Scenarios for VAT registration in Hungary

Scenarios for VAT registration in Hungary

A company non-established in Hungary providing taxable sales of goods or services in Hungary, may be a reason that the company must request a Hungarian VAT number. The Hungarian VAT registration causes are harmonized with the EU directives, therefore in case of VAT taxable transaction the company is obliged for registration. In some further case any purchase (intra community acquisition or sales) or movement of own goods from or to any EU member may be a reason for the VAT registration.

The registration must be fulfilled prior to the taxable transaction, but it is possible to complete a retrospective registration.

Reasons for the registration

The following transactions may cause an obligation for VAT registration for a company:

• Local sales of goods with VAT or reverse charge
• Delivery of goods with installation
• Intra-community acquisitions
• Movement of own goods, or movement to consignment or inventory
• Implications on call-of-stocks
• Buying of goods in Hungary
• Intra-community supply of goods outbound from Hungary
• Organizing events, selling entry tickets
• Distance selling of goods (if the company has not chosen OSS scheme)

The distance selling threshold is zero if the company is not participating in OSS Scheme. The VAT registration may also be helpful when the company had implications filing the 8^th Directive VAT refund claim.

The registration is usually completed within 30 days after posting the correct documentation for VAT number request. Following the registration process the tax authority immediately creates an unique domestic Hungarian VAT number and an EU VAT number. The VAT number is valid as of the filing of the application or from a retrospective date depending on the intentions of the company.

Having a Hungarian VAT number does not necessarily mean that the company has a fixed establishment from VAT point of view. Furthermore, the Hungarian activity in some cases may trigger a Permanent Establishment and corporate tax may also apply, but these are not usual in case of commercial activity.

Filings

The VAT returns are obliged to be filed until the 20th of the following month after the month of reporting. The new VAT registration clients are obliged to file the VAT returns on monthly basis. The deadline of the payment is equal to the filing deadline.

The business activity of the company may trigger some other type of tax returns filings, for example: retail business tax, environmental protection fee.

It is recommended to check the business activity of your, whether it triggers a VAT registration or it can be avoided, please contact us for a consultation.