Hungary's National Tax and Customs Administration (NAV) has reported the dismantling of a fraudulent invoicing network that involved several companies and individual entrepreneurs, leading to a tax evasion amounting to over 73 million Hungarian forints (approximately €200,000).

The investigation revealed that the primary aim of the network was tax minimization through fictitious invoicing practices.

According to NAV, multiple individual entrepreneurs were discovered to be exclusively invoicing two limited liability companies (kft.), which were found to be owned by the same individual.

The subcontractors involved in these operations were primarily relatives and acquaintances of the owner.

However, instead of engaging in legitimate loading activities, these individuals were orchestrating the issuance of fictitious invoices for non-existent services.

Despite the fraudulent nature of the transactions, the invoices were uploaded to the online invoicing system and the respective VAT returns were submitted on time and in compliance with regulations.

Notably, the companies in question did not remit any VAT to the state budget, as all transactions were conducted in cash, typically with the invoiced amount being the maximum cash amount permitted—1.5 million forints per invoice.

The audit uncovered a tax discrepancy totaling 73 million forints related to the two kft., and the proceeding is ongoing.

The anticipated penalty for the tax evasion is expected to reach 200 percent of the owed tax amount.

Following the initiation of the audit, the taxpayers have reportedly altered their practices by employing legitimate staff under employment contracts or casual work agreements.

Their subsequent tax declarations now include ten to twenty times their previous average VAT payment obligations, along with five to seven times the amount of taxes and contributions related to their employees, as stated by NAV.