Your Hungarian company is required to track its incoming and outgoing payments. Your taxes are calculated based on these, and transactions must be recorded. Incoming payments are recorded on invoices in Hungary – read on to learn how that works.
Invoice every incoming payment
Every incoming payment must be recorded. The record is an official document with mandatory elements, which must be made out not only in a specific format, but also by a specific method: either in a special booklet or in state approved software. This also means you cannot create an invoice on any piece of paper or in a Word document.
There are in fact two main tools for recording incoming payments:
- Invoice (“számla”): an official document that records all the data necessary for identifying a transaction. Can be created in an invoice booklet or a piece of software. The default tool for tracking incoming payments.
- Bill (“nyugta”): an official document thar records the main data of the transaction. Can be created in a bill booklet or a piece of software. Available to specific sellers. e.g. in retail or hospitality.
Before you start trading, consult your accountant about which option is relevant for you. For example, if your Hungarian company is mostly selling services to a handful of clients, you will probably be required to issue invoices. At the same time, if you have a shop with a cash register where you are mostly selling goods, you are most probably required to create bills (which are then automatically printed by the cash register machine).
Reporting income to the Hungarian Tax Authority
Since incoming payments are essential for calculating your taxes, every transaction should be reported to the Hungarian Tax Authority. This is why it is infinitely more convenient to use invoicing software than an invoice booklet: these tools can be connected to the database of the Tax Authority online, so whenever you issue an invoice it gets automatically uploaded to the database. The same is true for electronic cash registers.
If you decide to use an invoice booklet, the data must be uploaded to the Tax Authority’s online tool within 4 days if the gross sum is below HUF 500,000 (otherwise you have only 1 calendar day to do so). The procedure is almost identical to issuing an invoice. As a result, it makes more sense to use an actual invoicing tool from the start.
Your accountant must also have access to your invoices so they can create the relevant reports both for your and the Tax Authority on time. That is pretty easy to achieve if you use invoicing software. If you use an invoice booklet, physical copies should be sent to your accountant.
Electronic and paper-based invoices in Hungary
In line with the above, Hungarian invoices can either be paper-based or electronic. However, the distinction is not as clear-cut as it might seem. Invoicing software can create “paper-based” invoices; in this case, the invoice will be in a PDF format, and can be sent in an email, but the recipient is required to print it. The same invoicing software can also create electronic invoices, which are also in PDF, but are authenticated by an electronic signature that the recipient can verify if they have the right tools. As a result, you can only send true electronic invoices if you have agreed about this with your buyer beforehand. Click here to learn more about e-invoices.
Information to include in an invoice
The invoice should list every piece of information that let every stakeholder identify the transaction. (In this sense, the stakeholders are the seller, the buyer, and the Tax Authority.) You must indicate information about:
- The seller (name, tax number, registered address)
- The buyer (name, tax number, registered address)
- The items sold (name, unit, quantity)
- The price (net, gross, VAT content)
- The payment (method, currency, banking data)
- The invoice itself (issue date, registration number)
For a more detailed description of information to be indicated on every invoice, click here.
Your accountant at your Hungarian company
While your accountant is probably not the person who will issue the invoices of your Hungarian company (see the tasks of an accountant here), they should be aware of your preferred invoicing method and they should have access to the information. If you tell them more about your planned operation, they can give you advice about which method to choose and how to best keep compliant with regulations about issuing invoices in Hungary.
While we at Helpers Hungary focus on the procedures relevant for company setup in Hungary, the accountants at our partner company, Helpers Finance, have ample experience working with foreign owners of Hungarian companies, focusing on small and medium-sized businesses. They would be more than happy to take care of accountancy for your business.