What is a Standard Tax Code?

A Standard Tax Code is a unified tax code list introduced by the Hungarian Tax and Customs Authority (NAV) in connection with the eVAT (eÁFA) system. Its primary purpose is to establish a harmonized, transparent, and automatable link between companies’ internal accounting/tax codes and the structure of VAT returns.

By adopting standard tax codes, NAV aims to replace the highly diverse, company-specific tax code systems with a centralized, well-documented structure. This plays a crucial role in the eVAT framework, where VAT returns are generated based on data already available to NAV.

Why are Standard Tax Codes Needed?

Previously, businesses used custom tax code schemes in their invoicing and accounting software, often not aligned with the official VAT return layout. This led to:

• Manual mapping,
• Complicated verification processes,
• Cumbersome data reporting.

The standard tax code list solves this by:

• Directly linking tax codes to declaration positions (e.g. payable, deductible, or other VAT categories),
• Providing the foundation for NAV’s automated return preparation logic in the eVAT system.

How Is a Standard Tax Code Structured?

A standard tax code is characterized by the following:

• A single invoice may contain multiple standard tax codes if it includes items with different VAT treatments.
• Each tax code is associated with one or two reporting positions.

Reporting positions fall into three categories:

PAYABLE: VAT payable to the tax authority,

DEDUCTIBLE: deductible input VAT,

OTHER: technical or exempt transactions (e.g. VAT-exempt sales or internal corrections).

This structure ensures that each tax code can be precisely mapped to the correct line in the eVAT return.

Example in Practice

Imagine a company that both sells goods domestically and imports goods from the EU.

The domestic sales use a standard tax code marked as PAYABLE.

The EU imports result in DEDUCTIBLE VAT entries using a different standard tax code.

The eVAT system will then automatically:

• Place the domestic sale in the “payable VAT” section,
• Place the import-related VAT in the “deductible” section.

This automation reduces errors and manual work in VAT filing.

Integration with the eVAT System

The use of standard tax codes is essential for the automation of the eVAT system, because:

• They define how each transaction should be placed in the VAT return,
• They underpin the logic of NAV’s draft VAT reports and analytics,
• They enable automatic validations based on NAV’s internal datasets.

Developers of ERP or accounting software must map internal tax codes to the standard NAV codes, ensuring correct data transformation and submission.

Benefits for Businesses and the Tax Authority

For businesses:

• Simpler VAT return preparation,
• Fewer errors or mismatches,
• Easier automation of bookkeeping and reporting.

For NAV:

• More efficient data validation and risk analysis,
• Faster, more accurate return review,
• Standardized communication and data quality.

Summary

The Standard Tax Code is a unified tax code list introduced by NAV as part of the eVAT system, serving as a link between invoicing, bookkeeping entries, and VAT declaration logic. Each code can be associated with one or two reporting positions (PAYABLE, DEDUCTIBLE, or OTHER), allowing transactions to be automatically placed into the correct section of the VAT return. The goal is standardization, automation, and transparency.

Official definition

A Standard Tax Code is a centralized code list introduced by NAV in connection with the eVAT system. It links individual tax codes to specific lines and positions in the VAT return. Each code must reference one or two positions: PAYABLE, DEDUCTIBLE, or OTHER.

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