Hungary: the mandate to e-invoice in the energy sector is now live

As Hungary moves towards a more transparent and efficient business environment, the introduction of mandatory electronic invoicing (e-invoicing) in the energy sector and the Real Time Invoice Reporting (RTIR) system are set to transform how companies operate.

Starting this year, electricity and natural gas suppliers must comply with stringent new regulations designed to combat VAT fraud and streamline invoicing processes.

This significant legislative shift not only impacts how businesses manage their invoices but also emphasizes the importance of adhering to updated VAT rules and electronic document retention. Let's dive into the details of these groundbreaking changes and what they mean for businesses operating in Hungary!

What does the latest change entail?

Effective 1 January 2025, electronic invoicing (e-invoicing) is compulsory in Hungary for electricity and natural gas suppliers, including traders, distributors, and transmission system operators supplying electricity and natural gas to non-private entities. This requirement is governed by Government Decree no. 273/2007 and Government Decree no. 19/2009.

According to Hungary's VAT regulations, non-private entities include partnerships, trusts, corporate entities, and NGOs.

This legislative update seeks to curb VAT fraud related to electricity and natural gas transactions. It also underscores the necessity of complying with Hungary’s VAT rules regarding the retention of electronic documents. The new regulations provide leeway in the format of e-invoices, allowing for any method approved by the Hungarian tax authority. Nevertheless, e-invoices must be archived electronically following the prevailing VAT legislation.

What other digital requirements do businesses need to abide by in Hungary?

Aside from electronic invoicing, entities doing business in Hungary must also comply with Real Time Invoice Reporting (RTIR).

The objective of the implementation of RTIR is to tackle the grey economy by discouraging tax fraud.

Under the RTIR requirement, businesses can issue invoices using printed invoice forms, an invoicing program, or a cash register.

However, data on invoices issued from block (or invoicing program) must be disclosed to the National Tax and Customs Administration (NTCA) if the conditions are fulfilled. This means that invoices can be issued in paper, PDF, or XML format, but the invoice data must be reported to NTCA in XML format, encoded to BASE64 format.

Who is affected by the RTIR mandate?

The requirement to report invoice data affects VAT-registered established and non-established businesses, including those conducting tax-exempt activities, and B2G, B2B, and B2C domestic and cross-border transactions are included in the mandate.

Since 1 July 2020, onward, data must be provided for all invoices and documents treated as invoices which

• are made out / issued by a domestic taxable person
• to a domestically registered taxable person
• about any domestic transaction carried out in line with the provisions of the VAT Act.

Invoices should be generated within eight days of the supply date, or within the 15th day of the month after the supply for intra-community transactions. If payment is made on or before the supply date, the supplier must issue the invoice right away. That being said, invoice data must be transmitted electronically to NTCA immediately upon issuance of an invoice. The process of reporting must happen automatically and without human intervention.

What is the scope of data to be included in the online data disclosure file?

Although most of the data to be disclosed is still the obligatory data content of the invoice according to the Act on VAT, from 4 January 2021, additional data must also be disclosed in the data disclosure.

• Such data is the fact that the transaction falls outside the territorial scope of the Act on VAT if the place of fulfilment of the transaction is not domestically,
• The data disclosure should also include whether the transaction qualifies as a supply of goods for consideration pursuant to Section 11 of the Act on VAT or a supply of services for consideration pursuant to Section 14 of the Act on VAT, if the VAT-liable person carries out such a transaction for a person or organization other than him, and whether the customer receiving the product or service is obliged to pay the VAT indicated in the invoice.
• The currency used to calculate the tax base; in the case of foreign currency, the exchange rate used to convert the tax base into HUF, and the data converted into HUF, if the invoice is issued with an invoicing program, must also be included.

In the case of an invoice issued to a non-VAT liable natural person customer, the disclosure shall contain less data than the obligatory data content of the invoice.

Can invoices be scanned and sent via email to the NTCA?

No. When disclosing data on invoices, not a pictorial copy of the issued invoices must be sent in, but the data on the invoices must be made available to NTCA in a specific structure and manner.

How should the data reporting on invoices take place?

Data on issued invoices can only be disclosed in the Online Invoice System or with the help of a third-party e-reporting provider with an invoicing function suitable for issuing invoices, such as eezi. If a business is disclosing the data content of the invoices made out or issued to NTCA in any other form or manner, they are not fulfilling their obligation to disclose online data.

The invoicing program shall provide data on invoices already made out, i.e. on invoices with a serial number on which (under the given serial number) the program no longer provides the possibility to enter new data or to delete or overwrite any of its data. Accordingly, after the data have been provided, the invoice data cannot be supplemented with any further information in support or in proof of the data supplied to NTCA.

It is advisable to keep NTCA's response messages about the fulfilment of the data provision in a retrievable way.

Thinking of doing business in Hungary?

If you have any questions or need assistance navigating Hungary's e-invoicing and RTIR requirements, please reach out to the eezi. We're here to help you ensure compliance and streamline your invoicing processes!