VAT: THE ROLE OF FISCAL REPRESENTATIVE

Objective

The purpose of this training is to provide companies entering the Hungarian market with a comprehensive understanding of VAT regulations in Hungary and the crucial role of a fiscal representative. This training is essential for ensuring compliance with local VAT regulations, preventing financial penalties, and optimizing the VAT refund process. By the end of the training, participants will be equipped with the knowledge to manage VAT reporting efficiently and understand the legal implications of fiscal representation.

Target audience

Accounting department staff and financial officers of companies entering Hungary.

overview

VAT Fundamentals & Hungarian Tax Environment

Module 1: Understanding VAT in Hungary

Objective: To introduce the fundamental concepts of VAT and specific VAT rules in Hungary.

Key Topics:

  1. What is VAT?

    • Basic principles of Value-Added Tax in the European Union.

    • Distinctions between VAT, sales tax, and other indirect taxes.

  2. Hungarian VAT System

    • Standard VAT rate (27%) and other applicable rates.

    • Thresholds and obligations for foreign companies.

    • When VAT registration is mandatory for foreign entities.

Why It’s Important: This module ensures participants understand the basics of VAT in Hungary, laying the foundation for more complex topics, like fiscal representation. Without this knowledge, they may face compliance issues.

Module 2: Overview of the Role of a Fiscal Representative

Objective: To explain the necessity and role of a fiscal representative for foreign companies in Hungary.

Key Topics:

  1. Who Needs a Fiscal Representative?

    • Criteria for non-EU companies and specific cases where EU companies need a representative.

  2. Legal Requirements & Responsibilities

    • The legal framework governing fiscal representation in Hungary.

    • Fiscal representative’s liability for VAT declarations and payments.

Why It’s Important: Participants will understand the legal obligations tied to fiscal representation, ensuring they can make informed decisions when entering the Hungarian market.

Case Study & Practical Session 1: Identifying the Need for a Fiscal Representative

Objective: Participants will apply theoretical knowledge to real-world scenarios.

Key Activities:

  • Review multiple case studies of Italian companies entering Hungary and determine whether they need a fiscal representative.

  • Discuss potential consequences of failing to appoint a fiscal representative.

Why It’s Important: This hands-on approach solidifies understanding and allows participants to see the practical application of their new knowledge.

Fiscal Representation & VAT Compliance in Practice

Module 3: How to Choose and Work with a Fiscal Representative

Objective: To guide participants on how to select a suitable fiscal representative and manage the working relationship effectively.

Key Topics:

  1. Qualities of an Effective Fiscal Representative

    • Criteria to consider (expertise, reputation, local knowledge).

  2. Contracts & Agreements

    • Drafting a contract with the fiscal representative, specifying roles, responsibilities, and fees.

  3. Working Relationship

    • How to coordinate VAT returns and communicate with the fiscal representative.

    • Importance of timely submission of VAT documents and payment.

Why It’s Important: Selecting the right fiscal representative can prevent administrative errors, tax penalties, and ensure that the company remains VAT-compliant.

Module 4: VAT Reporting and Compliance for Foreign Companies

Objective: To teach participants about the VAT reporting process in Hungary and the role the fiscal representative plays in it.

Key Topics:

  1. Monthly/Quarterly VAT Returns

    • Deadlines, reporting formats, and electronic submission via the NAV (Hungarian Tax and Customs Administration) system.

  2. VAT Refunds

    • How foreign companies can claim VAT refunds in Hungary.

  3. Audits and Inspections

    • What happens during a VAT audit? The role of the fiscal representative in liaising with Hungarian authorities.

Why It’s Important: Ensuring accurate and timely VAT returns is critical for financial compliance. Mistakes can lead to fines, and understanding the VAT refund process can save companies money.

Case Study & Practical Session 2: VAT Reporting and Filing Practice

Objective: To practice preparing and submitting a VAT return with the guidance of a fiscal representative.

Key Activities:

  • Participants will simulate the filing of a VAT return using case-specific data.

  • Identify possible errors and correct them before submission.

Why It’s Important: This session gives participants hands-on experience with VAT reporting and fosters confidence in managing the filing process.

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