Game over: Hungary's tax authority NAV will have "X-ray vision"
By Lilla Németh, Director, Tax Services, RSM Hungary.
Businesses, service providers and basically anyone that issues invoices will have to adapt to a new set of rules as of next year. The XSD 3.0 template of the online invoice reporting system of tax authority NAV will become mandatory as of 1 January 2021. The Finance Ministry has announced that a grace period until 1 April will be granted for the switchover and no sanctions will be imposed during these three months.
IT, tax and auditing experts will have a lot on their plates as the new version creates new tasks for economic agents and the developers of invocing programmes and data reporting systems.
Online invoice reporting will be modified on two fronts:
- the scope of the tax subjects will be broadened (community transactions, export transactions and sale to private persons will also be covered),
- a new XSD template (i.e. for XML modification) will be required (version 2.0 will be replaced by version 3.0 from January 2021).
Why is another modification to online invoicing necessary?
A little more than two months have passed since the 2.0 XSD template was introduced, so why do companies and taxpayers have to deal with this again? Well, tax authority NAV makes the reasons quite clear.
Effective from 1 January 2021, community transactions, export transactions and sale to private persons will also be covered by the online invoice reporting obligation.
This means that
the online invoice reporting system will be full-scale, as the tax authority will have access to all invoices issued by economic agents.
To provide data in the necessary format, the 2.0 version had to be developed further.
E-billing is also ahead of a major change, as filing in the new 3.0 XML template will also be considered as an electronic invoice. With the tax subject's consent filing in XML format will also create an e-invoice, in which case the entire data content of the invoice will need to be provided instead of the content that is mandatory under the VAT law. Consequently, an amendment to the relevant legislation can be expected.
At the same time, as invoices must contain name and address while uploading and reporting these in XML format is explicitly prohibited in the case of private persons for data protection reasons, the NAV will differentiate and the XML format of an invoice issued to private individuals will not be qualified as an electronic invoice.
XML as electronic invoice another step towards electronic VAT reporting
Businesses and consultants will be given a lot of opportunities but also a lot of tasks by the XML-based invoicing. We've already seen various forms of digitalisation in the administrative area, and an increasing number of processes can become automated and therefore faster due to regulatory pressure, more flexible employment conditions and multiple remote access. Besides currently routine tasks XML-based files with software support will allow the submission and fine-tuning of returns or the compilation of analyses. Not only will this save time, but it will also help minimise mistakes relying on computer knowledge and learning capabilities.
Via the required modifications NAV will take another important step towards e-VAT reporting. In the 3.0 template the tax authority will require slightly more data from economic agents once again, but the specifics have not been worked out yet. Online data reporting rules and the VAT law need to be harmonised.
The digitalisation of taxation is on a track that leads to the electronic creation, submission and processing of data. This is a welcome step, particularly if we think about the new contactless world that is coming to pass due to the coronavirus pandemic or if our goal is a paper-free and environmentally friendly office. We should think about it right now what economic agents and service providers can do and how can they take part and come out victorious from such a massive transition.
Lilla Németh , Director, Tax Services, RSM
Cover photo by MTI/Balázs Mohai
