Many countries have recently started their continuous transaction controls (CTC) journey by introducing mandatory e-invoicing or e-reporting systems. We see more of this trend in the European Union as the recent reports on the VAT in the Digital Age Initiative discuss that the best policy choice would be to introduce an EU-wide CTC e-invoicing system covering both intra-EU and domestic transactions.
However, the efforts to fight tax fraud aren’t limited to mandatory e-invoicing or e-reporting systems. Many governments prefer to look beyond and introduce another tool that gives them greater insight into their economy: e-transport documents. When introducing e-transport systems, we see that one country differs from other EU Member States with the early adoption of an e-transport system – Hungary.
Hungarian E-Transport System: EKAER
The Electronic Public Road Transportation Control System or Elektronikus Közúti Áruforgalom Ellenőrző Rendszer (EKAER) has been in place in Hungary since 2015. Operated by the Hungarian tax authority, the EKAER is intended to monitor compliance with tax obligations arising from the transportation of goods on public roads in the national territory.
The system was initially introduced to monitor the movement of all goods in the national territory. However, after several letters from the EU Commission asking Hungary to bring their system in line with the EU regulations, the scope of the system was narrowed down to the so-called risky products in January 2021. The risky products are defined in 51/2014. (XII. 31.) NGM decree, which consists of foodstuffs or other risky products (such as flowers, all kinds of natural sands, different types of minerals, etc.).
According to 13/2020. (XII. 23.) decree on the operation of the Electronic Road Traffic Control System, Hungarian taxpayers are required to report specific data regarding the transport of risky products by using the EKAER system before the transportation of goods begins. It’s also important to mention that it’s necessary to be registered in the EKAER system and provide a risk guarantee for certain types of transport unless there is an exemption in the law.
EKAER number generation
Taxpayers are obliged to report the transport of risky goods in XML format to the EKAER system. This information includes data regarding the sender, the recipient, and the goods. Moreover, businesses must also report additional specified data to the tax authority based on the transport type (domestic, intra-community acquisitions and intra-community supplies).
Following the report by the taxpayer, the EKAER system generates an EKAER number, an identification number assigned to a product unit. This number will be valid for 15 days; therefore, the delivery of goods must be performed within this period. Businesses must communicate the EKAER number to the carrier, and it should accompany transported goods.
Although no future changes are foreseen for the EKAER system, different countries worldwide continue to introduce e-transport requirements similar to the EKAER system. Taxpayers must ensure that their transport processes are flexible and compatible with changes that the tax authorities are introducing to stay compliant.