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Special regulation in Hungary for distance selling companies already in the OSS System
The Hungarian Tax Authority has confirmed earlier assumptions that due to the Hungarian legislation, One Stop Shop (OSS) registration gives no exemption for certain other tax types – environmental protection fee (or green tax) and retail tax – for distance selling clients.
This means that even if a non-Hungarian client is registered in the OSS system for VAT purposes, the client must register a tax number in Hungary to fulfill the environmental protection fee and retail tax obligations.
In its recent official resolution, the Hungarian Tax Authority (HTA) confirmed that the conclusion of ABT Treuhand Hungary’s previous blog post means that if a non-Hungarian company sells its products to the territory of Hungary, assuming that the conditions are met, VAT can be declared through the OSS system, but due to certain other tax types, it will need to register itself for tax purposes in Hungary.
In the HTA’s view, the tax liability cannot be reduced to the obligation of filing tax returns and paying taxes. A taxpayer, who is otherwise not obliged to pay value added tax – therefore not required to file a VAT return and a VAT advance in Hungary –, is still obliged to register itself in the country for tax purposes. From this point of view, there is no difference between the taxpayers, whose obligations in this respect are itemised in the Hungarian Taxation Act.
The HTA also stated that the Hungarian environmental product fee obligation is determined by the tax number used in the given transaction: if a foreign (i.e., non-Hungarian) company does not legally have a Hungarian tax number or does not use it, no product fee obligation arises.
Similar to the environmental product fee, if a foreign company which does not have a branch in Hungary sells its products within Hungary, it will incur a Hungarian tax liability under the Hungarian Retail Tax Act and the foreign company will therefore become subject to the retail tax. This is independent of the fact that a foreign company fulfils its VAT liability – after its sales activities in Hungary – in another country or through the OSS system, as the Hungarian Retail Tax Act determines the concept of tax liability independently of the Hungarian VAT Act.
In the light of the above, although it is possible to use OSS in distance selling in Hungary, the taxpayers concerned must also consider other related tax liabilities. This requires the “revival” of the old tax number in the case of taxpayers, who have abolished their Hungarian tax number because of the OSS. More thorough tax and business planning is required in the case of new entrants.
For more information, please contact:
dr. Tamás FÜLEKI
Senior Tax Advisor
ABT Hungaria Kft., Hungary
T: +36 1 398-8963
E: tamas.fuleki@abt.hu
W: www.abt.hu
