What is the simplification about?

One important innovation of DAC9 is that it allows for the centralised filing of a global minimum tax return. This means that the parent company or a designated group member can submit the new return, updated in January, on behalf of the group for all members of the group, instead of each of them having to do it separately in their own country. A standardised Top-up Tax Information Return (TTIR) will be introduced within the EU and Member States will automatically share data relating to the global minimum tax.

A possible consequence of the change is that group members will be less involved in the return process at national level, but intra-group data reporting should still be encouraged.

What are the key deadlines?

The Directive provisions adopted at EU level must be transposed into national law by Member States by 31 December 2025. The change will also affect the financial year 2024, for which the reporting obligation will have to be fulfilled by 30 June 2026 at the latest. The deadline for transmitting the data to the relevant tax authorities is 31 December 2026, but for subsequent years the deadline will be three months from the date of receipt of the return.

Which group member should submit the global minimum tax return?

Consideration should be given as to which group member jurisdiction is the most appropriate to submit the global minimum tax return, i.e. which group member should be designated for this task. A possible consideration in this decision is whether a particular group member is covered by a temporary exemption (e.g. CbCR exemption, etc.) or, in the absence of such an exemption, whether the data required for GloBE compliance is already being collected.

Since the exchange of data will only be automatic within the European Union, if the group has a non-EU (third country) group member, it is also necessary to check whether the country concerned has acceded to the OECD (Organisation for Economic Co-operation and Development) Multilateral Competent Authority Agreement on the Exchange of GloBEInformation (GIR MCAA). If it has not acceded, it may still be obliged to submit a local global minimum tax return.

A transitional simplified jurisdictional reporting framework (Simplified Framework) will also be available as a transitional option, which could reduce the administrative burden for businesses.

What else should businesses look out for?

It is recommended to review reporting requirements in a timely manner to ensure that the systems used by the company are able to accurately capture and report the required information to ensure that the return obligation is properly fulfilled.

It is important to keep abreast of any changes in the regulatory background to the OECD’s Global Minimum Tax Information Return (GIR) and the EU’s Form TTIR.

It is also important to be aware of and comply with the rules because the 2025 tax inspection plan of the Hungarian tax authority concerning GloBE includes a priority review of the so-called covered taxes (corporate tax, innovation contribution, etc.).

Given that the top-up tax liability is already required to be included in the 2024 financial statement, the Hungarian companies concerned will have to perform the global minimum tax calculation shortly. The tax advisors at WTS Klient Hungary will be happy to assist you with the calculation and any other questions related to the global minimum tax return. 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!

This article provides general information and does not constitute advice.

A Global minimum tax return can be submitted centrally next year bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

The retroactive recovery of VAT on pharmaceutical tax payments is a great opportunity for pharmaceutical companies in Hungary to improve their cash-flow situation, so it is worthwhile for all those entitled to benefit from it. They can also claim interest on late payment in addition to the VAT refund.

How to claim back VAT on pharmaceutical tax payments?

There are several ways of claiming a refund, but the different ways of claiming involve different possibilities and risks.

On the one hand, companies can reclaim the VAT on pharmaceutical tax payments on the basis of the European Court of Justice’s judgment in the Novo Nordisk case. The mechanism of the payment of pharmaceutical tax is deceptively similar to payments made under funding volume agreements. In the Boehringer case, the European Court of Justice ruled years ago that the VAT base can be reduced ex post by the value added tax on funding volume agreements. The legal basis for the VAT recovery in both cases is therefore that these payments can be considered as a discount for VAT purposes, i.e. the supplier cannot freely dispose of part of the consideration received from the ‘purchaser’.

In addition to or instead of a claim, VAT on pharmaceutical tax payments can also be reclaimed in the VAT return under the provisions of the Hungarian VAT Act in force from 29 November 2024.

Which refund method should you choose?

When reclaiming VAT on pharmaceutical tax payments, there are a number of questions that need to be clarified beforehand in order to maximise the amount to be refunded (e.g. how and when to claim the refund, calculation of the limitation period, what other taxes/paid VAT may be reclaimed, interest claim, etc.).

The main dilemma to be clarified is the method of refund. As in the present case the European Court of Justice has ruled with a retroactive effect that the Hungarian VAT law is against the EU law, an application under Article 196 of the Hungarian Act on the Rules of Taxation can be made until the end of April 2025. After the 180-day statutory limitation period, it will no longer be possible to submit an application, and from then on, the retroactive reduction of the taxable amount will be possible only in the VAT return for payments of pharmaceutical tax made after 31 December 2023. It therefore makes a difference to the scope of the claim whether VAT is claimed back before or after the end of April 2024.

What are the advantages of making a claim?

A claim under Article 196 of the Hungarian Act on the Rules of Taxation allows you to claim back more VAT without risk than you could reclaim in a VAT return. This is because VAT on pharmaceutical tax payments made before 31 December 2023 (not time-barred) can be reclaimed under the application method, whereas this will not be possible under the return method. An additional advantage of the application procedure is that in the worst case, the applicant will not receive the VAT claimed, but will not be subject to a tax penalty. On the other hand, in the case of a refund in the VAT return, the Hungarian tax authority may impose penalties for any unauthorised claim.

In the case of an application under Article 196 of the Hungarian Act on the Rules of Taxation, another fundamental question is how the limitation period is to be interpreted: do the five-year limitation rules generally limit the scope of the VAT refund claim, or could the law be interpreted to mean that the 180-day limitation period in this type of case is also the limitation period itself, which starts to run from the publication of the European Court judgment. Under the latter interpretation, it would be possible to recover past VAT without any time limitation when making an application.

As can be seen from the above, the timing of the claim and the way in which it is made have a significant impact on the amount of VAT that can be recovered and the risk of recovery. Since more VAT can be recovered in a claim under Article 196 of the Hungarian Act on the Rules of Taxation with less risk, it is worthwhile to try to do so in the remaining few weeks for those who are entitled to a refund of VAT on pharmaceutical tax payments but have not yet done so for whatever reason.

The VAT advisers of WTS Klient Hungary are constantly monitoring domestic and international tax law cases and the changing regulations that follow them. If you need expert support on any of the above, please do not hesitate to contact us!

A VAT on pharmaceutical tax payments: the deadline for reimbursement is approaching bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.