VAT Exemption Thresholds
- Higher Exemption Limits: The threshold for opting for VAT exemption has been increased to 18 million HUF (approximately €50,000). This allows smaller businesses to remain outside the VAT system, reducing their administrative burden.
- Eligibility for Exemption: Businesses can choose to remain VAT-exempt if their sales do not exceed the new threshold in either the previous year or the current year.
Electronic Data Reporting
- Mandatory Electronic Reporting: Businesses are required to electronically report VAT data related to invoices issued, including those from e-invoices and e-receipts. This aims to streamline compliance and facilitate real-time monitoring by tax authorities.
- Data Submission Requirements: Companies must submit details of sales and purchases, including the VAT amounts, to the tax authority via a designated electronic platform. This includes invoices issued by authorized e-invoicing systems.
Compliance and Transparency Enhancements
- Detailed Reporting Obligations: The amendments specify that businesses must provide detailed data on VAT-exempt transactions, improving transparency and reducing tax evasion risks.
- Regular Updates: Businesses must regularly update the tax authority on their VAT transactions, ensuring compliance and enabling easier audits.
Changes to VAT Deduction Rules
- Input VAT Deductions: The law clarifies the rules around input VAT deductions. Businesses are required to provide adequate documentation to support their claims for VAT deductions, especially in cases involving cross-border transactions.
- Increased Scrutiny on Deductions: The tax authority will apply stricter standards for validating input tax claims, particularly for businesses transitioning between VAT-exempt and VAT-registered statuses.
Penalties for Non-Compliance
- Stricter Penalties: The amendments introduce higher penalties for late or incorrect VAT reporting, emphasizing the importance of timely compliance.
- Automatic Rejection of Non-Compliant Invoices: Invoices not reported within specific time frames will be rejected, affecting the ability to claim input tax credits.
Support for Small Businesses
- Simplified Compliance Procedures: For small businesses under the new exemption threshold, simplified reporting procedures have been introduced to ease the compliance burden.
- Transitional Provisions: Existing businesses transitioning to the new thresholds will be given specific time frames and guidelines to adapt to the changes without facing immediate penalties.
Alignment with EU Regulations
- Harmonization Efforts: The amendments aim to align Hungarian VAT laws with EU directives, particularly concerning VAT treatment in cross-border transactions and digital services.
- Facilitating Cross-Border Trade: New measures will simplify VAT handling for businesses engaged in international trade, promoting smoother operations within the EU market.
Focus on Family Support
- Family Tax Benefits: The law emphasizes benefits related to family support, including adjustments to how family allowances interact with VAT obligations, ensuring that families benefit from these measures without undue tax burdens.
Source cdn.kormany.hu
