Tax representation, VAT management and obligations in Hungary

Appointing a tax representative is a legal obligation. This applies to every company based outside the European Union engaging in transactions taxable in Hungary, such as:

• Importation of goods from countries outside the EU to Hungary,
• Exportation from Hungary to countries outside the EU,
• Purchases of goods supplied in Hungary from EU member states,
• BtoB supplies of goods from Hungary to EU member states,
• BtoC supplies of goods and services to Hungarian individuals, including via Marketplaces.

Failing to appoint a tax agent is heavily punished by the Hungarian tax administration and makes companies ineligible for VAT refund.

Moreover, please do note that European partners (furnishers, suppliers, clients, marketplaces…) systematically refuse to deal with non-European companies that failed to appoint a tax representative, as it would be too risky for them.

Beyond the legal obligation, tax representation is a simple and economical alternative to physical implantation by creating a branch or a subsidiary.

In fact, tax representation allows foreign companies to enter the Hungarian market while avoiding the costs and constraints of physical implantation that involves the creation of a structure and the management of a separate accounting.

In particular, a foreign company that has appointed a tax representative in Hungary will not be subjected to the corporate tax in Hungary .

The activity is completely remote-controlled from abroad through the tax representative who will handle all the VAT-related obligations required by the Hungarian tax administration: obtention of a VAT number, submission of periodic declarations and VAT payment, submission of requests for VAT refund, etc…

Intra-community VAT is a complex subject, constantly evolving. It requires an extremely detailed expertise.

By choosing ASD Group, you will receive the support of a team of tax experts in intra-community VAT. They will back you up day to day and help secure your activity.

Choosing ASD Group also means choosing a reliable partner, working with the Hungarian tax administration for over 20 years. We will be the guarantor of your business in Hungary and of your reputation with the Hungarian tax services.

ASD Group is also a network of branches located in 25 countries within and outside the European Union.

The transformation and digitalisation of tax is becoming more widespread.

So as to be at the forefront of these digital tax issues, ASD Group has invested in developing platforms for online services, which make managing requirements and exchanges between taxpayers and the tax office much easier.

• Designating a tax representative is an obligation for companies established outside of the EU;
• The standard VAT rate in Hungary is 18%;
• The reduced VAT rates in Hungary are 18% and 5%;
• There are also various of parafiscal taxes that apply to specific products or activities;
• BtoC: the threshold for distance selling is HUF8,800,000 (€32,257);
• BtoB: the optional reverse charge mechanism of Article 194 of Directive 2006/112/EC applies (under specific conditions):
  • to supplies of goods with installation in Hungary,
  • and to some supplies of services located in Hungary.
• Intra-Community flows of goods must be declared on Intrastat and EC Sales List declarations;
• Failure to submit EC Sales List can lead to taxation of Intra-Community supplies;
• Tax treaties define the concept of permanent establishment regarding Corporation Tax.