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.

Frequently asked questions

Why do we need a VAT number in Hungary?

If a foreign business carries out taxable activity in Hungary, for example selling goods or providing services, it needs a Hungarian VAT number in order to charge, declare and settle VAT properly, even without establishment.

What obligations will we have in connection with VAT returns?

After registration, regular VAT returns have to be filed, usually monthly or quarterly depending on the volume of activity, together with the related data reporting and the payment of the VAT.

Do we need to appoint a local representative or tax adviser in Hungary?

For EU businesses, appointing a fiscal representative is usually not mandatory, but involving a Hungarian tax adviser is a practical necessity for accurate returns and communication. For businesses from third countries the representation question can be different, and we clarify that in advance.

What deadlines apply, and what happens if we miss one?

Returns and tax payments have statutory deadlines, and missing them can lead to a default penalty and late payment interest. Keeping track of the deadlines and preparing the returns on time is exactly our job.

Will you represent us before the tax authority?

Yes. We keep the contact with the Hungarian tax authority (NAV) and give you well-prepared support in the event of an audit. For legal questions we involve our partner law firms.

What do we have to do in the event of an audit?

During an audit we handle the communication with the tax authority, put together the documents requested and see the process through. We have gained experience in many tax audits.

Do you have professional indemnity insurance?

Yes, and it is set out in our contracts: if the error comes from our work, we stand behind it.

As a foreign company, do we need a Hungarian VAT number if we only sell B2B?

Not necessarily. If you sell to a taxable person in another Member State, the VAT is usually accounted for by the customer under the reverse charge rules, so in many cases no Hungarian registration is needed. This changes if you hold stock or a warehouse in Hungary, or sell to a Hungarian customer domestically. In those cases we clarify the obligation.

You can find out more here about exactly which cases require VAT registration.

We are a webshop selling to consumers in several EU countries. Do we have to register everywhere?

No. Since 2021, the VAT on distance sales to consumers in other Member States can be settled from your own Member State through the One Stop Shop (OSS) scheme, in a single return, above a single combined threshold of EUR 10,000 a year. For Hungarian businesses we handle this OSS administration ourselves; a foreign company typically has to register in Hungary if it holds a warehouse or stock here.

What data do we have to provide, and in what format?

Typically the outgoing and incoming invoices and the documents relating to the activity, digitally, in an agreed format and on an agreed schedule. We give you the exact list at the start.

Will we get feedback on the returns filed and a statement of the VAT paid?

Yes. We inform you about every return, and on request we prepare a statement of the VAT payable or reclaimable and of the VAT paid.

What language do you communicate in?

In English or in Hungarian. We deal with the authorities in Hungarian, but we keep in touch with you in English. Serving international clients is one of the strengths of our service.

What is included in the basic fee, and how does invoicing work?

Our quote is fixed in advance. It usually covers the registration procedure and the regular returns, while individual or occasional tasks appear as separate items. We agree the invoicing currency, forint or foreign currency, when the contract is signed.

What happens if our turnover grows or the company structure changes?

We adjust the service to the increased volume and agree that with you in advance. If the activity changes in a way that creates a fixed establishment, we flag it, because that may also trigger an obligation to establish a local entity.

What is the notice period, and how does the handover work?

We set out the contractual terms at the initial discussion. If you change provider, we make sure the handover is orderly so that the filing process is not interrupted.

Ask for a tailored quote

Would you like to know whether your business can use VAT registration in Hungary, or whether it needs to establish a local entity? Contact our tax advisory team. We help you weigh the options and guide you through the whole process.

Get in touch with us.