VAT registration, branch and affiliated company
The first step in the Hungarian taxation issue is to investigate if the Hungarian activity can be done under the VAT-registered status or any other form will be suitable. Firstly we have to identify if the foreign company is considered to establish a premise or not. It is yes if the firm owns a real estate in Hungary, or rent one. It can be a warehouse, a shop or an office. In this case the VAT registration is not enough, a branch or an independent entity must be established.
The branch is not an independent entity, but registered at the court and pays the local income taxes like corporate income tax, municipality taxes and all others. The main company is responsible for all liabilities of the branch. The affiliated company is an independent entity registered at the court. The mother company is not responsible for its liabilities.
Typical VAT-registered activities
The most common type of the activity is the web shop. These companies if they are located outside of the territory of Hungary, and in Hungary they do not have an office or warehouse, but they import to Hungary more than yearly EUR 35.000,- then they are not allowed to apply their domestic VAT key anymore. They have to register their company under the Hungarian VAT system and issue their invoices with 27% VAT. Beside this they are obliged to follow the Hungarian invoicing requirements.
The other typical activity is the conference organisation. Despite in this case the place of the conference (usually a hotel) is a rental, but it is just a few days, so this is not a steady-state site. In this case the VAT registration is perfect. As the VAT related to a real estate belongs to the country where the real estate is situated, the Hungarian VAT is applicable in this case too.
Beside these activities there several are more, but always it must be investigated with caution whether the VAT registration is enough or not.
In case we realise that your company is entitled to fulfil its Hungarian tax liabilities then the following steps will be taken.
Firstly we will collect all the necessary documents, check them and the ones whose language is foreign will be translated to Hungarian.
When the package is ready we will go to the tax office and will submit the application with the annexes. To avoid any problem or delay with correspondence with the authorities we submit the documents personally. The Hungarian tax office will issue the VAT number in 4 weeks, but in urgent cases this period can be reduced to 2 weeks.
The tax number can be issued retrospectively in case the activity has already been started before the application form is submitted.
