From July 2018, digitalization of the tax authority’s operation is moving to a new level. Similarly to the connection of cash registers to the tax authority’s system, invoicing programs will also support internal automated processes of the Hungarian Tax Authority (HU TA) real-time with electronic messages and grant the tax authority real-time insight into the invoicing of companies. However, the introduction of automated data supply poses more complex technological challenges and comes with potential pitfalls.
On the one hand, unlike as in the case of the limited number of versions of cash registers, currently, thousands of different invoicing programs issue invoices under Hungarian tax numbers. A large number of these programs are independently developed software or software used by a relatively low number of active clients the updating of which will require active cooperation from users also.
Below we would like to point out, above all, the technological aspects that define the preparation for and the implementation of real-time invoicing data reporting and the connection of the invoicing programs.
1. Take real-time invoicing data reporting seriously!
Even at second reading, the sanctions in the draft decree are shocking. A fine of HUF 500,000 per invoice may be imposed for non-fulfillment or late fulfillment of the online reporting obligation. Even if, as expected, immediate penalization will not be the first means to use for HU TA in the case of non-compliance, the requirement is clear: all invoicing programs that a company intends to use in the long run must have the prescribed communication functions.
2. Do not think that you still have time to solve this!
The online connection of invoicing systems to the interface to be developed by HU TA is far from trivial and hardly an easy task. The time and cost requirement of implementation may depend strongly on the types of systems that the company uses for the issuing of invoices. A basic condition, however insufficient in itself, is that the invoicing program must be in an office having internet connection.
You are in an easier position if you use a system provided by a diligent and sufficiently motivated service provider for invoicing as it will most likely prepare the necessary module developments for the invoicing program you purchased with a view to its own business interests also. Still, you should consult your service provider in advance on the expected time of completion of the development and the conditions of its use as the use of the new module(s) may perhaps require substantial changes to the current practice, process or system of invoicing.
3. Do not consider manual invoicing data reporting solutions!
It is the clear intention of HU TA to receive immediate and automated notice of the issuing of invoices with the content specified by it. The emphasis here is on immediate and automated. Whatever technical solution the company introduces, be it a separate scheduled item in a task management system or a module attached to the invoicing program, the fulfillment of these criteria will be critical.
HU TA is still not expected to audit invoicing systems in advance, however, it will extend its inspection activity to the auditing of software solutions used for real-time data reporting. During preliminary consulting, the tax authority emphasized a number of times that no technical solutions would be acceptable in the case of which any manual intervention is possible or necessary after the approval of the invoices and during the sending of data to HU TA.
4. Consider whether you should apply selection to your invoices!
Although the draft decree currently provides for the immediate reporting of invoices issued to a taxable person (business associations) with a VAT content exceeding HUF 100,000 it does not prohibit the reporting of all invoices, including the ones falling below this VAT content limit. It should, therefore, be considered whether a selection of invoices based on the amount is worth the time and technology required for this purpose. If you are likely to issue invoices with a net value both below and above HUF 370,000 on a regular basis to your business partners, you should perhaps extend real-time data reporting to all your invoices. On the one hand, this would ensure that no invoices to be reported under the decree are omitted and, on the other hand, there is a lower chance for errors as the IT solution, in this case, is simplified.
Contact us for more help on this matter.