The Hungarian Ministry of Foreign Affairs and Trade has launched a public consultation on the expected amendments and invited feedback until 21 March 2025.

Investments from EUR 2 million can be supported

The amendment of the government decree will allow investments from EUR 2 million to be eligible for support in some parts of Hungary. The regions concerned are Borsod-Abaúj-Zemplén, Heves, Nógrád, Szabolcs-Szatmár-Bereg, Bács-Kiskun, Békés, Csongrád-Csanád, Baranya, Somogy, Tolna and Zala counties.

The minimum eligible cost of the investment will remain tiered depending on the location of the investment. The additional bands are as follows:

• EUR 3 million: in municipalities of the counties of Hajdú-Bihar, Jász-Nagykun-Szolnok, Pest, Fejér, Komárom-Esztergom, Veszprém, Győr-Moson-Sopron and Vas not qualifying as district seat municipalities.
• EUR 5 million: in Salgótarján, Miskolc, Nyíregyháza, Békéscsaba, Pécs, Kaposvár, Szolnok, or in municipalities of the counties of Hajdú-Bihar, Jász-Nagykun-Szolnok, Pest, Fejér, Komárom-Esztergom, Veszprém, Győr-Moson-Sopron and Vas that are considered as district seats.
• EUR 10 million: in the municipalities of Győr, Székesfehérvár, Tatabánya, Szekszárd, Kecskemét, Szombathely, Veszprém, Zalaegerszeg, Debrecen, Szeged and Eger.

Changes in terms of commitments

There are also significant changes to the commitments for subsidy for investments. The two main elements of the commitments will be wage bill (EUR 5 million increase in wage bill over the maintenance period) and turnover (EUR 25 million increase in turnover over the maintenance period) instead of staff maintenance.

However, in addition to these, the following commitments are expected to be required:

• a wage increase per capita or
• a per capita increase in turnover, or
• creation of at least 25 new jobs.

In addition to the above, at least two of the following commitments will be required:

• creation of R&D jobs,
• R&D expenditure increase,
• achieve the required proportion of suppliers within 100 km to reduce environmental impact,
• use of own renewable energy, also to reduce environmental impact,
• increase the number of employees in dual training or student employment contracts, possibly with a vocational training contract.

It is clear from the expected changes that support for investments will be more focused on innovation and environmental protection than before, and that the emphasis will be on average wage growth rather than employment growth, thus supporting higher value added production as opposed to lower value added mass production.

The experienced financial management experts of WTS Klient Hungary are happy to provide our clients with up-to-date information on investment support options, legal requirements and financial accounting for subsidies. Contact us if you need an expert!

 This article provides general information and does not constitute advice.

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Change in VAT registration turnover 

One of the most important elements of the VAT changes in Bulgaria for 2023 is the change in VAT registration turnover. As of 1 January 2023, taxable persons established in Bulgaria will be subject to a mandatory VAT registration when they reach a taxable turnover of BGN 100,000 for a period encompassing the current month and 12 consecutive months prior to the current month.

The VAT registration turnover doubles compared to the previous BGN 50,000 threshold. The significant increase in the turnover requiring a VAT registration is designed as a tax relief measure for small and medium-sized enterprises which now incur significant compliance costs and which are less competitive due to the additional VAT on their goods and services.

The VAT registration turnover is meant to be further increased as of 2025 after EU Directive 2020/285 is transposed in the Bulgarian VAT Act. The new measure will, however, not affect not-established taxable persons who are subject to a VAT registration before they make any supplies taxable in Bulgaria.

New permanently reduced VAT rates

At the end of 2022 the Bulgarian Parliament transformed some of the temporarily reduced and last year already extended VAT rates into a permanent measure. The amendments to the Value Added Tax Act were published in the Bulgarian State Gazette No. 102 on 23 December 2021 and came into force on 1 January 2023.

The permanent VAT rate reduction applies to the following supplies:

• Books: 9% reduced VAT rate applies to books on a physical medium or by electronic means or both, including textbooks, learning books and learning sets, children’s picture, drawing or colouring books and music printed or in manuscript form with the exception of publications wholly or predominantly devoted to advertising and publications wholly or predominantly consisting of video content or audible music.

• Newspapers and magazines: Newspapers and magazines were initially left outside the scope of the reduced VAT rate and were subject to the standard rate of 20%. However, as of 1 January 2023 the supply of newspapers and periodicals will be taxable at the rate of 9% on a permanent basis.

• Baby food and diapers: The baby foodstuffs falling within the scope of the permanent 9% reduced VAT rate include adapted milk formula, baby porridges and cereals, vegetable, fruit and/or meat purees in jars not exceeding 250g. Baby diapers are also subject to a reduced 9% VAT rate.

Extended reduced VAT rates

The extended period of application of the reduced 9% VAT rate on the supplies listed below started on of 1 January 2023 and shall be in force until 31 December 2023:

• Restaurant and catering services: Restaurant and catering services consist of the supply of prepared or unprepared food, including take-away and delivery of food. The reduced rate does not apply to services consisting of the supply of wine, beer and alcoholic spirits. Take-away food from supermarkets and the like are excluded from the reduced rate. 

• Supplies under the special travel-agent VAT scheme: The reduced VAT rate also applies to supplies falling within the scope of the special travel-agent VAT scheme, as well as to the excursions organised by tour operators and travel agents with occasional passenger transport by bus. However, the overall application of the reduced VAT rate to these services may be called into question by the European Commission in the framework of an infringement procedure, as they already fall within the scope of a special margin scheme. 

• Supply of services for the use of sports facilities: The use of various sports facilities is also taxable under the reduced 9% VAT rate.

The super-reduced VAT rate of 0% which was introduced in the middle of 2022 and was initially designed to apply until 1 July 2023 shall now be in force for further six months until 31 December 2023. The 0% VAT rate applies to the following:

• Bread: “Bread” shall be understood as the product which is produced from the baking of dough as a mixture of wheat flour or another cereal, alone or in combination, and water, with or without adding salt, which rises using bread yeast or leaven, and technological additives (if necessary). 

• Flour: “Flour” shall be understood as the product which is a result of grinding bread wheat and which may be used for making bread and bread products.

If you would like to know more about the VAT changes in Bulgaria for 2023 or other tax rules in the country, please visit the homepage of Delchev & Partners Law Firm, the exclusive representative of WTS Global in Bulgaria.

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Abolition of mandatory VAT registration for selected groups

In order to reduce administrative burden, effective from 1 January 2023, the VAT Act of Slovakia defines selected groups of taxable persons who have the possibility to decide whether or not to register for VAT after the turnover exceeds EUR 49,790. These are primarily taxable persons who exclusively provide financial and insurance services or rent out real estate with exemption. These taxable persons also have the option to request cancellation of tax registration or withdraw their registration request. In defined cases, these taxable persons are not required to submit a separate tax return in case of not fulfilling the registration obligation.

Furthermore, the cases of assessment of late payment interest, which is related to the amount of tax on the importation of goods, have been harmonised with the cases of assessment of late payment interest related to customs debt.

New obligation for customers

In accordance with the rule of tax deduction on the customer´s side, a new provision is added to the VAT Act of Slovakia. It introduces the customer’s obligation to correct the deducted tax to the extent of the unpaid liability in the tax period, in which 100 days have passed since its due date.

The amendment to the VAT Act of Slovakia also includes the possibility of correcting the tax base on the side of the supplier in the event that the customer does not pay him the whole or in part for the supply of goods or services, and his receivable becomes unenforceable for the purposes of the VAT Act. The amendment further regulates and specifies the definition of unenforceable receivable. According to the new definition, this is such a receivable that has been due for 150 days.

New exemptions from VAT

In connection with the COVID-19 pandemic, the supply of goods or services to the European Commission, agencies and similar bodies that will be transported to another Member State for the purpose of providing them free of charge is exempt from tax. Also the acquisition of goods from another Member State for the same purpose by the European Commission, agency and similar body is exempt from tax.

From 2023, the method of determining the amount of the correction of deducted tax in the case of theft of small tangible property purchased for a purpose other than resale is established. In such a case, the legal fiction of assessing this property as if it were mandatorily depreciated property, is applied.

Furthermore, the amendment to the VAT Act of Slovakia introduces the obligation for the legal successor to continue adjusting the deducted tax even for movable investment property.

New deadlines and procedures

The amendment to the VAT Act of Slovakia also provides a united time period for the registration of a taxable person, together with the time period during which a taxable person who has not fulfilled the registration obligation or has submitted an application for registration late, is considered to be a taxpayer. This period is framed to 21 days.

The amendment also relieves the foreign taxpayer from the need to submit a nil tax return if he only carried out a supply of goods within the triangulation simplification under VAT ID assigned within the territory of the country.

At the same time, a special deadline has been introduced for paying the tax in the event that the person does not have a personal account number of the taxpayer at the time of acquiring a new means of transport from another Member State. The new deadline for paying the tax is 7 days from the date of delivery of the notification on the assignment of such an account.

The last significant innovation is the adjusted procedure of the Financial Administration in case of not submitting an application for tax registration, or its late filing. In the event that the result of a special tax return is an excessive deduction, the Financial Administration will not automatically check its eligibility through a tax audit, but may choose a different procedure, such as e.g. preliminary tax inspection.

If you want to know more about the latest amendment to the VAT Act of Slovakia or other tax issues in the country, we recommend you visit the website of Mandat Consulting, k.s. and contact the local WTS experts in Slovakia.

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Starting from January 2019, Government Emergency Ordinance no. 114/2018 introduces several amendments to the Romanian Fiscal Code. The most important ones concern construction companies and the treatment of value tickets.

Changes regarding taxation of construction companies

According to the new law, the following fiscal incentives are valid for the period 2019-2028 for employees of construction companies:

• salary tax exemption;
• reduced social contribution from 25% to 21.25% (the published legislation does not explicitly mention the reduction, so a correction can be expected);
• exemption from health contribution – employees are insured for health services without payment of the contribution;
• employers are exempt from paying the social contribution for particular or special working conditions;
• work insurance contribution reduced from 2.25% to 0.3375%.

The conditions to be fulfilled by these employees / employers to apply the incentives are:

• the employers carry out activities in the construction sector which include the construction activity defined by NACE code 41.42.43, section F, Construction and/or production of building materials, defined by the following NACE codes: 2312 – Shaping and processing of flat glass; 2331 – Manufacture of ceramic tiles and flags; 2332 – Manufacture of bricks, tiles and construction products, in baked clay; 2361 – Manufacture of concrete products for construction purposes; 2362 – Manufacture of plaster products for construction purposes; 2363 – Manufacture of ready-mixed concrete; 2364 – Manufacture of mortars; 2369 – Manufacture of other articles of concrete, plaster and cement; 2370 – Cutting, shaping and finishing of stone; 2223 – Manufacture of builders’ ware of plastics; 1623 – Manufacture of other builders’ carpentry; 2512 – Manufacture of doors and windows of metal; 2511 – Manufacture of metal structures and parts of structures; 0811 – Quarrying of ornamental and building stone, limestone, gypsum, chalk and slate; 0812 – Operation of gravel and sand pits; 711 – Architectural and engineering activities and related technical consultancy;
• the employers generate the turnover from the above activities exceeding the limit of at least 80% of total turnover, calculated cumulatively from the beginning of the year, including the month in which the exemption applies;
• the monthly gross salaries are between RON 3,000 (roughly EUR 630) and RON 30,000 (roughly EUR 6,300) per month inclusive, and are obtained based on the individual labour agreement;
• the exemption is applicable on the basis of further instructions and Declaration 112 represents a declaration on one’s own responsibility to fulfil the above conditions.

Separately, for the period between 1 January and 31 December 2019, the minimum gross monthly salary for construction workers (for the above-mentioned areas of activity) is RON 3,000 (roughly EUR 630), regardless of the positions held by the respective employees (e.g. accountant or secretary), the new legislation making no restrictions in this regard.

Taxation of value tickets

The fiscal treatment of value tickets granted to employees has been unified, so gift tickets, meal tickets, holiday vouchers, nursery vouchers and cultural vouchers are subject to 10% income tax, but they are not included in the calculation of social contributions.

Extended validity for VAT simplification measures

VAT simplification measures can now be applied until 30 June 2022 for certain operations (such as cereal supplies), as the supplier issues the invoice without VAT and the buyer registers the VAT through the reverse charge mechanism.

Contribution of 2% from turnover

Separately from the above amendments to the Romanian Fiscal Code, electrical energy license holders must pay a contribution of 2% from their turnover.

Tax on financial assets

In addition to the fiscal modifications, the banking institutions must pay a tax on their financial assets if the quarterly ROBOR (Romanian inter-banking interest rate) exceeds 2%. The tax on the financial assets will be computed quarterly by applying a rate to the financial assets of the banking institution as follows: a rate of 0.1% if the quarterly ROBOR is between 2% and 2.5%; a rate of 0.2% if the quarterly ROBOR is between 2.5% and 3%; a rate of 0.3% if the quarterly ROBOR is between 3% and 3.5%; a rate of 0.4% if the quarterly ROBOR is between 3.5% and 4%; and a rate of 0.5% if the quarterly ROBOR is above 4%.

Other changes to the Romanian Fiscal Code: Law no. 30/2019

Apart from Government Emergency Ordinance no. 114/2018, Law no. 30/2019 for the approval of Government Emergency Ordinance no. 25/2018 introduced significant amendments to the Romanian Fiscal Code.

Interest deductibility limits

From 1 January 2019, the interest deductibility limits have been increased for corporate income tax purposes. Thus the excess costs of indebtedness (the difference between borrowing costs and interest revenues) are deductible if they are less than the RON equivalent of EUR 1,000,000 (instead of EUR 200,000, the old limit).

The amount exceeding the EUR 1,000,000 ceiling may be deducted up to 30% (instead of 10%) of the following calculation formula: revenues minus expenses minus non-taxable revenues plus profit tax, plus the excess costs of indebtedness, plus tax depreciation.

The non-deductible interest expenses can also be carried forward by companies involved in merger or spin-off processes, or the successors of these companies.

Sponsorship tax credit

From 1 April 2019, corporate income taxpayers or microenterprise taxpayers can only use the sponsorship tax credit for sponsorships of non-profit entities listed in a register of entities for which tax deductions are granted, a register maintained by ANAF (the national tax authority).

This register can only contain non-profit entities who operate in the area for which they have been set up, who have fulfilled their tax declaration obligations, who have no tax obligations past due by more than 90 days, who have filed their annual financial statements and who have not been declared inactive.

New tax on income from virtual currency transfers

From 20 January 2019, the taxation of income earned by individuals from transfers of virtual currencies was regulated by subjecting the profits from these transactions to a 10% income tax rate.

Changes to VAT

From 1 January 2019, where deliveries performed cannot be cashed due to the bankruptcy of the beneficiary or as a result of a reorganisation plan, the VAT base may be adjusted from the date of the court ruling or of the closing judgement regarding the beginning of the bankruptcy procedure.

As of the same date, the VAT rate of 5% can be applied for the delivery of dwellings if several dwellings are acquired by the same individual (so far, the 5% VAT rate was only possible for the first delivery to an individual).

If you would like to know more about the Romanian Fiscal Code or other taxation issues in Romania, please visit the homepage of Ensight, the exclusive representative of WTS Global in Romania.

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