Tax Alert

Tax Alert

Tariff headings update and transition to TESZOR numbers after 1 July 2019


After 1 July, for the purposes of identifying goods and services invoices must contain tariff headings as valid from 1 January 2018 and TESZOR’15 numbers (if the taxable person decides to contain such data). The new classifications will also be applicable in terms of determining goods and services which fall under the scope of restriction of VAT deduction, reduced rates or reverse charge, etc.

Hungary's Parliament passed legislative changes to regulations of the VAT Act regarding tariff headings and SZJ numbers back in 2018, which become effective as of 1 July 2019. Subsequent to these legislative changes entering into force, the tariff headings as valid on 1 January 2018, laid down by the Commission Regulation (EU) 2017/1925, and the TESZOR’15 numbers as valid on 1 January 2018, must be applied instead of SZJ numbers.
The changes will not affect the substance of tax liabilities or any provisions of the Act, because the provisions of the VAT Act referring to SZJ numbers and tariff headings will also be updated at the same time.
There are no transitional provisions in relation to the changes, therefore, for invoicing, the new classification numbers should be applied in line with the date of supply instead of in line with the issuance date.

As most billing programs can only apply one classification scheme at a time, considering the date of the supply in this respect may create problems. However, based on Tax Authority communications the right to deduction of VAT by the recipient of the invoice should not be affected if the issuer of the invoice uses the new classification numbers in line with the issuance date of the invoices, as neither the TESZOR’15 numbers (for services) nor the tariff headings (for goods) qualify as mandatory invoice elements.

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