EU VAT Regulation Takes Effect

On 1 July 2011, the new EU VAT Regulation became directly applicable and therefore takes precedence over domestic VAT laws and practice in all EU member states.

The Regulation contains provisions which explain or interpret the EU VAT Directive and is an important step towards adopting a uniform understanding of VAT rules in the EU.

The key changes affecting VAT in Hungary are:

• different definitions (from those in the Hungarian VAT Act) for 'place of establishment', 'fixed establishment', 'permanent address' and 'usual residence'
• detailed rules on the obligation of taxpayers when checking the tax status of foreign business partners. These include a lot of safe havens which were not clearly available until now