Managers' guide for the NAV 1. - The process of a tax audit (in Hungary)

How does a tax audit take place, what are the practical focal points?

In 2026, the selection of tax authority audits will no longer be a random sample, but a data-driven decision. According to its own 2026 audit plan, the Tax Authority will base the selection on risk analysis and – specifically named – artificial intelligence-supported models. In other words, by the time the auditor arrives, the office already has a hypothesis about what it will find.

This guide will walk you through the process of a tax audit from the mandate to the final decision, what deadlines bind the authority and the client, what an SME can expect in 2026 - and even where the fate of the case is decided in practice (spoiler: typically not in court).

1. Not all procedures are tax audits

The most common and costly misconception is that companies treat all official requests with the same weight. However, the Tax Administration Regulations (Air.) sharply distinguish three situations, and the legal consequences are completely different.

Compliance audit: its purpose is to determine whether the taxpayer has fulfilled its registration, reporting, documentation and data provision obligations, and whether an economic event has actually occurred. It does not establish a tax difference and – this is the key – does not create a period closed by an audit . Typical forms include, for example, checking invoices and receipts, examining employment reports, and collecting data in preparation for a larger case.

Tax audit: this is the “serious” procedure: the authority examines the correctness of the tax base and tax for each tax type and period, and may establish a tax difference. The period closed in this way generally becomes a period closed by audit , which can only be reopened later in special cases, with a re-audit or a repeat audit. This is both a risk and a value: a cleanly concluded tax audit creates legal certainty.

Supportive procedure: formally not an audit, the Tax Authority indicates the discrepancy it detects and provides an opportunity for voluntary settlement. The practical weight of this increases year by year – according to the Tax Authority's 2025 data, the office conducted approximately 9 thousand support procedures and 21 thousand supportive audits, and approximately 60 billion forints of tax was subsequently declared through taxpayers' self-audits. In more than a fifth of the cases, the auditors did not sanction the taxpayer, but rather directed them.

If you are contacted in a support procedure or during a compliance audit, there is even more room for maneuver. There is a possibility of error correction, and the company can typically still self-audit for the given period. With the delivery of the mandate for the tax audit (handing it over during an on-site audit), this window closes: there is no longer any room for self-audit for the tax type and period concerned.

2. Audit risk

The backbone of selection today is data comparison. Online invoice data provision, VAT returns, cash register data, bank card transactions, international information exchange received by NAV (DAC guidelines, CbCR) and platform operator data provision together provide a picture in which anomalies automatically stand out. NAV's 2026 audit plan states this openly: data-driven, targeted, risk-based selection, with differentiated action according to taxpayer behavior.

The 2026 inspection plan names, among others, the following areas:

• VAT (including VAT claims that have been rolling over for several years and have not been called; classic VAT fraud chains; risky areas of activity)

• E-commerce (courier and delivery service providers as a new target group)

• Certain sectors (construction, automotive, agriculture and food, chemical, IT and software development, service sector)

• Cash-intensive sectors (hospitality, accommodation, taxi, beauty, fitness and personal training)

• Import and customs (regular importers of products, distributors of Far Eastern products, customs valuations, and goods subject to CBAM and EUDR )

• Transfer pricing and large corporates (those failing to provide transfer pricing data will receive special attention, along with the accuracy of CbCR, related party transactions involving intangible assets, the global minimum tax, and companies showing persistent losses or unusually low profits)

• Other (such as transactions related to tax havens and income derived from them, Szoch benefits related to specialized education and dual training, undeclared income from real estate sales, and the food chain supervision fee that has come under the jurisdiction of the National Tax and Customs Administration since 2025)

Practical experience shows that the Hungarian Tax Authority is increasingly attacking multiple threads at once : compliance checks in the supply chain, parallel tax audits at the main taxpayer, and criminal investigations. If multiple audits are suddenly launched at business partners, there is a good chance that all companies will be included in a network analysis, so passivity and waiting are the worst strategy.

3. The tax audit process step by step

3.1. Letter of mandate

The audit begins with the delivery of a letter of authorization to this effect, the handing over of a copy of it, or the presentation of a general letter of authorization. The first step is not to explain, but to read the letter of authorization to find out the tax type, period, type of procedure, and competent body involved.

In the event of a tax audit, the authority may notify the taxpayer in advance, but notification may be omitted if it would jeopardize the effectiveness of the audit. In cash-intensive sectors, on-site visits are essentially always unannounced.

3.2. Proof stage

This is the substantive part of the procedure and typically takes the longest. Its tools include: document requests, taxpayer and employee statements, witness interviews, on-site inspections, test purchases, inventory taking, data requests from third parties (banks, partners), related investigations at the partner, international inquiries, and, in justified cases, estimates .

Two procedural innovations from 2025 are already visible in practice: NAV can record electronic minutes , and electronic procedural tools have been expanded, including the use of remote hearings. This speeds up the procedure – and reduces the room for maneuver previously provided by logistical “friction”, e.g. referring to travel or health conditions.

3.3. Minutes and comments

The authority records its findings in a report; the inspection is concluded with the delivery of the report. After that, there are 30 days to make comments. If the comment raises a relevant new aspect, the authority may even conduct an additional inspection.

Why is this the most important moment? Because according to Air. , in the appeal and in the proceedings initiated on the basis of the appeal, no new fact may be stated or new evidence presented that the taxpayer was aware of before the first-instance decision was made, but did not present despite the authority's invitation. This preclusion rule is the most undervalued provision of Hungarian tax proceedings. The administrative court may also only examine the facts that arose in the administrative proceedings.

3.4. Official procedure and decision

After the audit is completed, the official phase begins, at the end of which the first-instance decision is issued: tax difference, tax penalty, late payment surcharge, and sometimes a default fine.

3.5. Legal remedies

• Appeal : in the case of a subsequent tax assessment, 30 days from the date of notification of the decision, this is reviewed by the dedicated body of the National Tax and Customs Administration, the second-instance tax authority. The appeal – as a general rule – has a suspensive effect on the execution.

• After the second instance decision, an administrative lawsuit may be initiated; the claim must be filed within 30 days of the notification. Filing a claim does not have an automatic suspensive effect, therefore, in cases involving large amounts, it is highly recommended to also submit a request for immediate legal protection.

• Request for supervisory measures : an extraordinary, discretionary tool, typically used when the normal legal remedies have been exhausted.

4. Deadlines (in brief)

Proceedings	Basic deadline
Compliance check	30 days
Tax audit (general)	90 days
Tax audit of taxpayers with the highest tax performance	120 days

The deadline may be extended several times in justified cases (by the head of the tax authority conducting the audit, the superior body, or the head of the National Tax Authority, by a maximum of 90 days each time). However, there is an absolute ceiling: in the case of a tax audit, the procedure may not exceed 365 days for a taxpayer required to register a company , and 180 days for other taxpayers – unless the taxpayer obstructs the audit.

However, it is important to highlight the following:

1. In the case of a reliable taxpayer qualification , the duration of the tax audit falls within the legal limit (maximum 180 days). The qualification is therefore not just a marketing label, but a procedural advantage, and it is worth managing it consciously.

2. Pause : the duration of the related investigation, domestic and especially foreign inquiries is not included in the inspection deadline.

5. Sanctions

• Tax penalty: 50% of the tax deficit; 200% in case of concealment of income or falsification or destruction of receipts, books, or records.

• Late payment surcharge: 365th of the central bank base rate plus 5 percentage points per day. In a high interest rate environment, this is a double-digit annual burden, and in long procedures it can often be even greater than the fine.

• Penalty for default: applies to breaches of obligations not related to tax deficit (reporting, data provision, document retention).

• Conditional tax penalty relief: if the taxpayer waives his right to appeal against the first-instance decision and pays the difference by the due date, he is exempt from paying 50% of the imposed tax penalty .

The NAV's magic weapon is the precautionary measure: if the authority believes that the satisfaction of a claim to be determined later is in danger, a temporary precautionary measure can be ordered during the inspection – i.e. well before the decision – which typically means freezing a bank account . In the case of an operating SME, this becomes a liquidity crisis within days. The legal remedy here is short-term and requires independent expertise; it is worth preparing for this scenario in advance, not when the bank has already refused the transfer.

Is there a statute of limitations? The right to a tax assessment generally expires 5 years after the last day of the calendar year in which the return should have been filed. However, the statute of limitations may be extended for several reasons (judicial review, repeated audit, self-audit, suspicion of tax fraud).

6. Classic mistakes

1. The accountant is entrusted with the process, but the audit is a legal process, not an accounting task. Moreover, if the disputed issue is accounting practice, the accountant may be in a conflict of interest.

2. Verbal statements: thoughtless statements made in front of the auditor (“this is how we usually do it”) are recorded and later returned in a submission. This is why it is recommended to provide a written response and read the minutes.

3. Subsequent modification of documentation can be the most dangerous: a backdated document at best discredits the entire defense, and at worst, poses a criminal risk.

4. The missed observation is much more In the case of formality, this is the last real opportunity to shape the facts.

5. Due diligence not documented – in advance . The typical reason for refusing VAT deduction today is not a formal error in the invoice, but that the taxpayer “knew or should have known” that he was participating in tax evasion. Only evidence generated at the time of the transaction protects against this: partner control records, requests for proposals, performance certificates, photographic documentation, e-mail traffic, transport documents, insurance. This cannot be fabricated retrospectively.

6. An audit is not a one-time event: the findings of a closed investigation automatically leave a risk signal in the system. The process correction after the finding is just as important as the remedy itself.

7. What should we pay attention to?

1. The date of receipt of the mandate is the starting date of many deadlines.

2. Document retention: all affected employees, all email accounts, all files. Loss of data during the procedure carries its own sanctions.

3. Let's map our own exposure before the NAV does. We look at the same data that the authority sees: online invoice, VAT return, cash register, bank account.

4. Self-audit – if there is still a legal possibility.

5. Single point of contact: responses given across multiple channels with different content are the most common and serious source of error.

6. Involve tax representation at the beginning of the procedure , not after the protocol. The cost of representation is lowest at the beginning of the procedure, and its impact is greatest there.

Summary

It may come as a surprise, but the NAV tax audit is more predictable today than it was ten years ago – but only for those who understand its logic. The selection is data-driven, the procedure is formalized, the deadlines are largely known, and the law precisely indicates the point where the taxpayer can intervene most effectively: the comment on the report. Anyone who remains passive up to this point will have only limited ability to argue later.

If your company has been subject to an audit or operates in one of the above risk areas and would like to assess your exposure in advance, contact us.

This article is for general information purposes only and does not constitute legal advice and is not a substitute for a professional assessment of the circumstances of the individual case. The legal provisions referred to have been compiled based on the text in force at the time of publication.

Materials used as sources: NAV's 2026 audit plan and related official information; Act CLI of 2017 on the tax administration system; Act CL of 2017 on the taxation system.

Dr. Robin Bordas

tax lawyer, tax advisor

BRDS Tax & Legal