Key takeaways
- Hungary VAT rates: The standard VAT rate is 27%, with reduced rates of 18% and 5%, plus a 0% rate for intra-EU and international transport services.
- Registration rules: There is no VAT threshold for foreign businesses, and non-EU companies must appoint a fiscal representative.
- Filing & penalties: VAT returns are filed monthly, quarterly, or annually, and late filings or payments can lead to fines up to HUF 500,000 and daily interest penalties.
Expanding your business to Hungary requires a solid understanding of its VAT (Value Added Tax) system. This guide provides a comprehensive overview of the Hungarian VAT landscape, exploring rates, registration, returns, and other essential aspects to help you navigate VAT in Hungary efficiently.
What is the Hungary VAT rate?
In Hungary, VAT is referred to as "Általános forgalmi adó" (AFA). The Hungarian VAT system includes a standard VAT rate of 27%, two reduced rates of 18% and 5%, as well as a zero Hungary VAT rate.
Registering for VAT in Hungary
There is no registration threshold for resident businesses in Hungary, although they can request an exemption if their sales do not exceed HUF 12 million. Foreign businesses with taxable activities in Hungary, but without a permanent establishment, must register regardless of their turnover.
In alignment with the rest of the EU, the distance-selling threshold in Hungary is €10,000. So if your cross-border sales to Hungary exceed this amount, VAT registration becomes mandatory. Businesses must also be registered for VAT in Hungary if they store products in the country or are part of a fulfillment program that includes Hungary, such as FBA (Fulfilled-by-Amazon).
To register, complete the necessary forms and submit them to the Hungarian Tax and Customs Administration. Upon successful registration, you will receive a Hungary VAT number, crucial for all VAT-related transactions. The entire process typically takes no longer than a couple of weeks.
Fiscal representative in Hungary
For non-EU-based businesses conducting taxable activities in Hungary, appointing a fiscal representative is mandatory. The representative helps in fulfilling VAT obligations and liaising with tax authorities and is jointly responsible for all VAT liabilities in the country.
Hungarian VAT return filing and penalties
Hungarian VAT returns must be filed electronically. Newly registered businesses are required to file monthly for the first three years, after which the following frequency of VAT return filing applies:
- Monthly return: Businesses owing more than HUF 1 million in VAT for the preceding year or those who are part of a VAT group.
- Quarterly return: Businesses owning between HUF 250,000 and HUF 1 million in VAT for the preceding year.
- Annual return: Businesses owing less than HUF 250,000 for the preceding year, provided they aren’t engaged in inter-community trading.
The deadline for Hungarian VAT returns and payments is the 20th of the month following the reporting period. For annual filers, the deadline is February 15.
Failing to file a VAT return can lead to fines ranging from HUF 100,000 to HUF 500,000. Late VAT payments attract an interest penalty of 1.8%, with interest calculated daily.
Hungarian Intrastat declarations
Intrastat declarations are required for businesses involved in intra-EU trade exceeding certain thresholds. The threshold for arrivals is HUF 250 million, and for dispatches, it's HUF 140 million. Declarations must be submitted electronically by the 15th of the following month for the supply of goods above that threshold.
Reverse charge mechanism in Hungary
The reverse charge mechanism is applicable in Hungary for intra-EU transactions and certain domestic transactions, transferring the VAT liability from the supplier to the recipient. This is particularly relevant for foreign suppliers without a VAT registration in Hungary.
Frequently asked questions
What is the VAT rate in Hungary?
Hungary has one of the highest VAT rates in the EU, with a standard rate of 27%. Reduced rates of 18% (for food and events) and 5% (for books, medicines, and accommodation) also apply, as well as a 0% rate for intra-EU and international transport.
When do I need to register for VAT in Hungary?
There is no threshold for non-resident businesses — VAT registration is required as soon as taxable activities begin. Resident businesses can request an exemption if annual sales are below HUF 12 million. The EU distance selling threshold is €10,000.
How do I register for VAT in Hungary?
Businesses register with the Hungarian Tax and Customs Administration (NAV). Once approved, you’ll receive your Hungarian VAT number within a few weeks.
Do foreign businesses need a fiscal representative in Hungary?
Yes. Non-EU businesses must appoint a fiscal representative, who is jointly responsible for compliance and VAT liabilities.
How often must VAT returns be filed in Hungary?
- Monthly – for new businesses or those owing over HUF 1 million
- Quarterly – for those owing HUF 250,000–1 million
- Annually – for those owing under HUF 250,000 and not trading intra-EU
Returns and payments are due by the 20th of the following month (or February 15 for annual filers).
Are Intrastat declarations required in Hungary?
Yes. Businesses must file Intrastat returns if annual EU trade exceeds HUF 250 million (arrivals) or HUF 140 million (dispatches). Declarations are due by the 15th of the following month.
