Expansion of domestic reverse charge mechanism

Aiming to reduce tax frauds within the steel industry, the domestic reverse charge system has been extended for certain metal products. The domestic reverse charge has also been extended for employee and staff leasing services, as well as student-work placements irrespective of the purpose of such services (previously, these services were reverse charged only in the case of construction work or activities subject to a construction permit issued by an authority).

Mandatory report and indication of the customer's tax number

The customer's tax number has to be indicated on invoices containing VAT above HUF 1m (previously HUF 2m). All invoices containing VAT over this threshold have to be reported (indicated on the itemised domestic recapitulative statement), but domestic reverse charge transactions are excluded from the obligation. In order to simplify the administrative burden, it is possible to include all invoices which contain domestic VAT summary reports on the domestic recapitulative statement regardless of whether the threshold is reached.

Elimination of tax exemption

Portfolio management of certain financial assets (including deposit, current accounts, payments, transfers, debts, as well as shares, debentures and other securities) are now subject to VAT following the recent judgment of the European Court. However, management of tax exemption still applies to portfolio management services provided to private pension funds, voluntary mutual insurance funds and institutions for occupational retirement provision.

Change in the place of supply for digital services

In compliance with the EU-wide changes provided by the VAT Directive, new rules govern the place of supply of business to consumer telecommunications services, radio and television broadcasting services and electronically supplied services. For these services, VAT is now charged in the country where the customer is based, so the general rate of 27% has to be applied on services for Hungarian customers. In relation to administration, simplified registration and use of mini One Stop Shop scheme is also possible for EU suppliers.