To do business in Hungary, you will most likely need a Hungarian VAT number. This number is used for invoicing and taxation purposes: to put it simply, it is what identifies you as a company (or a freelancer) at the Tax Authority. It is not to be confused with the tax ID, which is what you need as an individual to work as an employee.
Who needs a Hungarian VAT number?
Nearly all Hungarian enterprises must have a VAT number. This includes both freelancers and companies. However, you do not need one if you fulfill either of the following criteria:
- Your only activity is property leasing
- Your services are not subject to VAT
Some other entities (such as budgetary authorities and certain foundations) need a VAT number as well, but we are focusing on businesses for now.
Registering a VAT number
Hungarian VAT number registration is usually part of the company setup (click here for more information about our company formation services), but you can do it separately as well: you may need to do this if you created an enterprise with a VAT-free activity, then started another activity that is subject to VAT.
Registering is free of charge, takes eight days and requires filling in form T201, either on paper or through the Client Gate. The same form also allows you to request an EU VAT number for doing business in the EU and an EORI number for customs purposes. Even if you are not interested in these options right at the start, it is worth adding the EU VAT number, because it entails no extra requirements or costs, but it can be of use to your company in the long run.
When submitting the application, you need to indicate:
- Your primary business activity
- Whether you are eligible for tax exemption (based on your business activity and other factors)
- The VAT number of the owners (alternatively, their identification data and address)
- The name, registered seat and VAT number of your virtual office provider
- The address where your invoices and supporting documents are physically kept (if not at the registered seat)
- Your mailing address (if different from the registered seat)
- The account number, name of the bank and opening date of any foreign bank accounts
Ideally, you want to apply for a VAT number before your enterprise begins to operate. You may do so later, but you will have to indicate when your business started. While your request is processed, the National Tax and Customs Administration gives you a so-called technical number that enables you to pay taxes, but not to issue invoices. Once you receive your definitive VAT number, you must file tax returns on a monthly basis.
Definitive VAT numbers have 11 digits in three groups. The following table illustrates the meaning of each digit, using the VAT number of Helpers Finance as an example.
|Identifier of the enterprise||1 for VAT exemption |
2 for regular taxation
3 for simplified taxation
4 and 5 for group VAT
9 for technical numbers
|Identifier of the competent tax authority|
As opposed to the Hungarian VAT number described above, the EU VAT numbers consists of only the country code and the identifier of the enterprise.
VAT number rejection, suspension and deletion
Your Hungarian VAT number application may be rejected if it contains incorrect or incomplete data, and most importantly, if your activity does not require a VAT number. The official notification about the VAT number rejection always justifies the decision and gives you 15 days to appeal it. To avoid this rejection, managers and owners can request a certificate about the lack of such circumstances before submitting the application.
Every time you modify your primary business activity or make any other significant changes to your business, you have to notify the National Tax and Customs Administration within 15 days, and your eligibility for a VAT number will be re-evaluated.
Your VAT number may be suspended (and eventually deleted) if:
- You cannot be reached via mail or at your registered seat
- You are over a year late on filing tax returns or paying taxes
- Another enterprise denounces you (which rarely happens)
While your VAT number is suspended, you are not entitled to VAT deduction, and you cannot issue invoices.
Need help? Contact us!
If you are planning to start a business in Hungary, check whether you will need a VAT number and apply for one in due course so you can start your operation without delay. Once you have a VAT number, comply with regulations to keep it: make sure to file your tax returns and pay your taxes on time, and be available when authorities reach out to you.
Sadly, the VAT number application form is only available in Hungarian. If you need help with your registration, contact your English-speaking accountant at Helpers Finance for a detailed breakdown. You can learn more about our accounting services here. You can ask for a consultation by calling our office on +36 1 215 0712, by e-mailing email@example.com, or by filling in our contact form.