14.12.2024

WTS Klient Global Minimum Tax Conference: Reassuring answers

Designated entity can also make the GloBE declaration

WTS Klient Globe Konferencia

The last day of the year is coming up, which is also the deadline for reporting data to the Hungarian tax authority for the global minimum tax. If you include the upcoming holidays, there is really little time left to register, and a significant number of companies do not even know whether they are subject to the new tax. While time is pressing and default penalties are significant, there are still many questions on the subject. The WTS Klient Global Minimum Tax Conference on 4 December 2024 helped to clarify these issues for participating business leaders, tax and accounting professionals.

WTS Klient GloBE Conference

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Uncertain and unprepared companies

 The Minimum Tax Act came into force in Hungary in 2024, under which multinational groups with revenues of more than 750 million EUR will be subject to a global minimum tax. However, the great interest in the conference undoubtedly confirms, and a non-representative online survey by WTS Klient Hungary also revealed, that a significant proportion of business leaders, almost one third, are not even sure whether their company will be subject to the new tax. The survey also found about the same proportion of professionals who feel completely unprepared and those who were unaware that the companies concerned will have to report by the end of the year. 70% of respondents believe that the Pillar Two rules are more complex than average, and 22% of them also believe that they are extremely complex, revealed András Szadai, tax partner of WTS Klient Hungary and host of the event, at the beginning of the Global Minimum Tax Conference.

Reassuring developments

Although the deadline of 31 December is fast approaching, the required data reporting form has only recently appeared on the website of the Hungarian tax authority, and the default penalty can reach up to HUF 5 million, there are some reassuring developments.

For example, various exemptions can be claimed under the temporary CbCR Safe Harbour or the permanent Safe Harbour rules and, as Lars Behrendt, tax expert and partner at WTS Germany explained in his presentation, there are already cluster methods developed for what to do in case of involvement of countries (e.g. China, India or the US) where implementation has not yet been announced or where it is not yet foreseen in the near future. It is clear that if these economically important countries do not introduce the Pillar Two rules, it will be more difficult to apply the Hungarian rules or collect tax that Hungary may be liable for.

During the roundtable of the Global Minimum Tax Conference it was also mentioned that it is worth submitting the data reporting sheet even if the data is incorrect, as there will be a possibility to amend the data report. For the domestic declarations to be completed by the end of the year, domestic group members can decide to have a Hungarian group member designated by them complete the declaration of all Hungarian group members in one form. In addition, under the DAC9 proposal published by the European Commission in October, it is likely that it will be possible for the Globe Information Return (GIR) to be completed by the parent company or a designated group member and received through information exchange by the EU Member States concerned in 2026.

Pillar Two in Hungary: detailed rules still to come

Although the ministerial decree containing important detailed rules, which is also mentioned in the Global Minimum Tax Act, has not yet been published, dr. Szilvia Tormáné Boris, corporate tax expert at the Hungarian Ministry of Finance, tried to reassure the participants: despite the fact that the detailed rules concerned have not yet been introduced in detail into the Hungarian legal environment, the OECD model rules at international level apply in accordance with the principles of the law.

The international development of the Pillar Two rules is ongoing: the latest international negotiations aim at identifying tax avoidance structures and transactions related to the global minimum tax and at enabling mutual exchange of data on the global minimum tax (GIR) reporting between Member States at EU and global level (DAC9 Directive proposal and OECD Multilateral Competent Authority Agreement), said the expert.

Tax advisors at WTS Klient Hungary keep abreast of domestic and international Pillar Two regulations and will be happy to help you navigate the topic. As part of our tax planning and consulting services, we not only explain the details of the rules, but also develop the most optimal solutions tailored to your company. Contact us with confidence!

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