WHAT ARE THE FORMAL AND CONTENT REQUIREMENTS OF COMPANY DOCUMENTS IN B2B TRANSACTIONS IN HUNGARY?

26 April 2024

Few people may know, but legislation often imposes formal and content requirements for certain documents. In most cases, these rules are for the sake of identification, which is in the interest of both parties, so it is important to pay attention to them to avoid misunderstandings. In this article, we examine the content requirements for documents used in business to business (B2B) transactions.

1. B2B documents

As mentioned above, this article summarizes the documents used in the business-to-business relationships.

If we consider business transactions between the company and its partners, there are two typical cases where the minimum content of the document is regulated by law in Hungary:

1. corporate correspondence;
2. invoicing;

In the following, we will therefore go through the content requirements for these documents, but first we will look at the formal requirements.

2. Format of B2B documents

According to the Hungarian VAT Act[i] an invoice may be printed on paper or issued electronically, however, please note that, regarding the use of electronic invoice additional requirements may arise, therefore it is always worth to consult with an accountant.

Furthermore, it is noted that in case of a liquidation procedure, which can be used as a debt collection procedure, the creditor must prove that he has sent the invoices to the debtor.

We highlight that certain type of contracts, or certain provisions are only valid in written form. In case the contract is only valid in written form, the important terms shall be recorded in written. In such cases, the safest solution is that the authorized representatives of the parties sign the contract or unilateral statement by wet ink or classified e-signature under the eIDAS Regulation[ii].

Besides this formal requirement, there is no general legal requirement regarding the data to be indicated on business documents.

3. Content of B2B documents

a. Corporate correspondence

According to the Company Act[iii] private limited-liability companies and limited companies, once they are registered, shall indicate on all printed or written forms of official correspondence, including electronic mail and the company's official website the following information:

- the name of the relevant court of registry,

- the company's name

- the company's name  registered office,

- the company's registration number

- any indication referring to the liquidation or dissolution of the company, if applicable.

According to the Company Act, the indication of the company's subscribed capital is optional. However, the company decides to indicate this information, it shall specify the amount of subscribed capital recorded in the companies register and the amount actually paid up.

b. Invoices

According to the Hungarian VAT Act it is obligatory to issue an invoice for the supply of goods or services to the purchaser of the goods or services.[iv]

According to the VAT Act the invoice shall contain for example the following information:

- the date of issue of the invoice;

- the invoice serial number, which identifies the invoice beyond reasonable doubt;

- the tax identification number of the supplier of the goods or services;

- the name and the quantity of the goods or services;

- the date of the performance or, in the case of an advance payment, the date of assessment of the tax, if different from the date of issue of the invoice;

- the term 'cash accounting', where appropriate.