Hungarian online invoice data reporting has caused significant technical difficulties for foreign self-billers. Therefore, in a notice issued in April 2021, the Ministry of Finance granted a grace period until 30 June 2021 for self-billing foreign taxable persons and - in view of their joint and several liability for the invoice issuing - their Hungarian vendors who did not or did not properly fulfil their online invoice data reporting obligation in the cases where the buyer of the goods was not established in Hungary for economic purposes and did not and should not have had a Hungarian domestic tax number.

However, as of 26 June 2021, the problem has hopefully been solved at the legislative level by introducing less stringent provisions in the government decree on invoicing, specifically for such cases. According to these provisions:

• the online invoice data reporting obligation may be fulfilled from a computer system other than the invoicing software of the foreign self-billing taxable person (provided that it is done electronically with a machine-to-machine link), and
• the reporting obligation is not immediate, but must be fulfilled within 6 days of the invoice being issued.

The changes to the legislation therefore also allow Hungarian vendors to provide the data from their own invoicing systems, or foreign companies to entrust a Hungarian service company with the online invoice data reporting.

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Should you have any further questions on invoicing or the Hungarian online invoice data reporting, please contact our tax experts.

This newsletter provides general information and does not constitute tax advice.