The amended Act
On 13 February 2015 the government submitted an amending proposal to Parliament aiming to amend the Act on rules of taxation regarding the rules applicable to the EKAER system. Based on the already accepted amendment, we know that the structure of the relevant legislation is set to change in that all detailed rules will be included in a Ministerial Decree to be promulgated at a later date. Practically, the amendment will rewrite all currently valid – EKAER-related – sections in a manner that all fundamental provisions concerning EKAER will remain in the Act but all other detailed rules will be regulated at decree level. So this amendment concerns legal technicality aiming to create a more flexible legislation by shifting the regulation from the Act to decree level, which may easier be modified in the future.
The new rules will take effect on 1 March 2015 (with the exception of provisions concerning the obligation to provide security). In other words, until 28 February 2015, it is necessary to act in accordance with the current provisions.
In comparison with the current provisions on the EKAER, the amending proposal will not result in fundamental changes. Regarding the legislative amendment, this is what we currently know:
- the EKAER number must be obtained in the case of transports concerning the sale / purchase of products and the movement of goods for other purposes, provided that the transportation is carried out, either partly or fully, on public roads using vehicles subject to a toll payment obligation;
- special rules apply to risky products and the EKAER number in this case must be obtained even if the transport is carried out by a vehicle that is not subject to a toll payment obligation;
- regarding application for an EKAER number, the taxpayer can authorize practically anybody through the system. This authorisation is valid until withdrawal but it must be stressed that any and all applications made shall be regarded as a legal statement made by / in the name of the taxpayer;
- exemption from the system will be included in the Ministerial Decree;
However, it is a change – made clear in the amendment – that it is also possible to request an EKAER number even if the taxpayer would otherwise not be obliged to have one.
All other particulars will be regulated in the Ministerial Decree. Accordingly, Annex 11 of the Act on Rules of Taxation will also loose effect, so possible changes to rules applicable to individual directions of trade (import from the EU, export into the EU, first domestic sale) are also shifted to decree level legislation. The same applies to detailed rules concerning risky products and the risk security. However, according to the amending proposal, one of the transitional provisions to be added to the Act on Taxation will be that the obligation to provide risk security will take effect from 11 March 2015 onwards, so the grace period taxpayers can enjoy will be a bit longer.
However, the system of penalties to be imposed in the EKAER system remains unchanged. In case an eligible transport has no EKAER number, the tax authority (NAV) can impose a default penalty on the taxpayer in an amount up to 40% of the value of the unreported goods. In order to collect the default penalty, the tax authority (NAV) may even seize (and shall document such seizure in minutes) the transported goods up to the value of the penalty. The amendment proposes that these legal consequences must and shall be applied from 1 March 2015 onwards. This is welcome as in the declaration on the website of the Ministry this deadline was already published but so far no piece of legislation has changed the start of the penalty period from 1 February.
Just recently, on 19 February 2015 the Hungarian government portal publicized also the draft of the above referred Ministerial Decree.
FELÍR and EKAER – related obligations
In case of transporting risky products on public roads, in addition to the obligation to provide financial security, the Act in effect stipulates a further obligation. Referring to a VM (Ministry of Agriculture) Decree on ‘food production and food trade reporting and traceability’, in the course of meeting the EKAER registration obligation, the Act also requires that the ‘food business operator operating the first Hungarian place of storage’ and the ‘first Hungarian place of storage’ be reported.
Although this reporting obligation is associated with the tax rules only indirectly, it is still referred to in the Act as a precondition for EKAER number registration.
So, based on another sectoral standard, ‘risky products’ as stipulated in the EKAER requirements may also qualify as products falling within the competence of the so called food chain supervisory authority.
Pursuant to the effective legislation, products falling within the competence of the food chain supervisory authority must also be registered in the ‘FELIR’ system (the Hungarian abbreviation for food chain supervisory information system).
Regarding these products, FELIR and EKAER are interrelated in that an EKAER number can be granted to the transports of affected clients only if there is also a FELIR ID number in place.
FELIR registration requires the payment of the supervisory fee and the making and submission of the related declaration via the website of the National Food Chain Safety Office (NFCSO).
If case you are subject to this obligation but your company has not yet been registered in the FELIR system, please make sure you pay the fee and submit the declaration as soon as possible so that you can meet your EKAER obligations properly.