The grace period granted for the application of the online invoice reporting’s new rules (version 2.0) expires on the 30th of September, 2020. Starting from this date the Hungarian Tax Authority can levy a penalty up to 500,000 HUF per invoice during a tax audit.
From 1st of July, 2020 the Hungarian Tax Authority has extended the online invoice reporting obligation to all domestic B2B transactions (regardless of the VAT amount) including reverse charge and certain VAT-free invoices.
In our previous article, we have collected the deadlines and technical/legal regulations in connection with online invoice reporting.
What needs to be considered during the performance of the online reporting obligation to avoid penalties?
The result of the data supply depends on many factors. Being compliant with the law is very important, meaning that the invoice content should meet the requirements of the Hungarian VAT Law. It is also important to comply with the legal requirements of online invoice reporting version 2.0 and to manage the records properly. Such regulations are the shortened deadline of issuing the invoice, changes related to the VAT-free transactions, and the increased administrative burden of companies using paper format invoice-blocks.
However, beyond the legal rules, there are certain technical conditions as well which need to be considered and the implementation of these rules may cause even more headaches for the companies.
In this respect, it is important to pay attention to the properly designed data export processes, the perfect matching of the xml file and the invoice content, and the correct operation of the invoicing processes.
The data reporting system cannot modify the invoice data. The idea that the primary goal is to have the data provision correct is wrong. If the invoice was issued with incorrect data content, the reporting program must send this (wrong) data content to the tax authority.
Additionally, the result of the data supply should be checked by the invoicing system with a query because the reporting is considered to be completed only in this case according to the law.
International ERP systems and the Hungarian online invoice obligations
For multinational companies, it is especially important that the ERP / enterprise management system is properly configured to comply with Hungarian accounting legislations, to have a properly working connection with the local accounting system and the online invoicing system of the Hungarian Tax Authority. This is often a very difficult exercise, which requires both IT and accounting professional knowledge.
Localization of ERP systems is typically more time consuming and expensive than the implementation of a local invoicing system. However, in a multinational environment, it is necessary to comply with the group’s IT policy and the designated systems from which managers receive consolidated reporting information.
Therefore, it is worth considering whether the development of the ERP system or the implementation of a complementary satellite system is the more efficient solution. The definition of the invoicing system according to the Hungarian Tax Authority provides some possibilities, because every IT program, function, or program module is considered as an invoicing program, which is able to issue invoices, including online invoicing systems. We can consider the module generating the invoices as a base module of the invoicing system, while the data reporting function can be provided by another – satellite – system. The combined solution provided by the two systems can be considered as a complete invoicing system according to the law, i.e. we have the possibility to consider the software suitable for data reporting as part of the invoicing program if we can ensure real-time data transfer without human intervention.
A solid background on the road to tax digitalization
BPiON’s accounting and process transformation professionals have jointly developed the TAXapiON application, which ensures the compliance of international accounting systems with Hungarian legislation, complete with a continuous invoice monitoring service and the support of the best professionals.
If you feel that your company is not yet confident enough and may need professional support with auditing the accounting and invoicing process or with the system implementation, contact BPiON’s online invoice reporting experts!