TAX LAW CHANGES 2021
1.
Value added tax
As an administrative simplification for VAT groupings, in the case of the formation or termination of a VAT grouping, as well as joining or leaving a VAT grouping, the future date from which the members wish to apply the above changes can be specified.
The possibility of a VAT base decrease for bad debts is extended as follows:
- VAT base decrease should also be enforceable for the receivables where the customer (debtor) does not qualify as a VAT subject (e.g. is a private individual);
- a receivable where the court has released the debtor from paying the remaining debts as a part of the debt settlement proceedings of natural persons should also qualify as a bad debt eligible for VAT base decrease;
- as it has been set out earlier, at least one year must elapse from the original due date of the bad debt. However, due to the amendment, this condition may be waived if the civil limitation period of the claim is less than one year. (The latter may be, for example, the case of subscription contracts under the Electronic Communications Act).
From 2021, the scope of the VAT reverse charge mechanism applicable to the manpower lease will be reduced, as it will only apply to the manpower lease related to construction, assembly and other installation work and for the construction, development and transformation of immovable property.
The range of invoice data to be submitted via online reporting is also expanding, as not only the Hungarian Forint amount of the VAT payable in foreign currency, but also the Hungarian Forint amount of the VAT base assessed in foreign currency, as well as the currency and the applied exchange rate will be required (including export and intra-Community transactions). Information should also be provided on the free transactions qualifying as taxable sales, transactions under the VAT reverse charge, as well as the transactions outside the scope of the VAT Act.
The taxpayer’s exemption from the obligation to issue an invoice is no longer linked to the method of payment. The other conditions (the buyer did not request the invoice, the amount was fully reimbursed, etc.) still apply.
If a taxpayer (entity) is wound-up with a legal successor which is not a Hungarian resident taxpayer, then the former entity is entitled to claim in its closing VAT return a refund of the deductible VAT which otherwise would not be eligible for refund.
From January 2021, the range of transactions subject to online data provision will be expanded, whereby it will affect all transactions (goods supply and service rendering) in scope of the Hungarian VAT Act performed by Hungarian taxpayers, notwithstanding whether the customer is a taxpayer in another Member State, or a taxpayer in a third country, or a private individual. This comprehensive reporting obligation creates the basis for draft VAT returns (so-called eVAT returns) preparation by the tax authority from July 2021 for Hungarian taxpayers. The draft VAT returns are expected to be available on an electronic platform; it should not become an automatic return if not accepted by the taxpayer who will also have the opportunity to amend the draft return. The taxpayers will have to decide on the VAT deduction right and exercise it on an invoice basis, otherwise the deductible VAT will not be deducted. If a taxpayer submits its VAT return by accepting or amending the draft VAT return, thus the reporting obligation set out for the input VAT invoices accepted will also qualify as fulfilled. A taxpayer may also decide to submit his VAT return in the traditional way, despite the availability of the draft VAT return. Further, if a taxpayer accepts the draft VAT return and also files it in the traditional way, the first submitted return will be considered as final. Self-revision VAT returns may be submitted electronically or in the traditional way.
In accordance with the European Union's legal harmonisation efforts, the provisions of the EU e-commerce package will be implemented in Hungary as of 1 July 2021.
In this context, the following changes should be noted:
- instead of the third country traders, electronic platforms facilitating their trading (eBay, AliExpress etc.) will become liable for VAT within the Community. Therefore, the platforms will also be required to keep record of intra-Community supplies of goods and services;
- the VAT exemption of the low-value goods (less than EUR 22) sold from third countries will cease;
- it will become possible to fulfil the VAT payment liability for the distance sales of goods imported from third countries whose actual value does not exceed the actual value of EUR 150 through the one-stop-shop system. In such case the import of the gods should be VAT exempt;
- the taxpayers with a VAT fixed establishment in a single Member State rendering distance services or carrying out distance goods sales to non-taxpayers established in other Member States under the annual value of EUR 10,000 may be taxed in accordance with the rules of the State of establishment,
- the one-stop shop will become available for distance sales of goods, too;
- separate one-stop shops will be set up for the taxpayers established in the Community and for the third-country taxpayers;
- the one-stop shop will be available for VAT payments only. Any input VAT charged to the taxpayer in connection with the distance selling and rendering of electronic services should be refunded in the framework of a tax refund procedure;
Other important VAT changes:
- According to tax bill T/13477 (not voted yet), the VAT rate on the sales of new residential property should again become 5% for the period between 1 January 2021 and 31 December 2022 (or, subject to certain limits, until 31 December 2026);
- Government Ordinance 498/2020. (XI. 13.) enacted a 5% VAT rate for sale of food and beverages for take-away or home delivery. This provision is in effect only for the period from 14 November 2020 to 8 February 2021, and only for the catering companies that also provided catering in-place prior to the pandemic restrictions (in addition to takeaway and home delivery food and beverage sales).
