Prohibition of deduction
The deduction of VAT is specifically prohibited by law in the case of certain services and goods except if the item is resold or the purchased item is directly integrated into a new product or service to be sold. The most important types of services and goods in this category:
- passenger car fuel
- services related to the maintenance of a passenger car (50% of repairs, maintenance and similar services of car operation)
- passenger car rental and operative leasing (50%)
- parking fee, motorway toll for vehicles having a total weight of more than 3.5 tons
- food and drink, hospitality, entertainment and taxi costs
- construction and renovation of residential property
- 30% of phone bill
Tax return
Taxpayers with a Community VAT number file tax returns monthly or quarterly; the filing deadline is the 20th day of the month after the relevant month or quarter. In the return, the input VAT of purchases may be offset against the payable VAT. From 2017 transactions with a VAT of more than 100,000 HUF are to be shown separately in the tax declaration.
Refund
If on the basis of the tax return the taxpayer is entitled to a refund, according to a European Court of Justice judgement, the tax authority is required to transfer the amount to the taxpayer if the amount to be refunded exceeds HUF 1 million for taxpayers filing monthly returns or HUF 250,000 for taxpayers filing quarterly returns, regardless of whether the transaction has been settled financially. The transfer is generally made by the tax authority within 75 days but the taxpayer may request that the transfer be made within 45 days if all purchase invoices of the relevant period were duly paid by the filing date of the return.