Hungary: the mandate to e-invoice in the energy sector set to go live soon

Hungary will require e-invoicing for electricity and gas suppliers by July 2025 to combat VAT fraud. Additionally, Real Time Invoice Reporting (RTIR) mandates real-time data submission to tax authorities for all invoices issued by registered businesses, highlighting the importance of compliance.

Hungary: the mandate to e-invoice in the energy sector set to go live soon
Photo by Keszthelyi Timi / Unsplash

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

Although general b2b electronic invoicing is not mandatory yet, starting this year, electricity and natural gas suppliers must comply with stringent new regulations in Hungary designed to combat VAT fraud and streamline invoicing processes.

This significant legislative shift not only impacts how the taxpayer manages 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?

Initially planned to go live on 1 January 2025, but now postponed to July 2025, eInvoicing in Hungary is compulsory 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 in Hungary. 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, an e-invoice must be archived electronically following the prevailing VAT legislation. 

Aside from e-invoicing in Hungary, what other digital requirements do businesses need to abide by?

Aside from a mandatory e-invoicing system, entities doing business in Hungary must also comply with Real Time Invoice Reporting (RTIR), or live reporting per invoice.

Real-Time Information Reporting (RTIR) took effect in Hungary on 1st July 2018. The objective of the implementation of Hungarian real-time invoice reporting is to tackle the grey economy by discouraging tax fraud.

Under the real-time VAT invoice reporting requirement, companies registered in Hungary for VAT can issue invoices using printed invoice forms, an invoicing program, or a cash register, but companies must report invoice data to the tax authorities in real-time.

However, data on invoices issued from block (or invoicing program) must be disclosed to the Hungarian National Tax and Customs Administration (NTCA) if the conditions are fulfilled. This means that an invoice can be issued in paper, PDF, or XML format, but the data of invoices sent must be reported to the NTCA (NAV) portal in XML format, encoded to BASE64 format. A PDF invoice issued by an ERP is considered an electronic invoice in Hungary. 

Who is affected by the Hungarian real-time reporting obligations?

The requirement to report the invoice data affects businesses registered in Hungary, including those conducting tax-exempt activities, and B2G, B2B, and B2C transactions are included in the mandate. This system allows the National Tax and Customs Administration of Hungary (NAV) to validate transactions in real-time.

Since 1 July 2020, onward, data must be reported in real-time 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 submitted electronically to the NAV system immediately upon issuance of an invoice. The process of real-time information reporting must happen automatically and without manual intervention.

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

Although most of the invoice details to be disclosed are still the obligatory data content of the VAT invoice according to the Act on VAT, since 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 in Hungary for VAT purposes,
  • The VAT 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 amount 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 of data in real-time shall contain less data than the obligatory data content of the invoice. Personal data such as name and address must always be included on an invoice but must not be disclosed to NAV. Personal data of non-taxpayers is thus protected. The name and address and other invoice information of the parties in b2g and b2b transactions must be communicated to NAV.

Can invoices be scanned and sent via email to the NAV online invoicing system?

No. When disclosing data on invoices, not a pictorial copy of the issued invoices must be sent in, but the data on invoices must be made available to NAV in a specific structure and manner. Users can use the NAV system, or a third-party provider to assist. 

How should the real-time invoice reporting that is mandatory in Hungary 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 NAV in any other form or manner, they are not fulfilling their obligation to disclose online data.

The invoicing program shall provide data on an invoice 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 NAV.

It is advisable to keep NAV's response messages set out in the technical documentation about the fulfilment of the data provision in a retrievable way - no need to worry about these when partnering with eezi!

Looking to register for VAT in Hungary and worried about your tax compliance?

If you have any questions or need assistance navigating Hungary's e-invoicing process, RTIR and other tax reporting requirements, please reach out to the eezi. We're here to help you ensure that you stay compliant and help you to streamline your VAT reporting, navigate draft VAT returns and invoicing processes!

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