Introduction
This concept is a specific rule in Hungarian accounting that has no exact equivalent in English terminology. While we aim to explain it clearly, please don’t hesitate to contact our support team.
What is a continuous performance invoice?
A continuous performance invoice applies to business transactions where the service is provided not as a one-off event but continuously over specified periods.
Examples include invoicing for rent, utility services, internet subscriptions, consulting, or accounting services.
How to issue a continuous performance invoice?
Define the service period
The invoice must always specify the period it covers, such as monthly, weekly, or other recurring intervals. Important: The period cannot exceed 12 months. At the end of each 12-month period, an invoice must be issued.
Determine the Date of Performance
The determination of the performance date is one of the most complex aspects of issuing continuous performance invoices. The performance date is defined according to Section 58 of the VAT Act, with the following scenarios:
Advance invoicing: we invoice a predetermined fee for a specific period. For this reason, we issue the current month's invoice at the beginning of the month.
performance date = invoice issue dateIf the payment deadline precedes the last day of the settlement period, the invoice is issued in advance for the respective period.
Example: June rent invoice
Issue date: 04. June 2024
Invoiced period: 01-30. June 2024
Payment deadline: 12. June 2024
Performance date (=issue date): 04. June 2024
Post-invoicing
performance date = payment deadlineIf the payment deadline follows the last day of the settlement period but is no later than 60 days after, the performance date aligns with the payment deadline.
Example: may consulting fee (hourly settlement)
Issue date: 06/04/2024
Invoiced period: 05/01/2024 - 05/31/2024
Payment deadline: 06/12/2024
Performance date (=payment deadline): 06/12/2024
Example: may software development fee (90-day payment term)
Issue date: 06/04/2024
Invoiced period: 06/01/2024 – 06/30/2024
Payment deadline: 06/12/2024
Performance date (=issue date): 06/04/2024
Cash or cash-equivalent payments
If payment is made in cash or using a cash-equivalent method, the invoice must be issued immediately. In this case, the issue date, payment date, and performance date are the same. The settlement period must also be indicated.
Automated invoicing
Online invoicing tools like Billingo or Számlázz.hu simplify issuing continuous performance invoices. These platforms allow automated recurring invoicing, ensuring invoices are sent to clients automatically at the end of each period.
Additional considerations
Ease of accounting While it’s not mandatory to label invoices as continuous performance in nature, enabling this in invoicing software can make accounting more efficient.
Invoicing deadlines: Invoices must be issued by the 8th day of the month following the performance period (Section 163 of the VAT Act).
International invoicing: If the performance occurs in another EU country or a non-EU country, the invoicing deadline extends to 15 days after the performance date. In such cases, the VAT obligation rests with the buyer.
This process ensures seamless and accurate invoicing for continuous performance transactions, facilitating smoother operations for both service providers and clients.