The National Tax and Customs Administration (NAV) of Hungary has announced a paradigm shift in its enforcement approach for 2023, emphasizing a cooperative relationship with compliant taxpayers while intensifying scrutiny of those suspected of deliberate tax evasion.

Ferenc Vágujhelyi, the head of NAV, highlighted the authority's commitment to supporting individuals who make minor, unintentional errors in their tax declarations, reiterating that more severe actions will be directed at taxpayers who intentionally neglect their public financial duties or engage in fraudulent activities, such as employing workers without proper contracts.

A key element of NAV's revamped oversight methodology is the introduction of the ‘data reconciliation procedure,’ which aims to facilitate a collaborative relationship between the tax authority and taxpayers.

This new process allows NAV to notify taxpayers of any discrepancies it identifies based on available data, effectively opening a dialogue that encourages voluntary rectification of errors by taxpayers.

Historically, NAV employed two main procedures: the traditional audit process, which results in binding determinations after inspections, and a compliance procedure that allowed for self-correction by taxpayers without penalty.

The new reconciliation approach is expected to strengthen this cooperative framework.

Vágujhelyi provided examples of discrepancies that the new procedure could identify, such as cases where taxpayers submit zero income declarations while having active financial transactions recorded in the electronic invoice system or where a company reports far fewer employees than are actually on their payroll.

In terms of digitalization, Vágujhelyi noted that the integration of feedback mechanisms during tax declaration periods would enhance taxpayer interaction with NAV. As digital tools evolve, the current online tax declaration platform, ÁNYK, is seen as outdated and due for replacement.

The e-SZJA platform has achieved an 80% utilization rate among taxpayers, and some forms in the business sector are approaching 100% online completion rates.

Despite the increase in digital operational methods, a significant number of companies continue to utilize the conventional processes for their declarations.

A notable statistic indicates that approximately 800,000 inquiries have been made by businesses regarding the data NAV maintains about them, illustrating a reliance on these traditional methods.

Additionally, Vágujhelyi stated that NAV's audit practices are underscored by data-driven risk analysis.

The agency collects extensive transactional data, positioning Hungary as one of the leading countries in Europe in terms of transaction monitoring.

This allows for a more effective screening of potential tax evaders, with a shift in focus towards deducting discrepancies rather than simply processing refund requests.

As part of its 2025 inspection plan, NAV intends to launch additional checks targeting sectors deemed high-risk this year, including:
- Construction and building materials trading companies
- Security, cleaning, and labor leasing firms
- Fruit and vegetable traders
- Online marketplace operators
- E-commerce platforms both domestic and international
- Internet content providers
- Event organizing, advertising, marketing, media, and film production companies
- Tourism and hospitality businesses, including accommodation and taxi services
- Regular import revenue reporting entities
- Vendors of products from the Far East
- Beauty and fitness industry enterprises
- Companies involved in excise tax activities

As these inspections commence, NAV aims to bolster compliance and reduce tax evasion in these targeted industries.