VAT Registration in Hungary

VAT registration with professional tax advisory support

A foreign business does not always need a local company or a branch office to operate in Hungary. Through VAT registration you can obtain a Hungarian tax number that covers value added tax obligations only, without establishment, an office or local employees.

When is VAT registration the right choice?

VAT registration is typically the right solution when the foreign business:

• sells goods in Hungary,
• provides services to Hungarian customers,
• carries out import or export activity,
• sells at an event held in Hungary.

Whether VAT registration is the right solution, and whether establishment in Hungary can lawfully be avoided, always calls for a case-by-case assessment.

VAT registration or a subsidiary: when is which one required?

This is one of the most frequent and most important questions, so it is worth clarifying. Plain VAT registration is a viable route as long as the foreign business’s activity does not create a fixed establishment in Hungary, in the sense the EU VAT Directive (2006/112/EC) uses that term.

As soon as the activity does create a fixed establishment, for example an office or a warehouse run with your own permanent staff, or another form of lasting local presence, plain VAT registration is no longer enough, and establishment is needed, that is, setting up a branch office or a subsidiary. This assessment always depends on the actual circumstances of the activity, so we recommend talking to us before you decide. If you go for establishment, we also help with the company formation.

B2B and B2C sales: when is a Hungarian VAT number needed?

Whether you need a Hungarian VAT registration depends a great deal on who you sell to.

B2B: selling to business customers

If the customer is a taxable person in another Member State, the VAT is usually accounted for by the customer in its own Member State under the reverse charge rules, so in many cases no Hungarian VAT registration is needed. Hungarian registration is more likely to come up if the business holds stock or a warehouse in Hungary, or sells domestically to a Hungarian customer.

B2C: selling to private consumers

July 2021 brought a significant change here. Distance sales to consumers in other Member States no longer require a separate VAT registration in every country of destination. Under the EU One Stop Shop (OSS) scheme, introduced by the 2021 e-commerce amendment to the VAT Directive (2006/112/EC), a business can account from its own Member State, in a single return, for the VAT on goods and services sold to consumers in other Member States, above a single combined threshold of EUR 10,000 a year. In these cases a Hungarian VAT registration is typically needed if the business holds a warehouse or stock in Hungary from which the consumer sales are made.

OSS administration for Hungarian businesses

The other direction is our territory too. For Hungarian businesses selling to consumers in other EU Member States, typically webshops and e-commerce sellers, we handle the VAT on cross-border B2C sales through the OSS scheme, so they do not have to register separately in every country of destination. It can all be settled in a single Hungarian OSS return, which we prepare and file.

The advantages of VAT registration

• No need to set up a Hungarian company or a branch office.
• Typically only a VAT return obligation arises, with no other taxes.
• Reduced administrative burden: no local employees, no office rental.
• Simpler compliance and lower regulatory risk.
• Cost-effective operation while being present in the Hungarian market.

How MGI-BPO helps

Our tax advisory team helps you find your way through the Hungarian tax rules and choose the most suitable solution. Our service falls into two phases:

1. Handling the VAT registration

• information on how the registration works,
• collecting and checking the documents needed,
• the full administration of the tax number application.

2. Managing the tax obligations after registration

• checking the invoices and documents,
• preparing and filing the monthly or quarterly VAT returns,
• informing you about the VAT payable or reclaimable,
• keeping contact with the tax authority,
• keeping you informed about changes in the legislation.

We also support clients who already have a Hungarian tax number and are only looking for a partner to handle the ongoing tax obligations.

If you need VAT registration in another European country, we provide support across Europe through the partners of the MGI Worldwide network.

You can find out more about the exact VAT registration process here