Online invoicing is here: what to do if you are not yet ready? - Mazars Tax Newsletter 2018/14

Currently nobody knows what sanctions they can expect after 1 July, but in any case, it is expedient to make a good “Plan B.”

From 1 July 2018, all invoicing software must be prepared for automatically providing data, in a pre-defined structure, for the National Tax and Customs Administration (NAV), on invoices having a VAT content of HUF 100,000 or higher and issued for domestic tax subject customers. Those who started the development projects in time manner must have already uploaded successful test invoices to the system of NAV several weeks ago. We are proud to say that Mazars was also among those in the vanguard. Nevertheless, the tests are still continuing, since the stakes are very high: in case of incorrect data supply, the default penalty can be as high as HUF 500,000 per invoice. Even though it is not expected that the tax authority would immediately impose the harshest penalties, those concerned should certainly rest assured of the opposite either: no news of the postponement of the deadline or any officially announced grace period have come to light so far. Therefore, companies who are not ready by 1 July had better look at alternative solutions. But what are their options?

Instead of their own invoicing software, they can use NAV’s Online Invoicing programme, which will be available free of charge. This will primarily satisfy the general invoicing needs of micro and small-sized enterprises. As a second option, they can obtain a third-party software or subscribe to a web-based invoicing service which can satisfy the data supply requirements. In other words, the currently used invoicing system can be replaced, relatively quickly and at not too high costs. However, such an inexpensive, web-based invoicing solution cannot easily be inserted into the integrated enterprise resource planning and accounting processes. Therefore, certain companies are likely to engage in “shadow invoicing,” the essence of which is that they issue an invoice using some external software, but only for the purpose of satisfying the requirements of NAV and to ensure that the data supply obligation is performed, while in a parallel way also generating another, “in house” invoice for accounting purposes, using their integrated system. This entails the danger that the tax authority may object to the double invoicing of the same transaction, especially if they send the latter, in house invoice to their customer. It is also important to call attention to the fact that, theoretically, penalties may also be imposed on taxpayers who refer to technical problems on a continuous basis and upload their invoices manually because their invoicing software cannot really perform the data supply function.

For all practical purposes, the most viable solution may be for the company to “outsource” their invoicing to a tax consultant or accounting service provider that is fully prepared for online invoicing. The VAT Act provides an opportunity for the above: it is possible to give a written authorisation to another person to issue the invoices. This is a lawful and relatively quick solution – even only for a transitory period, until the company’s own system is finished – to the problem.

Finally, tax subjects that have no transactions with VAT content of HUF 100,000 or more will have no problems with online invoicing. The breaking up of transactions into smaller pieces, however, is not recommended as it may meet with the authority’s disapproval. Ultimately, in case of larger companies, it is the costly and lengthy development of an own invoicing system or the introduction of an external converter software that may provide a reassuring solution.