E-Commerce & B2C Services in Hungary
The EU VAT reform, which took effect from July 1, 2021, affects e-commerce firm owners that conduct cross-border transactions within the EU or import items from outside the EU.
Article 2 of the VAT Act provides that the supply of services within Hungary by a taxable person is subject to Hungarian VAT.
Under Hungarian VAT law, the definition of the supply of services is anything that is not a supply of goods. This also includes temporary or permanent intangible property and the commitment to stop an activity or to tolerate a situation.
Read more about B2C services & E-Commerce in Hungary in our comprehensive guide.
B2C Services in Hungary
Article 2 of the Hungarian VAT Act mandates that the provision of services within Hungary by a taxable entity is liable for Hungarian VAT. According to the law, the concept of service provision encompasses all activities that do not qualify as the supply of goods. This broad definition also covers the transfer or leasing of intangible assets, whether temporary or permanent, despite the absence of a specific definition for intangibles in the Hungarian VAT Act. It also includes agreements to cease an activity or to endure a particular condition.
Typically, services rendered to private consumers (B2C) are taxed at the service provider’s location, leading to the non-taxation of inbound B2C services in Hungary under the standard place-of-supply rule. However, a distinct approach is applied to inbound telecommunications, broadcasting, and electronically supplied services (TBE Services), which are deemed to be supplied in Hungary according to special place-of-supply rules.
For B2C transactions involving telecommunications, broadcasting, and electronic services, the place of supply is determined by the location of the non-taxable consumers — where they are established, have their permanent address, or usually reside, regardless of the supplier’s or consumer’s EU status.
Services provided electronically include those delivered over the internet or an electronic network, characterized by their automated nature and minimal human intervention, making their provision highly dependent on information technology.
TBE services that are delivered electronically include:
- website creation
- web services
- remote program and equipment maintenance,
- software, and updates.
Foreign service providers operating outside of Hungary but offering business-to-consumer (B2C) services from within Hungary are typically required to register for Hungarian VAT. From July 1, 2021, international suppliers of B2C services have the option to streamline their VAT registration and reporting across the EU by registering in a single Member State under the EU-wide “One Stop Shop” (OSS) system.
Selling in Hungary?
Ecommerce in Hungary
The VAT e-Commerce Package, as outlined in the Hungarian VAT Act, defines a supply of goods as the transfer of the right to control tangible property as an owner or any transaction that yields a similar outcome. This definition does not encompass temporary transfers of goods. Among the transactions considered as supplies of goods are:
- The transfer of goods across EU Member States in compliance with EU regulations by taxable individuals for their business activities.
- Goods transferred as collateral security.
Transferring ownership of a building under registration to a client is subject to VAT, regardless of whether the client supplied any materials used in the construction. When it comes to VAT, inbound B2B digital service provisions are treated similarly to other types of inbound services. A special regime applies to telecommunications, broadcasting, and electronic services delivered to end-users in Hungary (known as “TBE services”), aiming to tax digital supplies based on the destination principle, meaning taxation occurs at the point of consumption.
Additionally, starting from July 1, 2021, the EU-wide “One Stop Shop” (OSS) system has been introduced to streamline the VAT registration and reporting process for international e-commerce product and service providers. As per Chapter XIX/A et seq. of the Hungarian VAT Law, the OSS scheme facilitates the registration and reporting for cross-border services and goods provided to non-taxable persons, reflecting Chapter 6 of Title XII of the EU VAT Directive (“VAT e-commerce regulations”), amended by Council Directives (EU) 2017/2455 and (EU) 2019/1995.
Replacing the MOSS scheme, which was active across the EU from 2015 until June 30, 2021, the OSS serves as a voluntary simplification measure allowing eligible taxable entities engaged in cross-border B2C supplies, both within and outside the EU, to forego VAT registration in every Member State of consumption. The OSS encompasses:
- B2C services offered by taxable entities not established within the EU (the “non-Union One Stop Shop,”)
- B2C distance sales of goods and services by taxable entities located within the EU but not in the Member State of consumption (the “Union One Stop Shop,”)
- Distance sales of goods imported from outside the EU valued at less than EUR 150 (the “Import One Stop Shop,” or IOSS).
Last Updated:05/04/2024
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
