{"id":5436,"date":"2025-02-25T10:00:08","date_gmt":"2025-02-25T09:00:08","guid":{"rendered":"https:\/\/mgi-bpo.hu\/?post_type=szakmai-hirek&p=5436"},"modified":"2025-02-21T09:50:32","modified_gmt":"2025-02-21T08:50:32","slug":"cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat","status":"publish","type":"szakmai-hirek","link":"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/","title":{"rendered":"Cash-Flow Matters: Should You Choose Standard VAT or Cash Accounting VAT?"},"content":{"rendered":"

For small businesses, managing cash flow is a top priority. One crucial decision is whether to use standard VAT<\/strong> (Value Added Tax) accounting or opt for cash accounting VAT<\/strong>, which allows businesses to delay VAT payments until they actually receive payment from customers. But which option is best for your business? How do they work, and what are the pros and cons? Let\u2019s break it down.<\/p>\n

In this article, we explore the differences between cash accounting VAT and standard VAT. However, if you need expert advice, it\u2019s worth seeking the support of an accounting firm<\/a>.<\/p>\n

Who Can Choose Cash Accounting VAT?<\/strong><\/p>\n

Not all businesses can opt for cash accounting VAT<\/strong>. It is available only to those that meet specific criteria:<\/p>\n

\u2714 Annual revenue does not exceed HUF 125 million<\/strong>.
\n\u2714 Qualifies as a small business<\/strong> under the local SME Act at the beginning of the tax year.
\n\u2714 Registered for business purposes in Hungary<\/strong>, or if not established, has a residence or habitual presence in Hungary.
\n\u2714 Not under bankruptcy or liquidation proceedings<\/strong>.
\n\u2714 Not part of a VAT group and does not benefit from VAT exemption<\/strong>.<\/p>\n

Now, let\u2019s compare how standard VAT and cash accounting VAT work in real-life situations.<\/p>\n

How Does Standard VAT Work?<\/strong><\/p>\n

Under the standard VAT system<\/strong>, businesses must pay VAT to the tax authority based on the invoice issue date or performance date<\/strong>, regardless of when the customer actually pays. Depending on the business\u2019s tax filing obligations, VAT payments may be due monthly, quarterly, or annually.<\/p>\n

Example: Standard VAT in Action<\/strong><\/p>\n

\ud83d\udccc B\u00fatorTrend Ltd., a furniture manufacturer<\/strong>, receives a large order from a hotel chain.
\n\ud83d\udccc In February<\/strong>, they issue an invoice for HUF 2,540,000<\/strong> (HUF 2,000,000 net + HUF 540,000 VAT<\/strong>).
\n\ud83d\udccc The hotel chain states they will only pay in April<\/strong>.<\/p>\n

\ud83d\udd39 What happens next?<\/strong>
\nSince B\u00fatorTrend Ltd. is under the standard VAT scheme<\/strong>, it must report the VAT in its February tax return<\/strong> and pay HUF 540,000 by March 20<\/strong>, even though the customer will not pay until April.<\/p>\n

\u2705 Advantage:<\/strong> No need to track when invoices are paid.
\n\u274c Disadvantage:<\/strong> The company must prepay VAT<\/strong>, which could create liquidity issues if payments are delayed.<\/p>\n

How Does Cash Accounting VAT Work?<\/strong><\/p>\n

With cash accounting VAT<\/strong>, businesses only need to pay VAT after<\/strong> receiving payment from customers. This approach improves liquidity management, especially for small businesses that face late payments.<\/p>\n

Example: Cash Accounting VAT in Action<\/strong><\/p>\n

\ud83d\udccc ITConsult Ltd., an IT consulting company<\/strong>, issues an invoice in February<\/strong> for HUF 635,000<\/strong> (HUF 500,000 net + HUF 135,000 VAT<\/strong>).
\n\ud83d\udccc The client only pays in May<\/strong>.<\/p>\n

\ud83d\udd39 What happens next?<\/strong>
\nSince ITConsult Ltd. uses cash accounting VAT<\/strong>, they only need to report and pay VAT in their June tax return<\/strong> \u2013 meaning they won\u2019t have to prepay VAT before receiving the money.<\/p>\n

\u2705 Advantage:<\/strong> VAT is only due when cash is received, preventing cash flow issues.
\n\u274c Disadvantage:<\/strong> Customers cannot reclaim VAT<\/strong> until they actually pay, which might make cash accounting invoices less attractive to some clients.<\/p>\n

Key Differences: Standard VAT vs. Cash Accounting VAT<\/strong><\/p>\n\n\n\n\n\n\n\n\n
<\/td>\nStandard VAT<\/strong><\/td>\nCash Accounting VAT<\/strong><\/td>\n<\/tr>\n<\/thead>\n
When is VAT due?<\/strong><\/td>\nWhen the invoice is issued\/performance date, even if payment is delayed.<\/td>\nOnly after receiving payment.<\/td>\n<\/tr>\n
When can VAT be reclaimed?<\/strong><\/td>\nImmediately after receiving a supplier invoice, regardless of payment.<\/td>\nOnly when the invoice is actually paid.<\/td>\n<\/tr>\n
Advantage<\/strong><\/td>\nNo need to track invoice payments.<\/td>\nBetter cash flow management, no prepayment burden.<\/td>\n<\/tr>\n
Disadvantage<\/strong><\/td>\nCan cause liquidity problems if customers pay late.<\/td>\nCustomers may prefer to avoid these invoices due to delayed VAT reclaim.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

When Should You Consider Cash Accounting VAT?<\/strong><\/p>\n

\u2705 If your business frequently experiences late payments<\/strong>.
\n\u2705 If cash flow management is critical<\/strong> for your operations.
\n\u2705 If you offer services rather than sell products<\/strong>, and you don\u2019t have high supplier costs.<\/p>\n

Cash accounting VAT can be a game-changer for small businesses, reducing financial pressure and improving liquidity. However, it\u2019s essential to weigh the pros and cons\u2014especially if your customers might be hesitant due to delayed VAT deduction on their end.<\/p>\n

Still unsure which VAT system is best for your business? Consulting with a tax expert can help you make the right decision!<\/p>\n

Disclaimer<\/strong><\/p>\n

This article is for informational purposes only and should not be used as the sole basis for making VAT-related decisions. Every business is unique, and various factors must be considered when selecting the appropriate VAT scheme. Therefore, we cannot assume any liability for decisions made solely based on this content.<\/p>\n

We strongly recommend seeking professional advice<\/strong> to ensure compliance and optimal tax planning. Our clients receive expert guidance tailored to their specific needs.<\/p>\n","protected":false},"featured_media":5437,"template":"","tags":[554],"evszam":[765],"szakmai_cimke":[532,843,845,844,672,524],"class_list":["post-5436","szakmai-hirek","type-szakmai-hirek","status-publish","has-post-thumbnail","hentry","tag-highlighted","evszam-2025-en","szakmai_cimke-accounting","szakmai_cimke-cash-flow","szakmai_cimke-small-business","szakmai_cimke-tax-advice","szakmai_cimke-taxation","szakmai_cimke-vat"],"yoast_head":"\nCash-Flow Matters: Should You Choose Standard VAT or Cash Accounting VAT? - MGI-BPO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Cash-Flow Matters: Should You Choose Standard VAT or Cash Accounting VAT? - MGI-BPO\" \/>\n<meta property=\"og:description\" content=\"For small businesses, managing cash flow is a top priority. One crucial decision is whether to use standard VAT (Value Added Tax) accounting or opt for cash accounting VAT, which\" \/>\n<meta property=\"og:url\" content=\"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/\" \/>\n<meta property=\"og:site_name\" content=\"MGI-BPO\" \/>\n<meta property=\"og:image\" content=\"https:\/\/s3-eu-central-1.amazonaws.com\/mgi-bpo.hu\/wp-media-folder-mgi-bpo\/wp-content\/uploads\/2025\/02\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/penzforgalmi-afa.png\" \/>\n\t<meta property=\"og:image:width\" content=\"940\" \/>\n\t<meta property=\"og:image:height\" content=\"788\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/\",\"url\":\"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/\",\"name\":\"Cash-Flow Matters: Should You Choose Standard VAT or Cash Accounting VAT? - MGI-BPO\",\"isPartOf\":{\"@id\":\"https:\/\/mgi-bpo.hu\/en\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/s3-eu-central-1.amazonaws.com\/mgi-bpo.hu\/wp-media-folder-mgi-bpo\/wp-content\/uploads\/2025\/02\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/penzforgalmi-afa.png\",\"datePublished\":\"2025-02-25T09:00:08+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/#primaryimage\",\"url\":\"https:\/\/s3-eu-central-1.amazonaws.com\/mgi-bpo.hu\/wp-media-folder-mgi-bpo\/wp-content\/uploads\/2025\/02\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/penzforgalmi-afa.png\",\"contentUrl\":\"https:\/\/s3-eu-central-1.amazonaws.com\/mgi-bpo.hu\/wp-media-folder-mgi-bpo\/wp-content\/uploads\/2025\/02\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/penzforgalmi-afa.png\",\"width\":940,\"height\":788},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/mgi-bpo.hu\/en\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"News\",\"item\":\"https:\/\/mgi-bpo.hu\/en\/news\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Cash-Flow Matters: Should You Choose Standard VAT or Cash Accounting VAT?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/mgi-bpo.hu\/en\/#website\",\"url\":\"https:\/\/mgi-bpo.hu\/en\/\",\"name\":\"MGI-BPO\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/mgi-bpo.hu\/en\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Cash-Flow Matters: Should You Choose Standard VAT or Cash Accounting VAT? - MGI-BPO","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/","og_locale":"en_US","og_type":"article","og_title":"Cash-Flow Matters: Should You Choose Standard VAT or Cash Accounting VAT? - MGI-BPO","og_description":"For small businesses, managing cash flow is a top priority. One crucial decision is whether to use standard VAT (Value Added Tax) accounting or opt for cash accounting VAT, which","og_url":"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/","og_site_name":"MGI-BPO","og_image":[{"width":940,"height":788,"url":"https:\/\/s3-eu-central-1.amazonaws.com\/mgi-bpo.hu\/wp-media-folder-mgi-bpo\/wp-content\/uploads\/2025\/02\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/penzforgalmi-afa.png","type":"image\/png"}],"twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/","url":"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/","name":"Cash-Flow Matters: Should You Choose Standard VAT or Cash Accounting VAT? - MGI-BPO","isPartOf":{"@id":"https:\/\/mgi-bpo.hu\/en\/#website"},"primaryImageOfPage":{"@id":"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/#primaryimage"},"image":{"@id":"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/#primaryimage"},"thumbnailUrl":"https:\/\/s3-eu-central-1.amazonaws.com\/mgi-bpo.hu\/wp-media-folder-mgi-bpo\/wp-content\/uploads\/2025\/02\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/penzforgalmi-afa.png","datePublished":"2025-02-25T09:00:08+00:00","breadcrumb":{"@id":"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/#primaryimage","url":"https:\/\/s3-eu-central-1.amazonaws.com\/mgi-bpo.hu\/wp-media-folder-mgi-bpo\/wp-content\/uploads\/2025\/02\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/penzforgalmi-afa.png","contentUrl":"https:\/\/s3-eu-central-1.amazonaws.com\/mgi-bpo.hu\/wp-media-folder-mgi-bpo\/wp-content\/uploads\/2025\/02\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/penzforgalmi-afa.png","width":940,"height":788},{"@type":"BreadcrumbList","@id":"https:\/\/mgi-bpo.hu\/en\/news\/cash-flow-matters-should-you-choose-standard-vat-or-cash-accounting-vat\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/mgi-bpo.hu\/en\/"},{"@type":"ListItem","position":2,"name":"News","item":"https:\/\/mgi-bpo.hu\/en\/news\/"},{"@type":"ListItem","position":3,"name":"Cash-Flow Matters: Should You Choose Standard VAT or Cash Accounting VAT?"}]},{"@type":"WebSite","@id":"https:\/\/mgi-bpo.hu\/en\/#website","url":"https:\/\/mgi-bpo.hu\/en\/","name":"MGI-BPO","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/mgi-bpo.hu\/en\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/mgi-bpo.hu\/en\/wp-json\/wp\/v2\/szakmai-hirek\/5436","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mgi-bpo.hu\/en\/wp-json\/wp\/v2\/szakmai-hirek"}],"about":[{"href":"https:\/\/mgi-bpo.hu\/en\/wp-json\/wp\/v2\/types\/szakmai-hirek"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mgi-bpo.hu\/en\/wp-json\/wp\/v2\/media\/5437"}],"wp:attachment":[{"href":"https:\/\/mgi-bpo.hu\/en\/wp-json\/wp\/v2\/media?parent=5436"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mgi-bpo.hu\/en\/wp-json\/wp\/v2\/tags?post=5436"},{"taxonomy":"evszam","embeddable":true,"href":"https:\/\/mgi-bpo.hu\/en\/wp-json\/wp\/v2\/evszam?post=5436"},{"taxonomy":"szakmai_cimke","embeddable":true,"href":"https:\/\/mgi-bpo.hu\/en\/wp-json\/wp\/v2\/szakmai_cimke?post=5436"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}