Hungary VAT Rates and Compliance (2025)

Rates and Thresholds

Tax Rate

27%

Non-Resident Threshold

First sale

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Taxable Transactions

B2B Sales

Reverse charge

B2C Sales

Yes

Digital Goods

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Home to the highest standard value-added tax (VAT) rate in the European Union (EU), Hungary also stands out in the EU for its uniquely demanding tax regulations. For companies with customers in Hungary, compliance requires careful attention to detail, strict adherence to real-time reporting obligations, and a thorough understanding of the country’s rates and rules.

Failure to comply with Hungarian VAT regulations can lead to significant penalties, operational disruptions, and financial liabilities. For e-commerce businesses, SaaS providers, and companies that are currently expanding into European markets, understanding Hungarian VAT rules can be a key to achieving sustainable international growth.

What is VAT and how does it work in Hungary?

VAT is a consumption tax levied on goods and services. Unlike a direct sales tax, VAT is collected at every stage of the production chain. All EU nations employ a VAT system. 

The VAT process can be broken down into three steps:

1. A manufacturer sells an item to a wholesaler. The manufacturer charges VAT on the sale and then remits this amount to the tax authorities.
2. The wholesaler sells that item to a retailer. The wholesaler also charges VAT on the sale. It can then deduct the VAT it paid to the manufacturer and remit the difference to the tax authorities.
3. The retailer sells the item to the end consumer. The retailer charges VAT on the sale. It can deduct the VAT it paid to the wholesaler and remit the difference to the tax authorities.

The tax burden falls on the final consumer, but the responsibility for collecting and remitting tax is shared by the businesses along the supply chain. If you sell to consumers in Hungary, you are responsible for charging the correct Hungarian VAT rate, collecting tax, and remitting it to the Hungarian tax authorities.

Hungarian VAT rates

Hungary's VAT system has multiple rates that apply to different categories of goods and services. 

Standard VAT rate: 27%

For most businesses selling into Hungary, including those in e-commerce, software, and general services, the 27% rate will apply. 

Reduced VAT rate: 18%

A reduced rate of 18% applies to a specific list of goods and services considered important to Hungarian society. This list includes:

• Some foodstuffs, such as cereal products and some specific dairy dessert products
• Admission to certain open-air events and concerts

Reduced VAT rate: 5%

This rate is designed to make essential items more affordable for Hungarians. It is applied to products and services such as:

• Essential food products including pork, poultry, fish, eggs, most dairy products, and bread
• Hotel and accommodation services
• Medicines and certain pharmaceutical products
• Medical equipment for disabled people
• Books (including e-books) and newspapers
• Newly constructed residential properties (under specific conditions)
• District heating services

Zero rating and exemptions

While most transactions in Hungary are subject to VAT, some specific goods and services are not. The Hungarian VAT system addresses this through two separate classifications: zero-rated and exempt.

Zero-rated supplies (0%): A zero-rated product is still taxable, but the VAT rate is 0%. These items are sometimes called “genuine exemptions.” This kind of transaction is technically taxable, so the business can deduct and reclaim any input VAT. Common examples of zero-rated supplies in Hungary include exports of goods to countries outside the EU and intra-community supplies of goods to VAT-registered businesses in other EU member states.

VAT exemptions: An exempt item is not subject to VAT, which means no VAT is charged to the customer. These items are sometimes referred to as “non-genuine exemptions.” (Hungary does not use the “genuine” and “nongenuine” terminology.) The primary difference between exempt products and zero-rated products is that a business cannot deduct the input VAT paid on an exempt transaction. Examples of exempt goods and services include financial services, insurance, public postal services, medical and dental care, educational services, and the rental of residential property.

Once you determine that your business will be selling taxable goods or services in Hungary, your immediate next step is to register with the Hungarian tax authorities to begin collecting and remitting VAT.

Registering for VAT in Hungary

VAT registration in Hungary involves notifying the Hungarian National Tax and Customs Administration (Nemzeti Adó- és Vámhivatal, or NAV). Unlike many countries, Hungary has no VAT registration threshold for foreign companies selling to Hungarian customers. If you make even one sale that is subject to Hungarian VAT, you are legally required to register.

Resident vs. non-resident businesses

The registration process differs slightly for resident and non-resident businesses. A resident business is one that has a fixed presence in Hungary. A nonresident business operates from outside the country but makes taxable sales within Hungary. Non-resident businesses based outside the EU are generally required to appoint a fiscal representative to manage their Hungarian VAT obligations.

Who needs to register for VAT? 

You must register for VAT in Hungary if your business engages in any of the following activities:

• Importing goods into Hungary from outside the EU.
• Making intra-community acquisitions of goods from another EU country in Hungary.
• Storing goods in a Hungarian warehouse or fulfillment center (such as through Amazon FBA) to sell to customers.
• Selling goods from Hungary to customers in other EU countries (intra-community supplies).
• Distance selling of goods to Hungarian consumers, if your total cross-border sales to EU consumers exceed the EU-wide threshold of €10,000 per year (unless you use the One-Stop Shop system — more on this later).
• Organizing and charging admission for live events, conferences, or exhibitions in Hungary.
• Providing services where the place of supply is Hungary and the reverse charge mechanism (more on this later) does not apply.

How to register for VAT in Hungary 

The VAT registration process in Hungary must be completed before you begin any taxable activities. The steps generally involve:

Gathering required documents: These include:

1. A completed Hungarian VAT registration form.
2. A VAT certificate or proof of VAT registration in your home country.
3. An extract from your company's national trade register.
4. The articles of association or statutes of your company.
5. A power of attorney if you’re using a tax agent or fiscal representative.

Translation: All official documents must be translated into Hungarian by a certified translator.

Submission: The complete application package is submitted to the NAV.

The process can take several weeks, so it is best to start well in advance of your first planned transaction. Upon successful registration, you will be issued a Hungarian VAT number.

Working with a fiscal representative

Businesses established outside the EU must appoint a fiscal representative in Hungary. A fiscal representative is a local entity (like a tax firm or an accountant) that is jointly and severally liable for your company's VAT debts. This means the NAV can pursue the representative for any unpaid VAT. For EU-based companies, appointing a representative is optional but highly recommended, due to the language barrier, the complexity of local regulations, and Hungary’s real-time reporting requirements.

When to charge Hungarian VAT

Determining whether to charge Hungarian VAT hinges on “place of supply” rules. These rules dictate which country the VAT is due in, and they vary significantly depending on whether you are selling goods or providing services, and whether the transaction is B2B (business-to-business) or B2C (business-to-consumer).

For goods, the rules are relatively straightforward:

• If goods are sold and dispatched from a warehouse in Hungary to a customer in Hungary, Hungarian VAT is due.
• If goods are sold from outside Hungary to a private consumer (B2C) in Hungary (distance sales), Hungarian VAT is due if the EU-wide €10,000 threshold has been exceeded.

For services, the rules are more complex and depend on whether the sale is B2B or B2C:

• B2B services: The general rule is that the place of supply is where the customer is located. Therefore, if you provide a service to a Hungarian business, that business is typically responsible for accounting for the VAT via the reverse charge mechanism.
• B2C services: The place of supply is generally where the supplier is located. However, for digital services (telecommunications, broadcasting, and electronically supplied services), the place of supply is where the customer resides. So a non-Hungarian business providing digital services to a Hungarian consumer must charge Hungarian VAT.

Reverse charges

The reverse charge mechanism is a defining feature of B2B commerce within the EU VAT system. For most cross-border B2B transactions, it shifts the responsibility of accounting for VAT from the supplier to the customer.

Reverse charge example: A German consulting firm provides services to a VAT-registered Hungarian company. Instead of the German firm charging German VAT, it issues an invoice with zero VAT and notes "subject to reverse charge." The Hungarian company then acts as both the supplier and customer for tax purposes, calculating the Hungarian VAT due and declaring it on its own VAT return. In most cases, the Hungarian company can simultaneously deduct that same amount as input VAT, so no payment is required. This mechanism simplifies trade between EU member states by preventing businesses from having to register for VAT in every country where they have a B2B customer.

Marketplace Facilitators 

Recent EU rules have introduced the "deemed supplier" model for online marketplaces, such as Amazon, eBay, and Etsy. When a marketplace facilitates a sale, it can be held legally responsible for collecting and remitting VAT. This applies specifically to:

• B2C imports of goods in consignments not exceeding €150.
• Sales of any value within the EU by a non-EU seller that are facilitated by the marketplace.

If you sell through such a platform, the marketplace may handle VAT on your behalf, simplifying your compliance burden for those specific transactions.

VAT deductions

A core principle of the VAT system is the ability for businesses to deduct input VAT, which is the tax they pay on their business-related purchases and expenses. You can offset this deductible input VAT against the output VAT you collect from your customers. 

If your deductible input VAT is greater than your output VAT in a given period, you can claim a VAT refund from the NAV. However, Hungary has strict rules on what can be deducted. For example, VAT on fuel for passenger cars is only partially deductible, and VAT on entertainment expenses is generally not deductible at all.

Statute of limitations

The tax authorities in Hungary have the right to go back and assess VAT liabilities for a specific period. The statute of limitations for VAT in Hungary is five years. This means the NAV can audit your records and demand unpaid tax for up to five years after the end of the year in which the VAT was due.

Staying compliant

To operate legally within Hungary, businesses must adhere to a strict VAT compliance process. This process involves several obligations: issuing correct invoices, submitting invoice data in real time, filing accurate tax returns, and maintaining complete records for audit purposes.

Invoicing requirements

A Hungarian VAT invoice must contain specific information. These requirements include:

• A unique, sequential invoice number
• The date of issue
• The date of supply (if different from the issue date)
• The supplier’s name, address, and VAT number
• The customer’s name, address, and VAT number (for B2B transactions)
• A clear description of the goods or services supplied
• The quantity of goods or extent of services
• The net price per unit
• The taxable amount (net value)
• The VAT rate applied to each item
• The VAT amount payable
• The total gross amount payable
• The currency (if not Hungarian Forint (HUF), the VAT amount must also be shown in HUF)
• A reference to any exemption or the reverse charge mechanism (fordított adózás)

Filing VAT returns

VAT returns in Hungary are typically filed on a monthly basis for nonresident businesses. Businesses with lower turnover may qualify for quarterly or annual filing, but monthly is the standard. The return summarizes all taxable transactions, output VAT collected, and input VAT deducted for the period.

Other required forms 

In addition to the main VAT return, businesses often need to file supplementary reports:

• Real-Time Invoice Reporting (RTIR): All invoices issued by taxpayers registered in Hungary (including foreign businesses) must be reported to the NAV electronically and in real time through a specific XML data structure. This applies to nearly all B2B and B2C transactions. Failure to comply with RTIR leads to heavy penalties.
• EC Sales List (ESL): If you make zero-rated intra-community supplies of goods or services to VAT-registered customers in other EU countries, you must file an ESL. This report, also typically filed monthly, details these supplies on a customer-by-customer basis.

Filing deadlines 

Hungary enforces a strict deadline for both filing reports and paying any tax due. The deadline for submitting the VAT return and ESL, as well as for payment, is the 20th of the month following the reporting period. For example, the filings and payment for the January period are due by February 20.

Recordkeeping requirements

As outlined by Hungary's National Tax and Customs Administration (NAV), businesses must maintain complete and auditable records. All VAT-related documents, including invoices, returns, and customs forms, must be kept for a minimum of eight years.

What are the risks of noncompliance? 

The Hungarian tax authority (NAV) is known for its strict enforcement and severe repercussions for noncompliance. These include: 

• Late filing penalties: Fines can be levied for failing to submit returns by the deadline.
• Late payment penalties: Interest is charged on overdue VAT payments, calculated daily. The penalty rate is twice the central bank's base rate.
• Default penalties: For inaccuracies or undeclared tax, a penalty of up to 50% of the unpaid tax can be imposed. In cases of tax fraud, this can rise to 200%.
• RTIR penalties: Specific penalties can be incurred for failing to report invoices in real time, potentially reaching up to 500,000 HUF (approx. €1,250) per invoice.
• Audits and Investigations: Noncompliance increases the likelihood of a full tax audit, which can be time-consuming and disruptive.

Tips on staying compliant

Due to its real-time reporting demands, Hungary VAT compliance is a daily, transaction-by-transaction responsibility. To effectively manage your obligations, your business must:

• Register immediately: Unlike many countries, Hungary has no VAT registration threshold for non-resident businesses. You must register as soon as you anticipate making your first taxable supply.
• Master real-time reporting: Every invoice issued must be reported to the tax authorities (NAV) instantly via the Real-Time Invoice Reporting (RTIR) system. This is a non-negotiable, constant obligation.
• Issue flawless invoices: Because every invoice is reported in real-time, there is no room for error. Ensure that every invoice contains all the data required by Hungarian law to avoid immediate rejection and penalties.
• Meet deadlines: Mark the 20th of each month in your calendar. This is the firm deadline for filing your VAT/ESL returns and paying any tax due.
• Keep long-term records: Maintain organized digital records of all sales, purchases, and VAT filings for at least eight years, ready for any potential audit.

In addition to these foundational practices, you can use tools designed to simplify and automate your compliance workflow. These tools include the EU’s One-Stop Shop and various tax compliance platforms.

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How to manage VAT with the One-Stop Shop 

Instead of registering for VAT in Hungary and every other country where you have customers, businesses can register for One-Stop Shop (OSS) in a single EU member state.

Through the OSS portal, you can file one quarterly return and make one consolidated payment to declare all the VAT collected from B2C customers across the EU. The tax authority you file with then distributes the VAT to the respective countries on your behalf. This dramatically reduces the administrative burden of multi-country B2C VAT registration and reporting.

Automating Hungarian VAT compliance with a tax software solution 

While the EU’s OSS simplifies multi-country B2C VAT returns, it does not address the most rigorous aspects of Hungarian tax law. The OSS portal is a filing system; it cannot manage the mandatory real-time reporting, confirm that your invoices meet strict local standards, or optimize monthly filings.

For these reasons, many businesses operating in Hungary rely on end-to-end tax automation platforms. These solutions are designed to handle the complete compliance lifecycle by:

• Automating Real-Time Invoice Reporting: By directly connecting to the NAV's API to automatically format and submit invoice data the moment a transaction occurs, tax automation eliminates the significant risk and manual effort of RTIR.
• Ensuring compliant invoicing: Automatically generating invoices that include all mandatory Hungarian data points, such as the customer's VAT number and the tax amount expressed in HUF, even if you bill in another currency.
• Streamlining VAT returns and payments: Consolidating sales and purchase data to accurately prepare periodic Hungarian VAT returns and ESL filings. The best platforms can also help automate the corresponding bank payments to meet the firm monthly deadlines.
• Providing a centralized audit trail: Integrating with existing e-commerce, accounting, and payment systems to create a single, unified record of all transactions, which is invaluable during an audit.

By building these functions into their core operations, businesses can effectively manage compliance automatically, mitigating risk and saving valuable time and resources.

Takeaway

Hungary’s value-added tax (VAT) system features the European Union's highest standard rate, 27%, in addition to reduced rates of 18% and 5% for specific goods and services such as basic foodstuffs, hotel accommodation, books, and medicines.

Compliance in Hungary revolves around a particularly strict framework with several primary obligations:

• Registration: Unlike many EU countries, Hungary has no sales threshold for foreign businesses, meaning registration with the tax authority (NAV) is required from the very first taxable sale. Storing goods in Hungary also triggers this requirement.
• Real-Time Invoice Reporting (RTIR): A mandatory system requires that data from nearly every invoice be instantly submitted electronically to the NAV, making transaction-level compliance a daily, automated obligation.
• Fiscal representation: Companies established outside the EU are required to appoint a local fiscal representative, who becomes jointly and severally liable for the business's VAT debts.
• Filing and deadlines: Businesses must adhere to a firm monthly deadline, typically the 20th of the following month, for filing VAT returns and EC Sales Lists (ESL) and for remitting any tax due.

To manage this demanding system, businesses can use the EU's One-Stop Shop (OSS) for simplifying multi-country B2C reporting. For a more thorough solution that handles the detailed requirements of RTIR and achieves full compliance from invoicing to payment, dedicated tax automation platforms provide the necessary tools for real-time data submission, accurate reporting, and efficient payment processing.