While in many countries e-invoicing is synonymous with digital reporting, they are actually two different concepts.

E-invoicing means the invoice is issued and received in any electronic format (Article 217 of the current EU VAT Directive). It may have a structured format, such as xml or other format readable by machines (which is a requirement under the VIDA proposal) or may be unstructured and signed (sufficient under the current Hungarian e-invoicing). E-invoicing is contrasted with paper based invoicing and in some countries may be compulsory in certain or all cases.

Digital reporting is either real time or near real time reporting of the invoice to the tax authorities in a structured format such as xml.

In Hungary e-invoicing is not compulsory, however all invoices are subject to real time invoice reporting (RTIR), including paper based invoices issued with an invoicing software and handwritten paper based invoices.

In Hungary issuing invoices and reporting them are two different obligations.

Issuing invoices

• Issuing invoice is an obligation that arises when the taxable supply is made, although in some cases it may be sufficient to issue a receipt

• Generally, businesses have 8 days to issue an invoice (in some cases 15 days) counting from the date when the supply was made (performance date)

• Invoice could be

  • handwritten (issued from the old-fashioned invoice book)

  • generated by the software and printed (paper based)

  • generated by software and sent electronically (e-invoice)

  • special case: invoice = xml

Failure to issue invoice could result in default penalty.

Reporting invoices

A separate obligation is to report the created invoice in real time to the Hungarian Tax Authority electronically, automatically, without human intervention in the pre-defined xml format with the pre-defined data (Real Time Invoice Reporting or RTIR)

Even if the invoice is not an e-invoice (handwritten invoice, paper based), it should be reported in RTIR (handwritten invoices within 4, in some cases 1 working day).

Even if the invoice is issued incorrectly (e.g. wrong VAT rate or wrong customer information), it should be reported in RTIR. If an incorrect invoice is later corrected or canceled, the corrective invoice or cancelation invoice should also be reported in RTIR. 

Failure to report an invoice (even an incorrect one) could result in default penalty. This could be in addition to the default penalty raised due to the failure to issue the correct invoice.

One should differentiate between issuing incorrect invoice or reporting the invoice incorrectly. If the invoice is issued incorrectly, it must be corrected and both the incorrect invoice and the corrective invoice should be reported. If the report is done incorrectly, the report should be corrected, not the invoice.

Invoice typology by method of issuing

·Paper-based invoices from the invoice book

·Software generated paper based invoices

·Electronic invoices

·XML invoices - the invoice issued does not send the invoice directly to the recepient, only sends the xml report to the tax authority

Invoice types by layout /data

·Standard invoice – contains all invoice data

·Simplified invoice – the main difference is that it contains the gross amount and the VAT amount included in the gross amount

Invoice types by tax point

·Standard tax point – when the taxable event takes place

·Partial invoice – the supply is partially delivered (the supply must divisible and the parties should agree in the partial acceptance of the supply)

·Advance payment – when the consideration is paid before the taxpoint (usually followed by the so-called final invoice)

·Periodic supply – parties agree to settle the deliveries on a periodic basis OR the consideration is related to the time period

Aggregate invoices – several invoices are issued in a single document

Tax points are important as they define the time of the chargeable event, influence content of the invoice, exchange rate and reporting

Periodic supplies should not be confused with aggregate invoices (several invoices are issued in a single document)

By sequence

·Original invoice (Normal invoice) – first invoice issued upon the delivery of the supply

·Modifying invoice – invoice that modifies the  original invoice (for example debit note or credit note)

·Canceling invoice

Final invoice (to be issued when the supply is delivered) not to be confused with the modifying invoice

Why invoice correction is important

·Once the invoice is posted (finalized), it is only possible to correct it by issuing a corrective invoice

·It is possible to correct the draft of the invoice without issuing a corrective invoice (because at that stage the invoice is not yet posted)

Incorrect practices:

·Handwritten correction of the printed invoice (even if signed and/or stamped)

·Photoshoping the original invoice :)

·Ignoring the incorrect original invoice

·Putting a post-it on the incorrect original invoice :)

·

If the invoice is issued correctly but the invoice reporting is incorrect, you only need to correct the invoice reporting.

Common features of the invoice correction

·Corrective invoice could be either a cancelation invoice or a modification invoice

·Corrective invoice should contain reference to the original invoice sequence number

·Additional RTIR data on the corrective invoices

·Original invoice and corrective invoice form part of the invoice chain