We would like to draw your attention to the publication of Government Decree 5/2025 (I.25.) on the increase of the threshold for the eligibility for the tax exemption from HUF 12 million to HUF 18 million. The relief rule will be introduced retroactively from 1 January 2025.
According to the rule change, from 1 January 2025 retroactively, the option of VAT exemption will be available if the annualised amount of the taxable person's total goods and services sales, and the annualised amount of the consideration paid or to be paid in HUF for the supply of goods and services, does not exceed HUF 18 million in 2024 and is expected to be HUF 18 million in 2025.
Lifting the two-year ban
The new rule removes the two-year ban on taxpayers crossing the threshold and not exercising their right to opt for the exemption until the end of the second calendar year following the year of cessation. Consequently, a person who wants to be exempt from VAT in 2025 because he became subject to VAT in 2024 due to a threshold crossing may opt to be exempt retroactively. The same applies to a person who exceeded HUF 12 million in 2023 but did not exceed HUF 18 million in 2024 and is not expected to exceed this threshold in 2025: he or she can choose to be exempt until 28 February 2025. However, after that date, it will still be possible to apply for an exemption retroactively to 1 January 2025 by means of a request for adjustment. The application is not formalised and there is no standard form provided by the tax authorities, so it can be submitted informally and free of charge.
Possible solutions for taxpayers opting for an exemption
- If the taxable person has not reached the exemption threshold in 2024 and has not become a VAT taxable person, he does not need to declare to remain exempt in 2025.
- If you became a VAT taxable person in 2024 because you exceeded HUF 12 million, you became a VAT taxable person under the rule at that time, so you do not need to correct your invoices and VAT returns issued accordingly, as the HUF 18 million threshold does not apply for 2024. If, however, you have not deducted the VAT on your 2024 VAT receipts in the VAT return to be submitted by 20 January 2025, you will not be able to deduct the VAT on these invoices later if you wish to benefit from the opting for the exemption retroactively under the new rules.
- For those who started the year 2025 as exempt persons, the exemption threshold has automatically been raised to HUF 18 million, and there is nothing more to do.
Elections and bill repairs should be done as soon as possible
The deadline for making the election is 28 February 2025, but given that monthly VAT returning taxable persons have until 20 February to send in their January VAT returns, if these taxable persons deduct VAT on invoices whose issuer will be retroactively exempt, an unauthorised VAT refund will be made, so invoice issuers should make their election as soon as possible, cancel the invoices and send them to the recipients. If a taxable person becomes subject to an exemption retroactively to 1 January 2025, they will no longer be able to reclaim VAT on incoming invoices from that date. The tax experts at Moore Hungary Tax Advisory Ltd. are still available to answer your tax questions, please contact us.
The tax experts of Moore Hungary Tax Advisory Kft. are still available to answer your tax questions, please contact us.
Moore Hungary
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