Tax authority to usher in a new era in e-invoicing: Are businesses ready?
Tax & Legal Alert | PwC Hungary | September 21, 2020
It is no longer uncommon for the Hungarian tax authority to turn restrictive rules into opportunities that benefit companies – as has been the case with online invoice data reporting. Many companies have found it burdensome that rather than simply issuing their invoices, since 2018 they have had to report invoice data to the tax authority in real time, while navigating a fast-changing regulatory landscape.
On 7 September 2020, the Hungarian tax authority published a new file structure that will be the basis for online reporting in 2021. From 1 January 2021, taxpayers will be able to submit their invoice data to the tax authority’s system using version 3.0 of the tax authority’s XSD schema. The new schema will become mandatory from 1 April 2021, after a transitional period during which no sanctions will be imposed.
In our previous newsletter, we noted that businesses can also use the reported XML files as e-invoices. This means that invoicing can be a one-step process: rather than issuing an invoice to customers and simultaneously reporting the data to the tax authority, companies only need to report the XML file which will then be made available to customers.
What is new is that the tax authority’s version 3.0 XML file gives invoice issuers a range of e-invoicing opportunities. The introduction of version 3.0 is expected to encourage wider adoption of electronic invoicing between companies, without companies having to do anything other than complying with their version 3.0 reporting obligation.
As communicated by the tax authority, there will be legislative changes to e-invoicing via mandatory online transaction reporting in the autumn.
In concrete terms:
- The tax authority’s version 3.0 XML already contains a separate field where invoice issuers can indicate to their customers that the given XML file is not only for reporting to the tax authority, but also qualifies as an e-invoice for the customer.
- All that is required is for invoice issuers to load from their invoicing system into the XML file all the data that would normally appear in the invoice, to indicate that it is an e-invoice, and to generate a hash value from the invoice data and put it in the XML file.
- But how to put all the data into the XML file that have so far been included in the invoices, in addition to the mandatory data? The tax authority has prepared for this, and version 3.0 of the XML schema already contains fixed fields for commercial data that have so far been missing, so for example, it is now possible to enter the PO number or the bank account number in a fixed field.
- Finally, it is important that invoice issuers inform their customers that they will be issued an e-invoice.
What will companies need to do to prepare?
Companies will first need to modify the current 2.0 XSD schema and migrate to the tax authority’s version 3.0 schema, which they are legally obliged to do. They will then need to examine what additional data are in their invoices other than the mandatory data, and will have to include them in the 3.0 schema as well. They will also have to place an algorithm that generates a hash code into the online invoice data reporting function. How much time will this take? In addition to migrating to the tax authority’s 3.0 schema, the additional IT development required may take an hour or two.
As well as preparing for the above, we recommend that you also consider introducing this method of e-invoicing.
Because of its simplicity, e-invoicing may gain significant ground in Hungary from 1 April 2021 for invoices issued for domestic transactions. So it should not come as a surprise if you get your invoices from your suppliers or if your customers request their invoices as described above in 2021.
If you need more information on how to prepare, the legal framework for the new e-invoicing solution, how to retain invoices issued in this way, and what IT development you need to undertake, please contact PwC’s tax advisory and Smart Tax teams.
For more information, please contact your regular contact person, or
Gábor Farkas, director
gabor.farkas@pwc.com
dr. Kornél Szeőcs, senior manager
kornel.szeocs@pwc.com
Barbara Palkovits, manager
barbara.palkovits@pwc.com
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