Having a robust understanding of rules and regulations surrounding VAT registration in Hungary saves significant money, time, and hassle for businesses. In this article, we will shine a light on the basics every business should know about tax numbers, VAT free status, and VAT registration in Hungary, plus important updates introduced in 2025.
How to Register a new Company for VAT in Hungary
VAT registration in Hungary is simply a part of incorporation. During this process, the lawyer dealing with the incorporation will send a form that includes VAT information for the new company to the National Tax and Customs Administration of Hungary (NAV).
The NAV will then generate the company’s tax number within two days, and inform the court of registry. Once a company’s tax number has been allocated, tax returns are due – even if there has not yet been any business activity. To avoid missing any reporting deadlines, it is important for companies to contact an accountant beforehand and arrange online access to the administration portals early on.
In Hungary, all taxes and contributions are paid using the same tax number. This number identifies the company at every tax authority. The same number is also used by the social security system, meaning social security registration is also automatic for new companies in Hungary.
Tax Number Format in Hungary
Presented in the format ‘xxxxxxxx-y-zz’, a Hungarian tax number is made up of the following three elements:
- The first eight digits are a serial number identifying the company
- The ninth digit indicates the company’s VAT status, where 1 = VAT free, 2 = normal VAT paying company, and 4/5 = group taxpayers
- The last two digits represent the competent tax office code (a territorial directorate or any of the special boards)
EU VAT Numbers in Hungary
Every Hungarian company can have an EU VAT number if they wish. This number, recognised throughout the EU, allows all relevant national tax authorities to track VAT on intra-community trade. An EU VAT number can be applied for at the time of incorporation, or at any point in the future. Once applied for, the number will be generated within a few days, and can be checked via the online VIES system.
A company must have been officially allocated an EU VAT number before issuing VAT free invoices to other EU countries. Intra-community trade is not connected to the local VAT status, but EU trade volume is counted when checking a company’s yearly revenue to establish eligibility for VAT free status in Hungary.
EU VAT numbers are presented in the format ‘HUxxxxxxxx’ for Hungarian companies, and are made up of the following two elements:
- HU, which represents Hungary
- The eight digit sequence from the company’s tax number (the serial number)
Recent Changes to VAT Free Status in Hungary
VAT free companies do not charge VAT, and cannot claim back VAT on purchases. In 2025, guidelines on which companies are eligible for VAT free status in Hungary changed. The annual income limit for VAT free status was raised from HUF 12 million to HUF 18 million. It is important to note that VAT free status is not automatically granted; companies must apply for VAT exemption.
When is VAT Free Status Worthwhile?
If a company’s annual income is less than the new HUF 18 million threshold, they can request VAT exemption. VAT free status has a range of pros and cons; it is valuable to some businesses and detrimental to others based on their operations.
VAT free status may be useful if:
- A business is B2C, as the total cost to the customer will be lower
- The cost a company generates to B2B clients is not VAT deductible
- A business does not have significant reclaimable VAT (e.g., those providing personal services like teachers, IT professionals, or tourist guides)
Leinonen Provides Expert Guidance on VAT in Hungary
If your company is eligible for VAT-free status, it is worth consulting with an expert to determine whether VAT exemption will be beneficial. The right decision could save you a significant amount of money. With over a decade of experience in Hungary, Leinonen’s experts are highly knowledgeable about the intricacies of Hungarian VAT and can offer the impartial advice your business deserves. Even if you do not need to establish a new entity in Hungary but only require VAT payer status, we can also assist EU-based companies with this process.
Get in touch today to organise a thorough consultation on VAT registration in Hungary with one of our local tax, payroll, and accounting experts.
