As you may know, Hungary plans to make invoice reporting compulsory. Any Hungarian VAT-registered entity that issues invoices with a VAT to another VAT entity registered in Hungary, or to physical person will be required to report these invoices “without delay to the Hungarian Tax Authority (HU TA (Tax Agency))”. This includes companies established outside of Hungary but registered for VAT in Hungary. Failure to submit invoices in real time may result in an administrative penalty of up to HUF 500,000 (EUR 1,700) / invoice.

Hungary will introduce mandatory invoice reporting from January 1, 2021 for all issued invoices, incl. B2B and B2C.

The Hungarian tax authority published the regulation and the RTIR (Real Time Invoice Reporting) specification.
What has changed (compared to the previous project):

• Invoices must be reported within 1 calendar day when the invoiced exceeds HUF 500 000, and 4 calendar days otherwise.

• The report is considered completed when HU TA sends a confirmation of receipt of the report.

• The RTIR XML (new XML format) file format differs from the previously designed XML format. Companies can only use the new XML format for RTIR and can choose both formats for the data export functionality.

What does the law say?

The provisions were officially published as final.

The technical specification can be found in separate guidance issued by HU TA.

Who is affected by real-time invoice reporting?

The real-time invoicing obligation applies to every Hungarian entity registered as a VAT payer. The entity that issues invoices to another entity subject to registration as a VAT payer with a VAT amount. This includes companies established outside of Hungary but registered for VAT in Hungary. The RITR does not apply to B2C (Distance Selling) deliveries.(Reporting invoices to private persons will be mandatory starting from 2021-01-01)

Which invoices are affected by RTIR?

RTIR does not affect all invoices. Firms may wish to filter out invoices that are beyond the control of RTIR. This applies to the following invoices:

• This only applies to invoices for deliveries. This means there is no need to report purchase invoices.

• This only applies to invoices for domestic deliveries. This means that you do not need to report, for example, sales or exports in the EU.

• This only applies to B2B invoices. Deliveries to private persons do not require reporting for the time being (Reporting invoices to private persons will be mandatory starting from 2021-01-01).

• This only applies to deliveries with VAT due. There is no need to report exempt deliveries, zero rate deliveries, reverse charge deliveries etc.

• This applies to all invoices with VAT.

• It is possible to bypass filters and report all B2B invoices.

What about modifying invoices (debit notes, credit notes, cancellation invoices)?

• The original invoice must be distinguished from the modifying invoice (eg Debit Note, Credit Note, Cancellation Invoice).

• A link must be established between the original invoice and all its modifications. The debit / credit note or cancellation invoice must contain the reference number of the original invoice / debit or credit note.

• Debit / credit notes that modify the affected invoices are also reported

• Invoices canceling the invoices concerned are also reported

• If, as a result of invoice modification, the modification invoice and all subsequent modifications will be reported.

What about paper invoices?

RTIR includes handwritten paper invoices issued from ready-made paper invoice forms. Handwritten invoices in paper form must be submitted electronically

• within 5 calendar days when the VAT on the invoice is below HUF 500,000 (EUR 1600)

• within 1 calendar day from issuing the invoice, when the VAT on the invoice exceeds HUF 500,000

Although handwritten paper invoices from the pre-built invoice form are considered the old-fashioned way of issuing invoices, it is still used in some sectors. Its use is rare in B2B cases, especially in transactions with a VAT value above HUF 100,000. The main purpose of this provision is to discourage taxpayers from using these types of invoices in order to avoid RTIR on invoices issued by invoicing software.

Why should the RITR be taken seriously / what are the sanctions?

The potential maximum penalty for non-compliance with RTIR is much higher than the maximum penalty for failure to submit VAT / Intrastat / ESPL returns together. Failure to submit invoices in real time may result in an administrative penalty of up to HUF 500,000 (€ 1,700) per invoice. This means that the companies concerned must make compliance with RTIR regulations a top priority.

Does the new requirement change the invoice layout?

No, the layout and minimum information requirements for the invoice remain unchanged. The way companies need to collect and store invoicing data about their transactions is changing, and the way that data is reported.

How does this affect the detailed country report (summary information)?

Detailed reports will continue to be submitted on the relevant purchase invoices. RTIR will override detailed reporting for sales transactions only.

What does this potentially mean for traders?

Companies will need to acquire / adapt invoicing software that is able to transfer data in real time.