In respect of the Act on Personal Income Tax (PIT Act),the proposal specifies, with effect from 1 August 2016, the definition of assignment. According to the new definition, assignment shall mean official, business trips with the exception of commute to and from work and commute to and from the employer’s seat and site.
Certain sport events no longer exempt from tax
The proposal also defines the term of sport event with effect from 1 August 2016. From this date on, the companies organizing sport programs for their employees and using, the opportunity provided by current regulation, enjoying tax exemption as a result will no longer be exempt from tax liability.
Changes concerning commute to work and distance work
The provisions of the bill also concern the rules of distance work. According to the amendment, the employer may also grant remuneration not to be considered as income (in the form of, among others, public transport season tickets or tickets) even if the place of work and the seat or site of the employer are not in the same town and there is no local public transport between the two locations.
The amount employers may pay tax free according to the government decree in the case of commute to work increases from HUF 9 to HUF 15.
Extension of the group of dependents
The proposal also includes an extension of the group of dependents effective from 1 January 2017, making it clear that persons having a legal relationship in higher education qualify as dependents.
According to the proposed changes, the rules relating to certain specified benefits and fringe benefits may also be applied to students attending dual training based on a student employment contract.
In addition, the proposal for the 2017 tax law amendment extends tax exemption to the benefits paid with regard to the theoretical part of the dual training up to the amount of the monthly minimum wage in force on the first day of the given month. This means that no health contribution payment obligation arises on the fee paid with regard to the theoretical part of the training either. The above changes would enter into force on the day following the promulgation of the amendment.
The changes effective from 1 January 2017 concerning pension insurance mostly represent specifications of existing rules and reliefs for the eligible persons. They include new rules such as, for example, the rule that in the future the Hungarian Tax and Customs Authority may transfer the state support payable to the individual to the insurer even if the individual has a registered tax debt of no more than HUF 1 000 and the rule that, in the case of the death of the insured person, the insurer shall disburse the support to the specified beneficiary or, if no beneficiary was specified, to the heir of the insured person.
Tax advance declaration
The rules concerning tax advance declaration would also be supplemented from the date following the promulgation of the amendment with eligible individuals not having to make a repeated declaration in order to apply family allowance after the birth of their children if they already made a declaration regarding the foetus before birth in order to reduce the administrative obligations of the persons concerned.
Determining the value applied to acquire movable property
From 1 January 2016, the regulation of the method of determining the value applied for the acquisition of movable property would be supplemented also. This means that if, in the case of granting a work of art, collection piece or antique as defined in the Act on Value Added Tax as a gift, the tax authority does not impose duty, 75 percent of the income from the transfer or the amount the individual may regard as such will qualify as the value applied for acquisition.
Income from controlled capital market transactions – supply of more detailed data
According to the changes proposed, from 1 August 2016, the Hungarian Tax and Customs Authority would also be able to include income from controlled capital market transactions in the tax return draft. The proposal specifies the scope of data and the deadlines relating to the supply of data which are applicable to the investment service provider.
Income from long-term investment accounts
The changes concerning long-term investment accounts from 1 January 2017 are mostly modifications specifying the content of former regulation. These include, among others, the provision on taking the impact of exchange rate movements into account also in the case of so-called bank deposit type long-term investment accounts when determining the yield if the account includes a financial instrument for which the term of exchange rate movement can be interpreted.
In addition, according to the proposal, in the case of the closing or termination of an above mentioned type of long-term investment account, any interest potentially not yet paid shall also be regarded as part of the yield. If the individual re-concludes the long term investment account contract, the interest payable to the individual under the earlier contract shall be regarded as a payment made under the newly concluded contract.
The proposal specifies that re-conclusion of an earlier long-term investment account contract shall not be considered for the purpose of the restriction that only one deposit type and one portfolio type long-term investment accounts may be contracted with one investment service provider in a year.
According to the proposal, the capital increase of a company that is realized from unpaid profit shall not be regarded as income of the individual. This change shall take effect on the day following the promulgation of the amendment.
Employee security benefit program changes
According to the proposal, from 1 January 2017 the organizer of the program would have reporting obligation in respect of option type employee security benefit programs.
Taking lapse of time into account for purposes of income from the transfer of real property and property rights
Based on the provisions of the proposal, from 1 January 2017, there will be no obstacle to considering the time lapsed when applying the already known 75 percent rule for the definition of the income of from the transfer if the transfer of the real property not qualifying as a flat and/or relating property rights takes place in over 5 years from the year of acquisition and the amount applied for acquisition cannot be determined.
According to the proposal, from 1 January 2017, in the case of negative inflation, the highest rate of premium increase relating to interest incomes arising in respect of single premium insurance shall not exceed 30 percentage points.
Tax exempt mobility housing support, workers’ accommodation
From 1 January 2017, the proposal would make the mobility housing support provided by employers exempt from tax.
In respect of the tax exemption of workers’ accommodation, from 1 January 2017 the proposal would extend the term of workers’ accommodation, including in this category properties in which one employee in an employment relationship with the payer is placed per accommodation unit.
The proposal integrates the definitions of equitable housing need, family members moving together, modernization and transformation ensuring accessibility for the disabled (previously regulated in a government decree) into Annex 1 to the PIT Act. The amendment would enter into force on the day following the promulgation of the amendment.