Corporate tax

• Preferential transfer of assets: The Hungarian summer tax package 2025 clarifies the conditions for tax deferral. If the shareholding requirement is only partially unmet, only the corresponding part of the previously deferred gain will become taxable, proportional to the transferred participation falling outside the affiliated group. The acquiring company must calculate the tax base differently in such cases.

• Corporate spin-off: This qualifies as a preferential transfer of assets for corporate tax purposes, thus allowing deferral and exemption from duties and excluding transfer pricing obligations.

• Reported shares: Following clarification, the participation exemption rules  will also apply to cross-border transformations occurring after the promulgation. If the taxpayer became a Hungarian tax resident due to a transformation completed in 2024, the benefit still applies provided all legal conditions (e.g., notification within 75 days) are met.

• IFRS-based taxation: The tax base calculation for corporate tax under IFRS is clarified. For derecognition of  own shares or participations (including in-kind contributions), the pre-tax profit must be adjusted for related profits or losses from the current and the previous tax years.

• R&D tax relief: The HUF 50 million limit on the tax base allowance for the direct costs of research and development activities carried out jointly with higher education institutions, the Hungarian Academy of Sciences and certain other research institutions is raised to HUF 150 million.

All corporate tax-related provisions of the Hungarian summer tax package 2025 take effect the day after promulgation.

Global minimum tax

• Notification of supplementary taxpayer status: The deadline is now the last day of the second month following the tax year-end (e.g. for the calendar year 2025: 28 February 2026).

• Default penalty: Violation of GloBE data reporting obligations may result in a fine of HUF 10 million by the Hungarian tax authority.

• Passive accrual: The anticipated supplementary tax for a financial year must be accounted for as a passive accrual, to comply with the matching principle. This rule already applies to reports for financial years starting in 2025.

Value added tax

• E-cash registers: Mandatory real-time receipt data reporting is postponed from 1 July 2025 to 1 September 2026. Voluntary use of e-cash registers is permitted from 1 July 2025, and related reporting obligations already apply from that date. The package also specifies technical and procedural requirements.

• Customs representative declaration: From 1 October 2025, customs representatives must declare the tax base and VAT amount in order to exercise the right to deduct VAT transferred to them.

• Travel services: From 1 January 2026, VAT base and tax amounts need not be indicated on invoices (unless the customer is a taxable person declaring non-travel organizer use). This does not apply to online reporting.

• Natural gas sales: From 1 January 2025, reverse charge VAT applies to gas sales between domestic taxable dealers. From 20 July 2025, buyers must declare their taxable dealer status. Both parties are subject to data reporting, including MWh volume.

• Online invoice data reporting: From 1 January 2026, successor-issued invoices must include the predecessor’s tax number. For VAT groups, both the group and the participating member’s tax numbers must be reported.

• Payment service provider reporting: The opening or closure of a payment account must be reported to the Hungarian tax authority within 7 days instead of 15.

• Chain transaction audits: From promulgation, the audit period is extended where multiple taxpayers must be audited to establish VAT liability (e.g. up to 365 days for reliable taxpayers).

Personal income tax

• Mothers’ allowance: The Hungarian summer tax package 2025 includes a number of technical changes related to the allowance for mothers of two and three children.These clarify the order of applying allowances, update prepayment declarations and regulate monthly tax return data. Infant care benefit (csed) and child care benefit (gyed) become tax-exempt with this new allowance.

• Expansion of tax-free benefits: From promulgation, tax exemption for employer-provided housing (e.g. service apartments, workers’ accommodation, dormitories) extends to foreign employees housed at Hungarian branches of foreign companies, provided legal conditions are met.

• Private use of electric bicycles: From 1 January 2026, tax exemption extends to electric bicycles up to 750 W (previously 300 W) when provided for private use by the employer.

Social contribution tax

From 1 January 2026, a new tax obligation arises for employers paying income to pensioners claiming PIT allowances for dependent children. The tax applies if total income exceeds four times the average annual wage and the payer would otherwise be required to withhold advance tax. Related entities are considered a single payer.

Tax procedure rules

• Binding tax rulings: From 1 August 2025, pre-consultations may be requested online for a HUF 1 million fee. Regular rulings cost HUF 10 million, urgent ones HUF 14 million, standard contract rulings HUF 12 million, and combined urgent/contract rulings HUF 16 million.

• Procedures to determine arm’s length prices: From the 31^st day after promulgation, fees increase to HUF 10 million (unilateral) and HUF 14 million (bilateral/multilateral). Pre-consultation costs rise to HUF 1 million per session.

• Branch registration: From promulgation, taxpayers must report the name and tax number of their Hungarian branches to the tax authority.

• Delisting from negative lists: Employers may apply once a year for removal from certain public negative lists of the Hungarian tax authority if no more than five employees were unreported and the related fine is paid in time.

• Automatic payment relief: Thresholds for eligibility increase for reliable taxpayers and both natural and legal persons, regardless of taxpayer classification.

Duties

From the 31^st day after promulgation, property value corresponding to a solar or wind power installation is exempt from transfer duty.

Special tax on credit institutions and financial enterprises

The special tax on credit institutions and financial enterprises continues in 2026. Tax is based on the 2024 pre-tax profit, adjusted as specified. Rates: 8% up to HUF 20 billion (7% in 2025), and 20% above (18% in 2025). The allowance for increasing the stock of government bonds is still available.

Income tax for energy suppliers

The income tax rate for energy suppliers is set at 41% in 2025 and 31% in 2026.

Additional insurance tax

The additional insurance tax liability will remain for the tax year starting in 2026, but the amount of the allowance will be increased from 30% to 60% of the increase in the nominal value of the government bonds portfolio.

Accounting

The entry into force of sustainability reporting obligations is postponed by two years.

In this article, we have tried to provide a thorough summary of the most important parts of the Hungarian summer tax package 2025 that affect companies’ decision makers. If you have any questions about the changes detailed here, please contact the tax consulting team of WTS Klient Hungary who are always at your disposal.

This article provides general information and does not constitute advice.

A Hungarian summer tax package 2025 adopted bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Minimum wage

From 1 December 2023 the minimum wage was increased to HUF 266,800 gross, while the guaranteed wage minimum rose to HUF 326,000. This also means, for example, that from 2024 the individual value of low-value gifts subject to preferential tax treatment has increased to HUF 26,680, while the amount of expenditure on gifts given to participants in connection with an event organised for several individuals (including business partners) – and subject to preferential tax treatment – has increased to HUF 66,700.

Preferential tax regime benefits

Provision of wine and wine products

From 16 November 2023, bottled wine and wine products with a protected designation of origin or protected geographical indication purchased directly from a winery are exempt from tax, if they are

• provided in the context of hospitality for entertainment and non-entertainment purposes,
• as a business gift, or
• as a low-value gift.

In such cases, no personal income tax or social contribution tax is payable on the supply of these wine products.

Low-value gift

Until now, once a year it was possible to provide a gift as an ‘other benefit’ bearing tax lower than wage tax, up to 10% of the minimum wage. Following the 2024 tax amendments, such benefits can be provided three times a year in 2024.

Tax exemption for winnings

For traditional lotteries (lotto, 6-number lotto, Scandinavian lotto, keno, etc.), winnings are exempt from personal income tax from 1 January 2024.

Acquiring stakes in start-up companies

One element of the 2024 tax amendments intended to stimulate the economy is that a stake acquired free of charge or at a preferential price by employees or senior management in a start-up business (micro or small unlisted enterprise that has been registered for five years or less, has not yet distributed profits, and has not been created by a merger or division) does not qualify as income.

Trusts

The input taxation introduced in 2023 in relation to trusts is replaced by output taxation on account of the 2024 tax amendments in cases where income is transferred to the beneficiary from the value of the initial capital of the assets under management or private foundation assets, five years have not passed between the release of the asset and the initial transfer of the asset to assets under management or private foundation by the settlor or founder (joining individual), and such transferred assets were revalued upwards at the time transferred (asset value appreciation).

Conventions avoiding double taxation

The double tax treaty discontinued by the US will no longer apply from 2024, but several related amendments have been introduced into Hungarian tax laws. The rule on offsetting tax paid abroad has changed, while the rules on other income do not apply to income from securities issued by a person with a registered office in an OECD Member State, or to interest paid by a person with a registered office in an OECD Member State. We should not forget that the Russians also suspended certain provisions of the Hungarian-Russian double taxation treaty in 2023!

Global minimum tax

One of the 2024 tax amendments triggering the biggest reaction was the new tax rolled out from 1 January: the global minimum tax. Although this does not concern a significant number of companies, those that are affected will have to prepare for considerable changes and will have to familiarise themselves with new penalties:

• up to HUF 5 million for failure to comply with notification obligation, or late compliance,
• up to HUF 10 million in the event of failure to file a return, or late, incomplete, incorrect or untrue returns

Reported shares

Taxpayers can take advantage of a one-time reporting option for their holdings declared as of 30 December 2023 that do not qualify as shares, if they meet the definition of a reported share at the time of the reporting. The reporting deadline is the deadline for the 2023 fiscal-year annual report. If the shares are reported, corporate tax of 9% is payable on 20% of the positive difference as of 31 December 2023 between the book value and the market value between independent parties. The difference is determined as if a sale was made at a profit to an independent party on 31 December 2023. No deductions – such as loss carryforwards or tax benefits – can be applied in this respect. The independent market value must be certified by an auditor or a qualified expert.

Corporate taxation

The corporate tax element of the 2024 tax amendments extends the range of costs that are not incurred in the interests of a business. This means that no costs can be deducted for royalty and interest payments to countries that are on the EU list of non-cooperative jurisdictions and territories or that are classified as having zero or low tax rates. Non-compliant royalty and interest payments made cannot be deducted from the corporate tax base, and the profit before tax must be raised by the accounting cost or expense not affected by the double non-taxation.

The criterion of having a real economic or commercial benefit as the primary goal is not fulfilled if (one of) the primary goal(s) of the royalty and interest payment is a tax advantage, even if there is a real economic or commercial benefit. The burden of proof is on the taxpayer, to be provided by the deadline for filing the tax return.

eVAT

The eVAT system previously postponed several times was finally introduced as part of the 2024 tax amendments. The system in place from 1 January 2024 allows taxpayers to submit their tax returns via the eVAT platform too, in addition to traditional VAT returns. This platform enables draft returns to be approved, supplemented and modified, either using data compiled by the NAV or data transmitted via the automated interface. Under the rules, the first return filed counts as the taxpayer’s return (if multiple returns are filed). Self-revisions can then be submitted either on a form or via the electronic interface. Taxpayers who opt for the automated interface in the eVAT system are exempt from any inspection for 15 days. During this time, any errors or discrepancies in the return can be corrected. The eVAT system is also available from the online invoicing system and via the separate eVAT website in Hungarian, English and German after logging in via the government portal. Easy-to-follow tutorials help you understand the interface and processes.

In the eVAT system you can find the menu items on the left-hand side, where you can view your taxpayer profile and make settings among other things, but you can also select the returns of given periods, and in the document list you can find documents from other data services in the system (typically the online invoicing system), which were uploaded by the tax authority when the draft return was created. You can review the data of the documents in detail as well, and if you accept the documents you can set the status of each individual document to ‘reviewed’.

Real estate and construction

The procedure for submitting declarations for the reverse charge treatment of construction/assembly services is also changing, and becoming more practical. From 1 January 2024, if the authorisation is linked to the activity of the service provider, then from now on they will declare this to the client.

Simpler administration

Continuous tax advance declaration

The 2024 tax amendments also aim to reduce the administrative burden for taxpayers. This means that from 1 January 2024, key tax base deductibles can even be claimed on a continuous basis, without the need to submit a new tax advance declaration to the employer or regular-income payer every year. The new option will apply for the first time to tax advance declarations made after 31 December 2023. The easiest way to submit tax advance declarations is via the online document management webpage called ONYA (available in Hungarian).

Quarterly payer return instead of monthly

From 2024 onwards, payers have to assess public levies and declare and pay the taxes and contributions related to payments and benefits not on a monthly basis, but quarterly, for the period including the month of the benefit. So instead of monthly, contributions will now have to be declared and paid in the quarter that includes the month of the benefit.

Social security

As a result of the 2024 tax amendments, in the case of a third-country national posted from Hungary, the income earned in the given month as consideration for the activity will be deemed the contribution base, and thus also the base for the social contribution tax. In other words, the reduced contribution base rule applicable for postings, according to which the contribution base is the basic salary, but at least the average gross salary, will be abolished for this category of personnel only.

Vehicle tax

Until 2024, vehicle tax had to be paid in two instalments. Please note that from now on, vehicle tax must be paid in one lump sum by 15 April.

Tax on public utility lines, advertising tax

The 2023 autumn tax law amendments removed telecommunication lines from the scope of the public utility tax from 1 January 2024, and repealed the Act on Public Utility Tax from 1 January 2025. The current 0% advertising tax rate will remain in force until 31 December 2024.

Household work

The 2023 autumn tax law amendments abolished the HUF 1,000 registration fee obligation for household workers, but the notification obligation still applies.

Most taxpayers will be affected by the listed points of the 2024 tax amendments.  In particular, we would like to draw your attention to the changing legislation brought on by the discontinuation of the Hungarian-US double taxation treaty, the global minimum tax and eVAT. If you have any questions regarding the changes, or their impact, please do not hesitate to get in touch with our tax specialists.

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Duty liability on real estate transactions when acquiring real estate or a company holding real estate

One of the most important rule changes regarding the duty liability on real estate transactions took place in January 2010: from this point onwards it was not only acquiring real estate (asset deal) that could result in an onerous property transfer duty liability, but also a share acquisition – directly or indirectly – of at least 75% in a company holding Hungarian real estate (share deal).

Calculating asset value when acquiring a company holding real estate

Subsequently, in July 2021, the legislator clarified the definition of a company holding Hungarian real estate with regard to the duty liability on real estate transactions, thereby closing a loophole that had hitherto been open to abuse in practice.

This is because according to the rules before July 2021, a company was deemed to hold Hungarian real estate if at least 75% of its assets as shown in its last available balance sheet (or opening balance sheet) consisted of real estate. So if the last available balance sheet (or opening balance sheet in the case of a start-up company) did not include any real estate (or if its value represented less than 75% of the adjusted asset value), but the company acquired property between two balance sheets, then the property value did not have to be taken into account when calculating the 75% ratio. This potentially gave rise to a situation where a company was not considered to be an entity holding Hungarian real estate in its last approved financial statements, but upon closing a share deal in the middle of the year, the company perhaps had significant real estate among its assets. If such a company was acquired by a buyer, as a general rule – under the previous legal provisions – it was not subject to paying duty on the real estate transaction.

The amendment adopted in 2021 eliminated the potential abuse arising from the above situation by effectively requiring the target company to prepare an interim balance sheet on the current value of the real estate and other assets at the time of selling the share. Based on this interim statement, it is necessary to determine whether a target company is a company holding Hungarian real estate, and thus whether the buyer is subject to the duty liability on real estate transactions if the company is acquired.

New proposal for sales revenue limit on real estate transfers 

The tax law amendments to come into force at the end of 2022, with effect from 1 January 2023, include a proposed amendment now relevant for real estate sale transactions (asset deals). The proposal concerns the exemption from payment of the duty liability on real estate transactions, which exempts transfers of real estate between certain related companies from the payment of the onerous property transfer duty. According to the current legislation, the condition for the exemption is that the core activity of the buyer when the duty payment liability arises must be the rental or operation of own or rented real estate (TEÁOR 68.20) or the sale of own real estate (TEÁOR 68.10).

According to the reasoning behind the proposal submitted to the National Assembly, the fact the condition for duty exemption can be fulfilled by a simple change notification regarding the core business activity opens the system up to abuse. So while maintaining the condition on the scope of activity, the proposal also defines a new 50% sales revenue limit, which the acquirer must make a statement on to the tax authorities. In other words, the duty exemption only applies if the sales revenue of the acquirer from the preferential activities (TEÁOR 68.10 and 68.20) relating to the real estate represents at least 50% of the total sales revenue.

The proposal uses the net sales revenue of the acquirer in the previous fiscal year as the basis for determining the 50% limit. Of course, this exemption would also be available for businesses starting their activities in the given year, provided that the acquirer declares that at least 50% of its net sales revenue will be derived from the preferential activities in that fiscal year.

Amount of additional duty and penalty

We might rightly ask what sanctions the proposal foresees if the sales revenue condition is not met for whatever reason. The following cases can be highlighted in this respect:

If this declaration or undertaking are not complied with, the acquiring party must report this to the state tax authority, which will compel the acquiring party to pay the unpaid duty plus an additional 50%. If they fail to comply with this obligation and the state tax authority finds in the course of a tax inspection that the declaration or undertaking were not complied with, the acquiring party will be charged twice the amount of the unpaid duty.

If the proposal is adopted, even given the level of the penalties, the duty liability on real estate transactions and the related financial and tax planning will be emphasised even more.

UPDATE (19 December 2022): In the meantime, the relevant bill was adopted by the Hungarian Parliament. The amendment will enter into force on 1 January 2023, as originally planned.

If you would like to entrust experienced experts with supporting your own individual transaction, please contact the tax consulting team of WTS Klient Hungary. We’re here to help.

A Duty liability on real estate transactions bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Income taxes

Personal income tax

The Hungarian spring tax law amendments simplify the rules for the flat-rate taxation of sole traders. A rule tracking changes in the minimum wage that ensures regular valorisation will be introduced to determine the income threshold for the choice of taxation method. Also, the system of flat-rate cost ratios necessary for determining income will be simplified, and flat-rate income of less than half the annual minimum wage will be exempted from personal income tax.

There will be no need to make a new annual declaration to the employer, the payer of the regular income, in respect of data that definitely cannot change. Such cases include when children have grown up or the mother has been entitled to family allowance for at least 12 years in Hungary. There is a transitional provision connected to the amendment, based on which, if the mother entitled to the allowance makes a declaration in 2021 and fulfils the conditions, she does not have to make a new declaration in 2022.

Taxation of crypto assets in Hungary

The spring tax law amendments define new taxation rules for the tax liability of income from crypto asset transactions. Based on the current rules, and for lack of any legal regulations otherwise, the income generated upon the transfer of a crypto currency is subject to tax, i.e. 15% personal income tax and a 15.5% social contribution tax. If the private individual receives such income from a non-Hungarian resident company or business (which is quite frequent in the case of trading with crypto currencies), the social contribution tax must be paid by the private individual, so the basis for the personal income tax and the social contribution tax is 87% of the income otherwise assessed.

Based on the new Hungarian rules, the income from the sale of the crypto asset no longer forms part of the aggregate tax base, it qualifies as separately taxed income and no social contribution tax has to be paid on it.

Based on a transitional provision, private individuals who did not assess income before 2022 in respect of the transfer or assignment of crypto assets may assess income under the new rules and take this into account as transaction income for 2022.

In Hungary, the method for determining the income from a transaction in crypto assets follows logic similar to that for determining income from a controlled capital market transaction. Income is generated when the aggregate amount of the transactional profits for the fiscal year exceeds the aggregate amount of the transactional losses realised in the reporting year and the fees and commissions related to the conclusion of the transactions. The latter include the verified expenses for the reporting year not connected to the specific transaction but related to the holding of crypto assets. Transactional profit is generated when the obtained revenue exceeds the verified expenses spent on the fees and commissions related to the acquisition of the crypto asset and the transaction. However, no transactional revenue has to (can) be established if the revenue from the transaction does not exceed 10% of the minimum wage in Hungary. The latter provision can be applied if, as of the date the income is acquired, the private individual does not earn income from other transactions regarding the same subject, and the sum of such income does not exceed the minimum wage in the fiscal year.

Upon determining the transaction’s result, the ordinary market value of the crypto asset at the time of the transfer or assignment (when the right is exercised) should be taken into account as income. Costs incurred during the acquisition of the crypto asset in the reporting year under the titles specified by the law may be taken into account as costs (e.g. when purchasing a crypto asset, the expenses incurred in its acquisition, and in the case of its mining, the costs incurred in performing this activity).

If the total transactional loss in the fiscal year exceeds the sum of the total transactional profit, the private individual incurring the loss may opt for tax equalisation. In the tax equalisation process the private individual can claim the “tax content” of their losses from crypto asset transactions in the fiscal year and the two preceding years as tax paid in their annual tax return.

Social contribution tax

From 1 July 2022, the plan is for the social contribution tax rate in Hungary to fall by half a percentage point to 15%.

Vocational training contribution

The employer’s tax burden on wages in Hungary will be reduced altogether by two percentage points from 1 July 2022. As part of this change and to decrease the administrative burden, the vocational training contribution (1,5%) will be discontinued.

Corporate tax

One important element of the spring tax law amendments is the transposition into corporate tax of the part of the EU directive containing anti-tax evasion measures that deals with so-called reverse hybrid entities. This completes the implementation of the directive.

According to the amendment, a hybrid entity registered in Hungary or with a registered office in Hungary will qualify as a resident taxpayer if it is majority-owned by foreign taxpayers whose country considers the hybrid entity as a taxpayer. Domestic taxpayers specified this way exclude investment funds and forms which have a broad circle of owners, a diversified securities portfolio, and are subject to investor protection regulation in Hungary. The income of the hybrid entity is subject to taxes to the extent that this income is not taxable by the tax laws of Hungary or another country.

Additionally, provisions for public trust foundations in the public interest will also be introduced based on the spring tax law amendments.

Sectoral taxes

Income tax on energy suppliers

To facilitate the restart of the economy, the spring tax law amendments introduce loss carry forwards to the income tax of energy providers along with provisions on grants to public trust foundations in the public interest.

Financial organisations’ special tax

The tax liability of venture capital fund managers and stock exchanges in the category of special tax on financial institutions will be cancelled.

Indirect taxes

Value added tax

The proposal set out as part of the spring tax law amendments creates a record-keeping and data reporting obligation for payment service providers with a view to legal harmonisation. The dynamic growth of cross-border e-commerce and the new VAT rules for e-commerce that will enter into force from 1 July 2021 require the introduction of a new control tool. In the case of sales within the framework of cross-border e-commerce to a non-taxable person, the seller can fulfil its tax liability in a Member State other than the one in which it is established by using a system that does not require registration in that Member State. Similarly, the payment of VAT on imports of less than EUR 150 will be simplified. These rules will bring about simplification for businesses, but for control purposes they will present a more difficult situation for the tax authorities. By forwarding payment data of cross-border payments, the proposal aims to provide a tool for the tax authorities to check the fulfilment of VAT payment obligations on cross-border e-commerce transactions.

For the purposes of legal harmonisation, the spring tax law amendments create the same conditions for VAT and excise duties for the procurement of goods, imports and services by the armed forces of Member States under the EU’s common security and defence policy as for procurements by the armed forces under the NATO’s common defence effort.

A VAT taxable person may apply to the tax authority by means of a separate written request to claim the VAT of an amount already accounted on an irrecoverable debt, if the limitation period calculated with reference to the original transaction on which the debt was based has expired by the time the debt is deemed irrecoverable. Such request may be lodged within a limitation period of one year from the date the debt is declared irrecoverable, and its submission is subject to the statutory conditions for reducing the tax base on the basis of an irrecoverable debt otherwise being met. The amendment also regulates the procedure to be followed in cases where, following a tax refund based on a request, the supplier of the goods or services is reimbursed for all or part of the consideration that was accounted for as an irrecoverable debt. The tax authority will make a decision on the request within six months.

The spring tax law amendments repeal the following conditions for a debtor to be excluded from a reduction of the tax base on the basis of a bad debt:

• the customer was under insolvency proceedings as of the performance date of the original transaction;
• their tax number was cancelled as of the same date;
• the customer was listed in the database for taxpayers with a considerable tax shortfall or large tax debt at the time of the original transaction and in the year before that;
• by the performance date of the original transaction the seller received a notice letter from the tax authority regarding abusive activity of the customer.

According to the Hungarian spring tax law amendments, taxpayers settled in the United Kingdom are entitled to a refund of domestically charged VAT on a reciprocal basis in the case of transactions completed after 31 December 2020. Prior to this date, the refund of VAT was granted based on EU law in respect of these taxpayers. The possibility to refund VAT shall exist as long as the two states provide this opportunity on a reciprocal basis.

Excise tax

The excise amendments are mainly aimed at implementing the tasks related to the transposition of the new horizontal excise directive (2020/262 (EU)) into domestic law. The changes primarily concern the inclusion of the transportation of taxed goods between Member States under the electronic document system and the harmonisation of customs and excise rules for the export and import of excise goods. The deadline for completing the implementation tasks resulting from the legal harmonisation obligation is 31 December 2021, with the entry into force on 13 February 2023.

The provisions on the territorial scope of the excise rules are amended in line with the Brexit Treaty.

The obligation to appoint a tax representative when carrying out domestic mail-order parcel services from another Member State will be cancelled, and the mail-order parcel services can be carried out even if the mail-order trader is registered with the State Tax and Customs Authority.

Duties

The purpose of the amendment to the Hungarian law on duties is to prevent abusive tax avoidance transactions. Therefore, the amendment of the law on duties as set out in the spring tax law amendments affects the duty-exempt status of home purchases claiming the CSOK and the notion of a company with domestic real estate assets.

Through this amendment, apart from the cases regulated so far, the Hungarian state tax authority will still subsequently have to levy the duty even if, for any reason, the party acquiring the asset pays back or has to pay back the full amount of the CSOK (e.g. if the party acquiring the property disposes of the home while the restraint on alienation and encumbrance registered in favour of the state still applies, or uses it for a purpose other than housing, or establishes a right of use or usufruct on it and for this reason they have to repay the support). For constitutional and tax considerations, the above applies to transactions where the obligation to pay duty (typically the signing of a contract for the purchase of a home with the CSOK) comes after the entry into force of the amending provision (i.e. the 31^st day after the promulgation of the law).

In the case of a company with domestic real estate assets, the book value of property acquired between two balance sheet preparation dates (up to the date of the duty liability, i.e. the acquisition date of a 75% stake) must be added to the value of the properties and all assets of the previous (approved) balance sheet, if the company’s quotas/shares are sold. According to the previous rules, a newly formed company could not qualify as a company with real estate assets despite property obtained in the meantime, although such was already included in the general ledger (the property was not yet included in closed financial statements).

Tax administration

Based on Hungarian Act LIII of 2017 on the Prevention and Combating of Money Laundering and Terrorist Financing, only service providers that have reported their activities to the supervisory authority may provide registered office services. The State Tax and Customs Authority only accepts the use of a registered office service provider which complies with the above conditions. If the taxpayer does not fulfil this condition despite the warning of the State Tax and Customs Authority, their tax number will be cancelled.

In light of the uncertainties in applying the law, the spring tax law amendments clarify the rules on the calculation of late payment interest, specifying the rounding methodology. As for the amendment, it should be noted that these rounding rules will also apply to default interest, and that the rounding will be applied in the same way for both the tax authority and the taxpayer in the event of late payment. 

Accounting

To enforce the principle of matching, the Hungarian spring tax law amendments allow the accrual of grant income in the accounting of development grants, similar to the accounting of operating grants.

In certain cases the new rules on contract accounting units (may) affect contracts where their application is either not justified or causes difficulties. To avoid this, the proposal exempts series production from the mandatory application of the rules on contract accounting units.

The spring tax law amendments add to the content of the independent auditor’s report regarding compliance with the requirements of European Commission Delegated Regulation (EU) 2019/815, and provides for the withdrawal of audit reports issued and disclosed unlawfully in relation to the financial statements.

Additionally, the proposal contains several clarifications and supplementary provisions to assist with implementation in practice. These may include proposals for: 

• the content of cost (purchase value),
• the reclassification of know-how within intellectual property,
• the clarification of requirements for correction accounting documents, and
• clarifying the capitalisation rule for option fees.

Audit

In view of the efforts aimed at widening the use of digital procedures in Hungary, the spring tax law amendments provide for the possibility of signing independent audit reports electronically by law.

The provisions in force regulate (almost limit) the possibility of electronic communication in official procedures conducted by the Chamber of Auditors with unjustified constraints. The proposal aims to expand the use of electronic administration similar to the rules for electronic administration previously prescribed for the procedures of the public oversight authority. Additionally, it also provides for the possibility to conduct the chamber’s general assembly and elections electronically.

International tax cooperation

In the law on certain rules of international administrative cooperation in the field of tax and other public charges, the EU dispute settlement procedure was regulated on the basis of the relevant EU directive. The rules of the directive have been transposed accordingly, but minor technical clarifications are needed for full compliance. Other amendments include the further transposition of the OECD International Standards for the Automatic Exchange of Financial Account Information and clarifications to the text.

The spring tax law amendments bring about significant tax changes which will affect most taxpayers. We particularly want to draw your attention to the changes affecting the taxation of crypto assets and the VAT refund of irrecoverable debts. If you have any questions regarding the spring tax law amendments, or their impact, then our tax specialists will gladly help you.

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CSOK, but no duty

From 1 January 2021 the bill would ensure full duty exemption for families with children claiming family housing support (CSOK) when buying a new property, irrespective of whether the acquired property is new or used, or of how much its sales value is.

If someone was exempt from the duty based on an advanced award of the CSOK, but the agreed number of children were not born, and thus the support must be paid back, the Hungarian tax authority will subsequently charge the onerous property acquisition duty. In such cases, the duty is based on the sales value at the time the duty obligation arose, and at the rate effective on that date. The right to determine the duty elapses within five years of repaying the support, or on the last day of the calendar year in which an official resolution is issued regarding the repayment.

However, the duty does not need to be paid back if the conditions for having children are not fulfilled for health reasons.

Return of 5% VAT on homes

The bill modifies the Hungarian Act on Value Added Tax too. For a temporary period from 1 January 2021 until 31 December 2022, the sale of newly built property would again be subject to 5% VAT on homes. For transactions concluded this year, the tax rate should be defined based on the transitional rule related to the termination of the 5% VAT rate as of 31 December 2019. This transitional rule would be repealed by the bill from 1 January 2021.

The transitional rule terminating the 5% VAT rate as of 31 December 2022 will set forth the conditions under which the preferential 5% VAT on homes will be applicable until 31 December 2026. The preferential tax rate may be applied on this basis if the building permit is finalised no later than by 31 December 2022, or if the associated construction is registered by 31 December 2022 pursuant to the rules of simplified reporting.

The preferential 5% VAT on homes is applicable if the total usable floor space does not exceed 150 square metres for an apartment in a block, and 300 square metres for a single-unit detached house. Pursuant to the VAT rules, property shall be regarded as new if it has not yet been properly used, or if it has, then two years have not yet passed between its approval for use and its sale.

If you need advice on how to apply the 5% VAT on homes, or on other issues related to real estate, our tax experts are here to help.

A 5% VAT on homes – it’s back bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Measures related to special payment options during state of emergency

One important part of the latest tax relief measures is that companies may ask for their tax to be reduced ­– without being subject to stamp duty – if they have fallen into difficulty because of the pandemic. This can amount to no more than HUF 5 million (roughly EUR 14,000) per company. Furthermore, up to a tax debt of HUF 5 million (roughly EUR 14,000) companies can ask for payment in instalments over 12 months without any extra charge, or a payment deferral for 6 months, again without any extra charge.

Beside these measures, businesses who have drifted into financial instability should not forget about the rules on special payment options which have long been part of tax legislation. Below we will answer some of the most important questions about these rules and in relation to the topic.

What exactly do we mean by special payment options?

By special payment options we mean

• deferring,
• instalment payments of, or
• reducing, and
• forgiving payment obligations at the Hungarian tax authority.

The first two options are defined separately by Hungarian legislation as payment relief.

Who can claim deferred payment and payment in instalments, and how?

Deferred payment and payment in instalments may be permitted at the request of the taxpayer at the tax authority. Payment relief may be permitted if the difficulty in paying

• is caused by reasons not attributable to the company, or if it conducted its business in a way to avoid such difficulty in a manner expected in such a situation, and
• is temporary in nature, and payment of the tax is highly likely later on.

It is important that the Hungarian Tax and Customs Administration (NAV) considers the reasons and conditions of the payment difficulty when assessing the request and determining the conditions. According to our information, for taxpayers who refer to economic hardship caused by the coronavirus pandemic as the reason for their payment difficulty, the NAV will place more emphasis on such circumstances in its considerations as permitted by law.

In which cases might payment relief not be granted?

Payment relief shall not be granted

• for advances on the personal income tax of natural persons and deducted income tax,
• for collected taxes,
• for contributions deducted by the paying agent from the natural person, and
• for VAT taxpayers of a tax group during the period of the tax group.

Can eligible taxpayers expect interest/charges on the payment relief?

The NAV levies the following charges in the event of payment relief:

• if a request is submitted, late payment interest is levied until the decision on the request is finalised; but if the payment relief is authorised, then only until the date of the first-instance decision,
• if the request is granted, a charge at the rate of the central bank’s base interest rate valid on the day of the submission shall be levied for the period of the payment relief from the date of the first-instance decision.

In the case of circumstances requiring special consideration, the NAV may waive the interest/charge payable.

What special rules apply to reliable taxpayers with regard to payment relief?

For reliable taxpayers the NAV may grant payment relief once a year for no more than 12 months without charges or interest for a tax debt (excluding deducted personal income tax, collected tax, contributions deducted from natural persons) registered at the authority, without reviewing the above conditions. For this, the request must be submitted electronically.

The NAV reaches a decision on automatic payment relief within 15 days of receipt of the request, which it sends out electronically. Automatic payment relief may only be granted if the net debt of the applicant does not exceed HUF 1.5 million (roughly EUR 4,300) at the time of the request assessment. If the reliable taxpayer does not meet the requirements for automatic payment relief, then the NAV will assess the submitted request based on the general rules. 

What happens if the taxpayer does not pay the due instalments or is late in paying them under the payment relief scheme? 

In such cases the relief is invalidated and the debt is payable in one lump sum with interest. This rule applies to the automatic payment relief of reliable taxpayers too.

Under what conditions can businesses ask for payment obligations to be reduced or forgiven? 

It is important to note that before the state of emergency the law did not provide grounds for the reduction or forgiving of tax debt in the case of legal persons and other business organisations. Based on this, Government Decree 140/2010 that appeared in the Hungarian Gazette on 21 April 2020 enables companies to submit requests to reduce their tax burden. Under the regulations before the state of emergency, the NAV only permitted the reduction or forgiving of charges or penalty debts after special consideration at the request of the taxpayer if the payment of such debt would make it impossible to continue with the business activity of the entity.

How to submit a request to the tax authority

Taxpayers obliged to communicate electronically may only submit requests electronically (form FAG01 for business organisations), taxpayers not subject to electronic communication can file requests electronically or on paper. 

Is there a fee for payment relief requests by business entities? 

Yes, submitting the request is subject to a fee in general cases. The stamp duty is HUF 10,000 (roughly EUR 28). However, procedures initiated by reliable taxpayers at the Hungarian tax authority for relief in the form of payment in instalments is duty-free. Procedures related to the payment relief and tax reductions defined by Government Decree 140/2020 are also duty-free in light of the state of emergency.

The team of WTS Klient Hungary, who have fully transitioned to working from home, are doing everything they can to provide support with their expertise and knowledge to any clients who find themselves in difficulty due to the coronavirus pandemic, and to help their clients navigate among the daily changes in law. Our experts are still happy to provide assistance, giving specific advice, legal help or contacting relevant authorities as is required. Please feel free to contact us.

A UPDATED! Special payment options during the coronavirus pandemic too! bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.