Significant changes in the filing of VAT returns and in invoice data reporting via the Online Invoicing Platform from 1 July 2020
Tax & Legal Alert | PwC Hungary | June 8, 2020
According to legislative changes already adopted, from 1 July, companies can expect significant changes in invoice data reporting to the Tax Authority: modifications will affect both the completion of domestic recapitulative statements for VAT returns, and online invoice data reporting.
Due to the circumstances created by COVID-19, many companies have raised the question as to whether the legislator intends to postpone these changes’ entry into force. However, the Tax Authority has confirmed on several occasions that such a postponement cannot be expected, hence we summarize below the changes companies need to prepare for over the next month.
Changes concerning recapitulative statements (the “M” sheets of the VAT return) from 1 July 2020
Under the current regulations, taxpayers are obliged to provide data concerning the invoices they receive for the domestic acquisition of goods and services – if the output VAT content of these invoices exceeds HUF 100,000 – in the VAT return in which they exercise the right to deduct tax based on those invoices. Taxpayers must fulfil this data reporting obligation by completing the recapitulative statement (“M” sheets) included in the VAT return.
From 1 July 2020, the rules for the supply of data by taxpayers will change significantly, as the previous output tax threshold of HUF 100,000 will be abolished. Under the new regulations, taxpayers’ recapitulative statements are required to include all invoices on the basis of which they exercise the right to deduct in each period, as well as any document that qualifies as an invoice whose effect is taken into account in that period.
As confirmed by the Tax Authority, reverse-charge invoices are not subject to the recapitulative reporting obligation. It is also not necessary to report invoices without VAT, since there being no VAT charged in such invoices, the right to deduct cannot be exercised.
It is important to emphasize that the reporting obligation will continue to apply only to invoices in respect of which the taxpayer exercises the right to deduct. Therefore, if the taxpayer cannot deduct tax due to the nature of their activity or the nature of the product or service acquired, such invoices need not be included in the recapitulative statement. However, if the taxpayer exercises the right to deduct in respect of an invoice only partially, the full amount of output tax indicated in the invoice must be included in the recapitulative statement, not only the tax actually deducted.
It is clear from the above that the change will impose a significant administrative burden on some taxpayers, as the number of “M” sheets and invoices submitted so far may increase substantially with the introduction of the new rules.
It is important for PwC Hungary to offer efficient solutions and provide expert support to its clients, this way in order to facilitate our clients’ business processes and to reduce their administrative burden, the IT and tax experts of our Smart Tax team have created T.R.U.S.T., an automated form-filling application that makes it quick and easy to prepare AbevJava forms for VAT returns.
Key functions of T.R.U.S.T. for completing the “M” sheets of VAT returns:
- Basic version for filling the ’M’ sheets: The data have to be uploaded using the Excel template provided by PwC. The application will process this template, indicating any logical or formal errors, and after the errors have been corrected, it will load the data into the “M” sheets of Form 65.
- Module for filling the ‘M’ sheets by loading the data of the Online Invoice system: As above, the data have to be loaded into the application using the Excel template provided by PwC. In addition, the application will download data from invoices reported by suppliers from the Tax Authority’s Online Invoice system. The application will then compare the two data sets so that the reported data can be corrected and supplemented. With this solution, our clients can make sure that they report invoices in the “M” sheets of Form 65 that have been validated by the Tax Authority.
Changes to the online invoice reporting obligation from 1 July 2020
As of 1 July 2020, taxpayers are required to comply with the new legal obligations resulting from the change in the legislation regarding the online data reporting as follows:
- data have to be reported to the Tax Authority using version 2.0 XSD of the Online Invoice, and
- in accordance with the abolition of the HUF 100,000 threshold, data shall be provided on all invoices issued by the Company to a domestic taxable person for domestic transactions.
In the light of the latest information - communicated by the Ministry of Finance - the Tax Authority, taking into account the current circumstances created by COVID-19, imposed a moratorium on fines until 30 September 2020 in specific cases. However, despite the allowance, we recommend for Companies to take the necessary steps in order to comply with the data reporting requirements coming into force as of 1 July as soon as possible.
An IT solution which is able to automate the booking process of domestic supplier invoices
Taking advantages of the opportunities provided by recent legal changes, PwC experts created the PwC ByX (Book Your XML) software which can be used to automate the booking process of domestic supplier invoices, significantly reducing the time spent on booking incoming invoices, and also manual data recording - which causes a lot of errors - can be eliminated. The solution retrieves the supplier invoices reported to the Company from the tax authority's Online Invoice system at predetermined intervals and organizes them into a secure, systematic database, without any intervention. After that ByX creates an accounting file - adjusted to the Company's accounting system - which can be loaded into the accounting program.
For more information, please contact your regular contact person, or László Deák (laszlo.deak@pwc.com) or Gábor Farkas (gabor.farkas@pwc.com).
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