We have already discussed whether it is worthwhile for businesses to switch to M2M e-VAT before ÁNYK is phased out in our series of articles dedicated to this subject. In our posts, we concluded that there was a strong rationale for it. However, now that the new provisions of the tax package for 2024 related to M2M e-VAT have been published, we can confirm that the advantages seem to outweigh the disadvantages convincingly. Introducing M2M e-VAT is therefore worth serious consideration by all taxpayers.
At the beginning of November, we basically concluded that a swifter VAT return process, the replacement of domestic summary reports (the so-called M sheets), the instant possibility of correction provided by NAV validations received during the submission process, and the reduction of the administrative burden during the checks are all aspects that are able to compensate for the disadvantages caused by the time and cost factors related to the implementation of M2M e-VAT.
However, the tax package for 2024 and the communication from NAV in the last few weeks related to the check-up strategy for 2024 reveal further advantages of its implementation, which, in our opinion, provide strong arguments for launching the project.
Exemption from self-correction supplement; moratorium on checks
The simplifications, which have been partly initiated by Andersen during the development phase of M2M e-VAT and which greatly contribute to the promotion of the system, were already included in the draft act before the tax package was adopted. These benefits are mostly related to the validations sent by NAV during the submission process.
As we have previously mentioned, the tax authority will provide validations during the M2M e-VAT process, which have been strictly confidential so far, before and after uploading the DATA XML file, based on which taxpayers can easily check whether the transaction data uploaded by them are correct or need to be amended. For ex-post validations, if a tax return is uploaded close to the deadline for submission, the results will often only be available for taxpayers after the deadline for submission.
However, the tax package provides the tax authority with the possibility to review the validation results. Because if the taxpayer qualifies as ‘reliable’, the tax authority may not perform a check for fifteen days after the deadline for submission. If a correction becomes necessary, the taxpayer is entitled to modify their return without becoming obliged to pay a self-correction supplement.
This means that the law creates an environment for tax payers choosing M2M e-VAT that is unique in the history of taxation in Hungary: there is enough time for its introduction, the tax authority acts in favour of taxpayers by communicating the validation results, and, should there be any errors, they can be corrected without any adverse legal consequences.
Check-up plans for 2024 in order to enhance data quality
According to the tax authority’s communication in the past years, there has been a systemic problem with adequacy of data submitted to NAV during the online invoice data provision. In fact, the tax authority sends 33 million error messages every month to taxpayers, up to ten percent of which are serious, so-called blocking errors (‘ERROR’). For 2024, the tax authority’s specific goal is to check the quality of data, for which a new tax administration procedure may be implemented.
It was already known before that regulation of online invoice data provision has been one of the biggest tasks related to the introduction of M2M e-VAT. We expect the fact that the tax authority will start to enforce cleaning of data in 2024 to motivate businesses to start this task before it is enforced by NAV. And if the data quality was provided by the business itself then the introduction of M2M e-VAT will be brought close to it, since the transfer of standard tax codes and the system implementation will be much simpler tasks.
In short, we expect that the tax authority’s inspection activity will significantly contribute to the introduction of M2M e-VAT in 2024.
If you have any questions related to the operation and implementation of M2M eVAT or would like to review your invoice data provision then don’t hesitate to contact us.