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Fiscal Representative in Hungary

Fiscal Representative in Hungary

A fiscal representative in Hungary defines the entity that is appointed as the tax representative of a company, who will handle various formalities established by the Hungarian authorities. While for some companies, there isn’t a legal obligation to appoint a fiscal representative, for others, it is mandatory in order to develop lawful commercial activities.

Therefore, if you want to open a Hungarian company, you will need to verify the legal stipulations concerning this matter. Of course, in-depth information on this subject can be offered by our consultants in company registration in Hungary.

What activities require a fiscal representative in Hungary?

The obligation to appoint a fiscal representative in Hungary depends on the place of registration of the company that wants to operate on the Hungarian market. The obligation is also connected to VAT formalities, in the sense that the issue of having a Hungarian fiscal representative can appear when the foreign company needs to be registered for VAT in Hungary.

Thus, it must be noted that companies registered in any member state of the European Union (EU) do not have to initiate any formalities concerning the appointment of a tax representative.

However, all companies that are incorporated outside the EU and that develop commercial activities that are subjected to VAT in Hungary must appoint a fiscal representative. This obligation appears for non-EU companies engaging in the following commercial activities:

  1. the import of goods from outside the EU in Hungary;
  2. the export of goods from Hungary to other non-EU countries;
  3. the purchase of goods from EU member states sold in Hungary;
  4. the business-to-business (B2B) supply of goods from Hungary to any other EU country;
  5. the business-to-client supplies of goods and/or services to persons living in Hungary.

What are the responsibilities of a fiscal representative in Hungary?

The fiscal representative must handle all company’s tax-related activities. For instance, some of the responsibilities are to register for VAT, prepare the VAT returns and submit them in due time, offer tax assistance, provide all the documentation required in case the company must be audited, complete tax forms, submit tax-related documentation and any other similar matter.

Please know that you can also appoint as a fiscal representative one of our consultants in Hungarian company formation, a procedure which can be completed by granting us with the power of attorney.

Types of power of attorney granted to a fiscal representative in Hungary

The power of attorney is a legal instrument that can be used for a variety of corporate matters. The document can be used for Hungarian company formation, in the sense that our team can represent investors in any step of the incorporation process.

It can also be used for legal matters referring to individuals, such as in inheritance matters, purchasing a property, signing a contract any many others. Based on the types of services a person needs, there are 2 main types of power of attorney (POA).

The 1st type refers to a POA where the person representing the client has limited rights, in the sense that the document is signed for a specific legal matter at the end of which the party representing the client will no longer have any legal rights of representation, while the 2nd type refers to a permanent POA, which grants the right to legal representation on a long-term basis.

Both documents can be used when appointing a fiscal representative in Hungary, but it must be noted that when a company, organization or another corporate entity, separate from a natural person, is involved, then the legal representation can be granted solely to an authorized entity (for example, our accountants in Hungary).

In other cases, private individuals can represent other persons in different legal matters through the POA, according to the National Tax and Customs Administration.

Does the POA need to be registered with the tax authorities?

Yes, it is mandatory to register the type of POA granted to a tax representative with the National Tax and Customs Administration (NTCA). The registration is done by completing the Form T201. It must be noted that any data initially registered in the Form, that is modified over time, must also be registered with the NTCA, by notifying the institution.

Submission of registration documents in Hungary

According to the NTCA, the submission of specific tax registration documents, including the POA, can be done online or on paper. The latter is applicable to foreign entities, as they are not legally obligated to submit documentation online.

However, once having an appointed fiscal representative in Hungary, the respective party has to submit the documentation using the electronic means provided by the NTCA. If you need guidance on this procedure, our specialists in company registration in Hungary can advise on the steps you must follow.

Is there a deadline to submit the registration documents of the representative?

According to the Hungarian legislation, there isn’t any statutory deadline to submit the documentation for the approval of the fiscal representative in Hungary. However, the person/company can act on behalf of the foreign client only after the NTCA received the necessary documentation and has approved the respective person as the official tax representative of a foreign entity.

Therefore, the foreign company can’t engage in any taxable activities until the matters related to the fiscal representative aren’t fully completed, which implies that the company can start its activities after the tax representative has been approved, based on the documentation received by the NTCA.

The termination of the right of fiscal representation

Please mind that a foreign company has the right to terminate the rights granted to a fiscal representative in Hungary, for a variety of reasons (the fiscal representative also retains the right to disengage from this activity, within the limits of the contract signed with the foreign company).

NTCA will officially consider that the representation rights are terminated only after a notification is sent to the institution. Until the notification is not officially received, NTCA will continue to send tax related documentation to the person who is still registered as a fiscal representative.

As such, it is highly recommended to be aware of the legal formalities applied by this institution and for this, our team of specialists in company formation in Hungary remains at your service.

Important matters concerning VAT obligations in Hungary

Whether you have completed the process of company formation in Hungary or you represent a foreign business expanding on the Hungarian market, you will have VAT obligations as long as any of your business activities are charged with the VAT.

Considering this, our specialist in company registration in Hungary has prepared a short presentation regarding the main details investors should know about VAT and VAT registration:

  • the standard VAT rate is 27% and the reduced rates are 18%, 5% and 0%;
  • the registration for VAT is done by completing the Form T201 with the National Tax and Customs Administration;
  • the country does not have a VAT registration threshold, but companies which do not reach a turnover above HUF 12 million can request a VAT registration exemption;
  • foreign companies that develop distance-selling activities must register when they reach EUR 10,000 (approximately HUF 3,8 million), in line with the EU directives;
  • your fiscal representative in Hungary should abide by the stipulations of the Act CXXVII of 2007 – the Hungarian VAT Act.

For non-EU companies, the fiscal representative appointed can only be an authorized agent, such as a lawyer, tax specialist, an accountant, a specialized company or an employee of that company.

Our accountants in Hungary can, of course, be appointed as fiscal representatives. For more information on other matters concerning tax representation, tax advice and assistance, we invite you to contact our Hungarian company formation specialists.