If you are a foreign entity carrying out business activities in Hungary you may face tax obligations towards the Hungarian Tax Authority (HU TA).
When do you need a Hungarian tax number?
It is important to know that there is no registration threshold in Hungary for foreign businesses without a domestic seat or fixed establishment. Consequently, a preliminary VAT application should be submitted before the first taxable supply is made regardless of the value of the performed VAT liable transaction.
Typically, you might need a Hungarian tax number for example, in the following cases:
- buying and selling goods in Hungary;
- in such special cases where a foreign entity transports equipment for toll manufacturing purposes and subsequently the equipment is sold in or from Hungary or removed from Hungary as own stock;
- importing goods into Hungary from outside EU;
- purchasing or bringing in goods to Hungary from another EU country;
- supplying goods from a warehouse in Hungary (except for tax exempted supplies within a tax warehouse);
- selling goods or removing own goods from Hungary to another EU country (some exceptions apply);
- delivering immovable property on a turn-key basis (supplying goods with installation or assembly) in certain circumstances;
- selling admission fee to non-taxable customers for conference, exhibition or training in Hungary;
- supplying goods to final consumers (B2C supplies) in Hungary over EUR 35 000 threshold (distance selling).
Tax advantages and other compliance tasks to be considered
Depending on the given transaction you have to be either registered for VAT purposes, establish a branch or set up a subsidiary. Should you do not have neither VAT fixed establishment (FE) not CIT and LBT permanent establishment (PE) in Hungary, you will not be required to pay CIT, LBT, PIT and social contribution which will reduce your tax burden in Hungary. In this case the VAT registration is a less complex form of doing business in Hungary as you will incur ‘only’ one-time cost for registering your business for VAT with the HU TA and periodic cost for preparing your VAT returns. In some cases, you may be required to pay Environmental Product Fee (EPF), file Intrastat, European Sales and Purchase Listing or register for Electronic Road Transportation Control System (also known as EKAER).
As you may know, as of 1st of July 2018 companies issuing B2B invoices with a VAT amount above HUF 100,000 (approx. EUR 320) are required also to report these invoices immediately to the HU TA through an automated technical solution.
Fiscal representative or tax representative (tax agent)?
Under the Hungarian rules non-EU companies should be required to appoint fiscal representative in Hungary. As the fiscal representative has to be joint and several liabilities over the Client’s tax obligations in Hungary, therefore it is an industry practice to provide bank guarantee or bank deposit to secure the fiscal representative from potential damages. Fiscal representative is responsible to ensure all tax obligations on behalf of the non-EU company in Hungary, including invoicing requirements, record keeping, EKAER obligations, tax filings and payments, enquiries from the tax authorities and tax inspections.
How can we help you with your Hungarian tax number?
RSM Hungary can help you to determine the necessity of your VAT registration in Hungary, to proceed with the registration with the authorities as well as to fulfil all necessary VAT and administrative obligations.
As we are one of the leading fiscal representative service providers in Hungary, launched our international fiscal representation service in Hungary in 2004 we are able to provide VAT services for non-EU businesses as well. As a result of our organic growth and the professional experience accumulated during the years, today we have a highly skilled expert team with a good command of foreign languages working on these assignments.
Contributing Advisors
Myles CulmerDirector, BDO Advisory Services