The Brave New World of Electronic Invoicing

Starting from July 1, 2025, electronic invoicing will become mandatory for all businesses when receiving electricity or gas invoices. Since no business can operate without electricity or gas, this change affects every company, regardless of its size or field of activity. We are in the final stretch, so the key question now is: are Hungarian businesses ready for the new rules?

What qualifies as an electronic invoice?

According to the VAT Act, an invoice is considered electronic if it contains the required data and is issued and received in electronic form. In practice, this means that if an invoice is created as a PDF and sent by email, it qualifies as an electronic invoice. It is important to note that what matters is not how the invoice was created, but whether it was transmitted electronically. The Hungarian Tax Authority (NAV), in its information notice issued on February 1, 2025, confirms that even a scanned paper invoice sent via email qualifies as an electronic invoice.

How should an electronic invoice be issued and received?

According to the law, from the moment an electronic invoice is issued until the end of its retention period, its authenticity of origin, integrity of content, and readability must be ensured. These requirements can be met in several ways. Qualified electronic signatures, electronic data interchange systems (EDI), or appropriate business control processes may be used—for example, comparing the content of the invoice with the delivered service and the related documentation. In such cases, authenticity and integrity do not need to be ensured through EDI or electronic signatures. It's also important to note that the recipient’s consent is required for electronic invoicing. This can be formal (via written agreement) or implied—e.g., if the company pays the invoice, this constitutes acceptance. However, this rule may be overridden if a legal regulation makes electronic invoicing mandatory in a specific sector.

What should be considered for archiving?

Both the issuer and the recipient of electronic invoices must retain them in electronic form for at least 8 years. During this period, the documents must remain readable and interpretable, and any deletion, accidental or intentional destruction, modification, damage, or unauthorized access must be prevented.

There are several ways to comply with these requirements. One option is using a closed system that technically prevents file modifications. In such cases, the developer of the software or IT solution must provide a written declaration that the archiving solution complies with legal requirements. However, it is important to note that the business and the service provider share joint liability for legal compliance. It is also possible to use a trusted service provider who ensures proper storage of the electronic invoice, provided that the invoice is secured with at least an advanced electronic signature. Additionally, the use of a hash code is another option. In this case, a code generated by a special algorithm linked to the invoice must be retained and sent to the tax authority. If the tax authority confirms the data processing, the integrity of the invoice's content and the authenticity of origin are ensured, since any subsequent change to the content would render the original hash code invalid—serving as a kind of "digital fingerprint."

What happens if a company fails to comply with these rules?

If a business fails to fulfill its archiving obligations, the tax authority may impose a default fine of up to HUF 2 million. However, the tax authority takes the circumstances into account—such as the company’s previous law-abiding conduct or cooperation—and may even waive the penalty based on these factors.

Author : Dr. Márton Kondi