VAT registration

In business transactions that involve Hungary, a VAT liability may arise, which in some cases must be fulfilled by the foreign company. If the reverse charge mechanism (R/C) cannot be applied, Hungarian VAT registration may become necessary.

The tax advisor of Tax&Bell Hungary summarizes the key points.

When does a VAT liability arise in Hungary?

If the place of supply of a transaction, as defined by the Hungarian VAT Act, is Hungary, then the VAT obligations related to that transaction must be fulfilled in accordance with Hungarian rules.If a non‑Hungarian business participates in a transaction whose place of supply is in Hungary, it will, in most cases, incur a Hungarian VAT liability.

Typical transactions that create a Hungarian VAT liability for a foreign business?

• Maintaining stock or inventory in Hungary

• Transporting own goods to Hungary without direct sale

• Participation in a chain transaction where either the dispatch or arrival country is Hungary

• Services related to Hungarian real estate

• Participation in construction activities in Hungary

When does a foreign business not incur VAT payment or registration obligations?

• In B2B transactions, where the customer is also a VAT‑taxable person, the reverse charge mechanism applies, provided that the supplier has no establishment in Hungary for VAT purposes. In this case, the Hungarian customer may asses, declare and pay the VAT.

• In the case of distance sales, if the total annual value of intra‑EU distance sales does not exceed EUR 10,000. Below this threshold, VAT of the Member State where the seat of the supplier locates may be applied.

What is the OSS system for? Can it replace VAT registration?

Not in all cases.The One Stop Shop (OSS) scheme was developed to support businesses engaged in distance sales that exceed the EUR 10,000 threshold or otherwise do not meet the conditions for simplification and therefore must charge Hungarian VAT.By using the OSS scheme, such businesses do not need to obtain a Hungarian VAT number. Instead, they can declare and pay the VAT due in other Member States — including Hungary — directly through their home tax authority as part of their regular OSS returns.

What qualifies as distance selling?

Not all cross‑border transactions qualify.As a general rule, intra‑Community distance sales occur when goods are transported from one EU Member State to another in the course of selling to non‑taxable persons, such as private individuals.

How does VAT registration work?

A VAT number must be requested from the Hungarian Tax Authority (National Tax and Customs Administration – NAV) by submitting a written registration form.The application must include documents proving the business’s legal and VAT status and the signature right.The tax authority typically issues and communicates the VAT number within approximately two weeks.

After registration, the foreign business must grant power of attorney to a person or service provider who will submit the VAT returns.VAT returns must be prepared and filed electronically.

How can Tax&Bell Hungary and its experts assist?

• Reviewing planned transactions

• Assessing whether VAT registration is required

• Handling the VAT registration process

• Preparing monthly VAT returns under power of attorney

• Providing advice on any Hungarian tax matters

Tax&Bell Hungary is a professional HR and Tax advisory firm you can rely on—whether you need consulting or an audit, or you wish to outsource your HR processes.

Take advantage of our free 30minute Tax Consulting Session or HR Consulting Session, during which we assess your and your company’s real needs and provide immediately useful guidance.

Feel free to contact us: info@taxandbell.hu