- VAT Group Tax Liability Overview: Taxable persons in Hungary can form a VAT group with permission from the State Tax and Customs Authority, allowing them to operate as a single taxable entity, which eliminates individual VAT liabilities among members for intra-group transactions. The VAT Act stipulates that transactions between group members are not subject to VAT, and the group’s rights and obligations are collectively shared.
- Legal Succession and Transitional Issues: Changes in group status, such as forming, joining, or dissolving a VAT group, are treated as legal succession under the VAT Act. This means rights and obligations related to VAT are transferred between the legal predecessor and the successor, raising practical issues during transitional periods, especially regarding the timing of transactions and tax obligations.
- Third-Party Transactions and Tax Obligations: The VAT treatment of transactions involving third parties during the establishment or dissolution of a VAT group can lead to confusion regarding who is responsible for issuing invoices and fulfilling tax obligations. The legal continuity rules under the VAT Act dictate how such transactions should be handled to ensure compliance and proper tax reporting.
Source: gov.hu
