Since the introduction of the new KATA legislation, many people are looking for ways to "extend" the validity of the KATA a little longer for invoicing business partners. In this context, the question has been raised in several forums as to whether it is possible to invoice in advance for services for the remaining part of the year, given that the legislation still considers fees due on the basis of a receipt issued by 31 August as revenue under the current rules. There is one case where this is possible, but in that case, attention must be paid to the proper practice of law," points out Dr. Babett Korponai, senior tax expert at ICT Business Advisory Zrt.
The question above can indeed affect many, whether they are accountants, payroll accountants, language trainers and other consultants, etc... What is worth pointing out in this context is that, as a general rule, a payment made before performance is considered as an advance payment, which must be followed by a final invoice after the payment. As the performance will take place after 31 August, the KATA companies that issued the advance invoice will no longer be able to issue a final invoice," points out Dr. Babett Korponai. This option is therefore not viable. The situation is different if an invoice is being issued, and for that there has already been performance before 31 August and for example, a 90-day payment deadline is set. In this case it does not matter when the money is received because the invoice has already been fulfilled.
When is it still possible to invoice companies in advance for payments made after 31 August?
If it is a so-called accounting period service or product sale, invoicing in advance may be a real option. However, it is also worth considering the basic principle of the Tax Administration Act, which states that "Rights in tax relationships must be exercised in accordance with their intended purpose. For the purposes of the tax laws and government regulations, a contract or other legal transaction that is intended to circumvent the provisions of the tax law or government regulation does not constitute the proper exercise of rights [the requirement of the proper (purposeful) exercise of rights (prohibition of abuse of rights)]".
Thus, invoicing in advance (in this case, for a transaction after 31 August) in order to circumvent tax legislation may be highly objectionable," emphasises Dr. Babett Korponai, senior tax expert at ICT Business Advisory Zrt.