Taxpayers shall fulfil their obligation to register with the tax authority prior to commencement of their business activities in Hungary.
As the tax number generated upon registration also serves as a VAT identification number, no separate registration is necessary in respect of VAT.
It is highly recommended that, using form No. ‘T34, private individuals apply for a tax identification code and request the issuance of a tax card prior to receiving any income, as in the absence of the card and/or the code the payer/employer must deny effecting any payment until the private individuals concerned provide their tax identification code. The authority in charge of data provision will also refuse to issue certificates verifying eligibility for tax allowances, tax exemption as well as for tax and other benefits until the relevant tax identification code is provided. The obligation to register with the tax administration can be fulfilled at any of the following locations:
- if, in order to perform business activities, you need a private entrepreneur’s licence, by submitting an application for an entrepreneur’s licence at the competent Document Office, you concurrently fulfil your obligation to register with the tax authority;
if, in order to perform business activities, you respectively the company represented by you needs registration, by submitting an application for registration to the competent Court of Registration, you concurrently fulfil your obligation to register with the tax authority;
if you are allowed to carry out taxable activities without an entrepreneur’s ID, or if the company represented by you can carry out taxable activities without court registration, you must register directly with the competent tax authority, individuals using form the ’T101 or form companies using form ’T201;
if you are a private individual without a tax identification code and intend to pursue an activity that incurs tax (other than entrepreneurial tax or VAT) payment liability, you shall fulfil your obligation to register with the tax authority by completing data sheet No. ‘T34 and submitting it to the competent tax authority;
if you are a private individual holding a personal ID card or a private individual who should hold one, but you do not have a social security relationship on your own right or a derivative one and, as a result, you incur special contribution payment liability, you shall, by completing form No. ‘T1011, register with the competent tax authority within 15 days following the date when the payment obligation is incurred or when it ceases.
Additional reporting obligations
Taxpayers engaged in an activity whose pursuit is subject to holding an entrepreneur’s licence or company registration shall, within 15 days following the receipt of the entrepreneur’s licence or the date of company registration, in respect of further data, provide data directly for the tax authority. For this purpose, private entrepreneurs and companies must use forms No. ‘T101E and ‘T201T, respectively. The following data shall be provided: the place where company’s documents are kept unless that place, is also the taxpayer’s seat or place of residence, the tax identification number/code of his representative as per the applicable statutory regulation, the tax identification number of the legal predecessor, the tax identification number/code(s) of the owner(s) of the limited liability company, association or joint company, the mailing address of the private individual unless it is identical with the taxpayer’s registered office or business premises, activities actually pursued under Regulation 1893/2006/EC, in the event that a registered office facility is provided as a service, the name/designation and tax number of the attorney/law firm providing the service, the term of the agency contract concluded to provide the registered office facility, the start date of the provision of the registered office facility as a service and those bound by the agency contract concluded.
Taxpayers taking up the entrepreneur’s ID shall register their core activity when taking the ID up at the document office. In case of other activities carried out using the ID, you may choose to register them at the document office or at the competent tax authority.
Companies required to be registered by the court shall register their core activity upon filing the court registration request at the registry court, and their other activities (including changes in the core activity) shall be registered directly with the competent tax authority.
The general rule is that the competent tax authority for an entrepreneur with no legal entity status – including private entrepreneurs – is the regional tax authority covering the seat, or if there is none, the site, in case of a legal entity or other organisation, the one covering the seat, or if there is none the site (the place where the activities are carried out). In case of non-resident individual who has no seat, place of business, permanent or temporary home address or place of stay within the territory of the Republic of Hungary, the Large Taxpayers Directorate has exclusive authority.
All taxpayers pursuing business activities shall report any change in the data earlier provided within 15 days following the occurrence of the change.
In the event that real property is acquired within the framework of an onerous transfer of property or through gifting, the party acquiring the property must fulfil his obligation of reporting. Such obligation shall be honoured by completing form No. B400 concurrently with the submission, to the Land Registry Office, of the document attesting to the acquisition of property. Notification for dutiable purposes, along with an application for registration in the real property register, must be submitted to the Land Registry Office within 30 days following the date of the document attesting to the acquisition of property. The party acquiring the property may also use the form to notify the tax administration of his eligibility for duty exemption or allowance. This provision applies to the acquisition of real property situated in the territory of Hungary and the rights of pecuniary value related to such real property, unless an international treaty otherwise stipulates.
With the exception of the acquisition of the ownership of motor vehicles and trailers or rights of pecuniary value pertaining to motor vehicles and trailers, a legal transaction subject to duty on acquisition of property, which is not subject to any real property registration proceedings, must be reported by the contracting parties directly to the tax authority. Notification is effected by having the original and a duplicate of the document establishing the acquisition of property submitted within 30 days of commencement of the duty liability.
A legal transaction subject to duty obligation in spite of not being documented may also be reported verbally.
If the ownership of motor vehicles and trailers or rights of pecuniary value pertaining to motor vehicles and trailers is/are acquired in the territory of Hungary, the duty on acquisition of property shall, prior to the registration of change in the ownership of the given motor vehicle or trailer, be paid to the duty collection account of the competent tax authority by way of a cash transfer order available at Document Offices, or, if such service is available, by bank card at the relevant Document Office, or shall be deposited in cash at the cash desk of the relevant Document Office. Except the acquisition of property through inheritance, the document attesting to the acquisition of the above rights, and – in the event a motor vehicle vendor is eligible for exemption − the decision of the tax administration attesting to such exemption, must be presented at the Document Office with competence to record a change in ownership.
Legal consequence of failure to register with the tax authority
The most common legal consequence of the infringement of the obligation to register with the tax authority is default penalty imposed by the tax authority. The tax authority imposes default penalty
- if the taxpayer is late in fulfilling his obligation to register with the tax authority or in notifying the tax authority of any change in his/its data,
- if the taxpayer completely fails to comply with his obligation to register with the tax authority,
- if the taxpayer carries out an activity that requires an entrepreneur’s licence or company registration or a taxable activity without having fulfilled his/its obligation to register with the tax authority.
Taxpayers who are private individuals (including private entrepreneurs) may be penalised up to HUF 200,000 other taxpayers up to HUF 500,000 for late performance of compulsory notification or data disclosure (registration, reporting changes) or in case the information supplied is incorrect, false or incomplete.
In the event that obligation to register with the tax administration or the obligation to notify the tax administration of any change fails to be honoured, the tax administration, upon imposing a penalty, calls upon the taxpayer to fulfil his/its obligation and sets a deadline for the fulfilment thereof. Twice the amount of the penalty previously levied is established and a new deadline shall be set if the taxpayer misses the deadline set in the former tax authority decision.
Tax Authority decisions on the imposition of default penalty on persons carrying out activities that require an entrepreneur’s license or company registration are disclosed by way of public announcements, i.e. they are not delivered by mail, and such decisions are executable as of the date of their disclosure irrespective of whether or not an appeal has been lodged against them.
(In addition to imposing default penalties, the tax authority may also confiscate, as a security, the instruments used for the activity performed without an entrepreneur’s license or company registration and/or the goods in stock up to the value of the penalty imposed.)