Hungary Tightens M-Sheet VAT Reporting: Major Changes Effective July 2026
As Hungary evolves in its approach to Value Added Tax (VAT) reporting, the introduction of a more granular and technically advanced VAT framework will be implemented starting July 1, 2026.
This overhaul stems from the 2025 Autumn Tax Package, which has seen significant amendments to the VAT Act as approved by the Hungarian Parliament. At the heart of these changes is the shift in M-sheets—recapitulative statements previously focused on invoice-level reporting—to a more complex deduction-based reporting model.
Key Changes to M-Sheets
Beginning July 2026, businesses will be required to include in their M-sheets not only the VAT charged on supplier invoices but also the VAT actually deducted, categorized by applicable VAT rates of 5%, 18%, and 27%. The data points will mandate:
- Supplier VAT Identification Number: Ensuring clarity and traceability.
- VAT Amount per Applicable Rate: Offering a breakdown of VAT liabilities.
- Proportion of VAT Deducted: Including adjustments for partial deductions.
This shift signifies a move away from a focus on invoice-level data to a framework heavily emphasizing alignment between transactional data and the timing of input VAT recovery. The addition of these mandatory data points is designed to facilitate compliance with the Hungarian tax authority’s (National Tax and Customs Administration of Hungary) enhanced digital audit approach.
Transitioning to eVAT and the Future of M-Sheets
While the advancements ushered in by this new M-sheet regime may initially seem daunting, there is a transitional phase in place. The ÁNYK filing system is set to be decommissioned by December 31, 2026, with taxpayers expected to transition to the eVAT (eÁFA) platform through web interfaces or machine-to-machine connections. From 2027, M-sheets will be entirely abolished, underscoring the urgency for businesses to upgrade their VAT data models and streamline their reporting processes.
Changes Implemented in 2025
This shift to a deduction-based reporting framework builds upon the 2025 reforms concerning VAT reporting. Notably, under these new rules, businesses are now required to submit precise net and VAT figures in Hungarian forints—doing away with the previously permitted rounding methods. This enhancement aligns M-sheet data more closely with submissions to the NAV Online Invoice System, the real-time electronic invoice reporting mechanism in Hungary.
Starting from July 2020, Hungary adopted a more comprehensive methodology by removing the HUF 100,000 VAT threshold for both online invoice reporting and M-sheet inclusion. This change mandates that all domestic invoices with deductible VAT be reported, encompassing even reverse-charge invoices and VAT-exempt transactions, thus providing complete visibility to the Hungarian Tax Authority.
The Role of NAV’s Automated Reconciliation Process
A pivotal component of the new VAT framework is the NAV's automated reconciliation process. This system cross-references M-sheet entries with data sourced from issuers via the online invoice platform, serving as a powerful risk analysis tool that can identify discrepancies. In instances of misalignment—whether due to errors in a company’s accounting system or mistakes from third parties—NAV may instigate compliance audits or reconciliation requests. Therefore, businesses are encouraged to adopt rigorous internal checks to ensure data integrity.
Simplification and Compliance with eVAT
To alleviate the burden of compliance and minimize errors, the NAV has been advocating for the use of its eVAT system. This approach has the potential to exempt taxpayers from M-sheet obligations by automatically generating pre-filled VAT returns based on data obtained from online invoices, thus streamlining the reporting process.
Since the 2019 Autumn Tax Package, the landscape of VAT compliance in Hungary has evolved significantly, incorporating real-time digital submissions. By January 2021, these requirements were extended to all invoices involving Hungarian VAT, including those linked to private individuals or foreign entities, with very few exceptions (e.g., transactions under the MOSS scheme).
Conclusion
As Hungary moves towards a digitally-driven VAT landscape, the tightening of M-sheet VAT reporting will require businesses to adopt new systems and processes swiftly. The upcoming changes not only signify a cultural shift in taxation but also align Hungary with broader EU VAT reforms aimed at enhancing transparency and compliance in the tax system. Businesses must prepare for these challenges ahead to navigate the forthcoming transition successfully.
For further insights and to ensure compliance, businesses can refer to resources such as the Hungary VAT guide. Additionally, the VATCalc application is capable of identifying transactions for M-sheet inclusion and generating the necessary reports through the VAT Filer product, enabling companies to adapt to the new VAT reporting standards efficiently.
