Value added tax
Value Added Tax (VAT) plays an important role in the Hungarian tax system: it represents the largest source of the budget’s tax revenues; nearly one third of revenues come from VAT. Accordingly, the tax authority pays particular attention to the audit of VAT liabilities. More than 80% of the findings relate to VAT.
In order to minimize tax risks, it is essential for taxpayers to place increased emphasis on the fulfilment of their VAT obligations, the correct VAT treatment of transactions and the preparation for tax audits.
This imposes significant challenges on taxpayers not only because there are many uncertainties in the relating legislation, but when interpreting and applying the national provisions, taxpayers also have to take into account the principles and provisions of the European Union’s common system of value added tax. An additional difficulty is that there have been a number of changes in recent years in the VAT legislation (as a result of national and European Union-led initiatives), e.g., regarding the place of supply of services, the invoicing and invoicing system requirements, cross-border transactions, e-invoicing, storage of invoices, reverse charge mechanism. In addition, in order to fight off the increasing level of VAT fraud, the tax authority requires stricter and more detailed reporting and documentation year by year. To comply with these requirements and to ensure timely adaptation is almost impossible for taxpayers due to the lack of information or to the limited administrative capacity.
Our services are designed to help you with the proper implementation of VAT provisions, to keep you updated on changes to Hungarian and EU legislation and by this to help you identify the VAT risks and the most appropriate structures from a VAT perspective.
- Determining the VAT implications of cross-border transactions
- Advising on the VAT treatment of special transactions (e.g., chain transactions, cross-border movement of own stock, commissionaire structure, contract manufacturing, mediated services, tooling transactions, transfer of going concern, guarantee transactions, discounts, events, transactions involving a branch or a permanent establishment)
- Advising on the requirements of “due care” for the purposes of VAT exemption and deductibility of input VAT, documentation review, design of internal policy on this matter
- Advising on invoicing, invoicing software requirements, e-invoicing
- Determining the Hungarian VAT obligations of foreign businesses; assisting with VAT registration, VAT reclaims; determining whether a fixed establishment for VAT purposes is created
- Reviewing the tax implications of transactions relating to immovable property (applicability of reverse charge mechanism, VAT treatment of payment instalments, determination of place of supply)
- VAT health-check: review of the company’s transactions and/or documentation in order to identify VAT risks and saving opportunities
- Review of VAT returns and assistance with self-revisions
- Representation before the Tax Authority and assisting with tax authority audits
- Analysis of ECJ cases concerning the above matters, determining their applicability to your transactions
- Ad-hoc advisory services
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