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Hungarian VAT numbers

Pursuant to the Act CL of 2017 on the Order of Taxation every tax payer in Hungary has to seek a tax number from the Hungarian Tax Authority (called NAV in Hungary) before being able to carry-on a business activity. Unlike other countries the tax authority in Hungary does not issue a separate tax ID number for different types of taxes, so every tax payer receives a single Tax ID, which is valid to identify the entity or the person for the purposes of all tax processes.

The Hungarian Tax ID contains 11 eleven digits with the structure below which makes it easy to determine whether your business partner is obliged to pay the Hungarian VAT or if the transaction is free of VAT:

xxxxxxxx-y-zz

Where the letters ’x’, ’y’ and ’z’ represent numbers:

  • xxxxxxxx– this part of the number identifies the taxpayer,
  • ythe so called VAT code
  • zzthe area code

The tax payer’s VAT code (y) may be any of the following:

  • 1 = personal VAT free taxpayer (generally small entities)
  • 1 = Taxpayer performing VAT free activity
  • 2 = Taxpayers under regular VAT rules
  • 3 = Taxpayers under the rules of simplified entrepreneur tax paying rules (not applicable anymore)
  • 4 or 5 = VAT group taxpayers

There are several differences between legal entities and individuals seeking Tax ID in Hungary. When founding a legal entity the founder has to complete a form to request a Tax ID, which is mandatory for every entity. Without Tax ID no business can be incorporated according to act CL of 2017 on the Order of Taxation.

When incorporating a business, the district tribunal court responsible for the company register submits the application directly to the tax authority, which makes the decision on whether you are entitled to a Tax ID or not. If the director has a previous criminal record, is a tax debtor or is banned from business management, the company will not be incorporated.

If any offence relating to tax fraud is committed, the Tax ID might be deleted by the tax authority immediately, after which the entity will be struck-off from the company register, which means it does not exist anymore.

Generally, a taxpayer that is not liable pay VAT is easy to recognise, having the so-called VAT number 2 in it’s Tax ID, however it can be changed immediately, when the conditions of being VAT free does not apply anymore.

For example, if the taxpayer reaches the VAT free income limit, currently 12 million HUF a year, (cca.: 34.000,- EUR) it is obliged to notify the tax authority immediately and the last invoice whith which the limit has been reached falls under the general VAT rules and the applicable measure has to be paid.

As the tax authority sees all invoices created (every taxpayer, with few exception is obliged to be in online contact with the tax authority and upload every invoice in real time) – it is highly recommended not to forget this notification.

TAX ID application process for individuals and self-employed entrepreneurs persons:

In some cases individuals do have to seek tax ID, which can be accomplished relatively easily. As every self-employed entrepreneurs and legal entities are obliged to maintain online contact with the tax authority, the application can be made online. It is important to note, that every individual, applying for an online tax ID has to have the customer portal registration, which can be done personally at any government office upon identification.

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"Further to the passing of my daughter, I contacted Peter to assist me with the closing of her bank account in Budapest. Peter was extremely helpful in dealing with the bank. Not an easy situation as receiving the proper information from them was quite challenging, but he definitely stayed on top of the case and did his utmost for ensure that the necessary was done.

He always kept me duly informed of the progress and provided assistance as well with the local steps I had to undertake here in Luxembourg wit the Hungarian Consulate. Peter also helped me with other Hungarian administrative documents which I had received for my daughter to ensure that nothing was left pending. He took the time to contact the required offices to advise them of the passing of may daughter and that whatever needed to be done with them was done. I would have not been able to solve this without his assistance.

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Murielle Gaudio (Jun 02, 2021)

VAT

This service is available across Hungary

Location

1Who is this service for?

Understanding local VAT rules and what actions need to be taken to ensure compliance are critical for businesses involved in providing services and products to other businesses and consumers resident in foreign countries.

National tax enforcement authorities tend to be zealous in relation to VAT compliance and infractions can prove extremely costly and disruptive.

2What does this service consist of?

  • Initial discussion to determine your particular situation
  • If you have received notification of an infringement, the tax lawyer will consider your legal options and best outcomes. Upon agreement, the lawyer will then represent you before national tribunals
  • If you need to understand how the local VAT rules and regulations would impact you and a proposed business plan, a report will be compiled. A follow-up meeting is generally arranged to deal with questions that arise as a result of the content of the report
Support services

3Free Support Services Included

When combined with the free and innovative Advocate Abroad support services you can be sure that you are obtaining completely transparent legal services from registered and regulated English-speaking lawyers abroad.These support services include:

  • Verification of the regulatory status of your professional.
  • Fees as recommended by the Local Professional Body
  • Fees specified in advance and legally guaranteed.
  • Service levels agreed in advance and guaranteed.
  • All professionals must hold professional indemnity insurance.
  • Professionals' proficiency in English monitored.
  • Continuous quality controls and reviews.

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