Distance selling in Hungary
The digitalization moves towards online selling and when it comes to the expansion of the company boundaries it has to face several legislative restrictions to comply with. International sales has never been easy, starting from capturing the attention of foreign consumer culture up to the administrative and logistic work that has to be done to successfully operate on several markets simultaneously. We seek to help companies in taxation matters and legislative compliance in the CEE region and enable them to reach out for this small yet important piece of distance selling cake
The value added tax is present in every EU country and has strongly harmonized rules and procedures, however Member States still retain the opportunity to introduce own restrictive controls over the VAT system to make it more efficient and help them fight against the VAT gap.
In Hungary the VAT is the highest in the EU, therefore the government has and still is continuously introducing number of controls in the VAT system to keep an eye on the activities of the companies. If you are a distance seller and you are selling to Hungary you have to be familiar with these regulations to avoid any unnecessary penalties that might affect your growth on the market.
First and most important is that if you are engaged in distance selling trading goods to individuals in Hungary, you need to register for VAT purposes if your sales volume exceeds 35.000 EUR (8.826.000 HUF) in a calendar year. Exceeding this threshold you are obliged to invoice your customers with a 27 percent VAT and issue a tax return until the 20th day of the following month. Most CEE countries operate on similar scheme, yet limits vary slightly from country to country.
The second crucial aspect is that if you are registered for VAT purposes you have to issue those invoices using a software that is compliant with the Hungarian legislation. This program needs to support the so-called “tax authority reporting” function, which enables the company to export data from the software in a format that is accepted by the tax authority. This is unique for the Hungarian market.
Digitalization makes our life easier but at the same time enables tax authorities and governments to have a greater insight of what companies are doing at their territory.
At KR Group we are using pioneer technology and utilise digitalization to successfully tackle the challenges of the legislative compliance. This enables us to assist you in any tax compliance matters you might be facing in the CEE region and through this partnership together we can make your business grow safely.