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Helga Kiss, tax director, RSM Hungary
Helga Kiss

Autumn tax changes 2022 - a summary of the key points of the new tax package

On 18 October, we were presented with a package of tax law proposals containing a number of tax law changes, including significant changes to corporate income tax and long-term investment accounts, while also aiming to simplify administration and tax obligations. We have summarised the main areas and tax types where taxpayers can expect changes.

Corporate income tax information report - new data reporting obligations for multinational companies

In line with EU requirements and the intention to enhance the transparency of tax burdens for multinational companies, multinational companies will face a new accounting data reporting obligation.  In the future, companies with consolidated revenues exceeding HUF 275 million for two consecutive years will have to prepare a report containing corporate income tax information.  The report will be prepared by the parent company and will include, in addition to the general information, the revenue, the profit before taxation and the corporate income tax payable, as well as any withholding tax, by country. The report must be published and filed each year. 


Long-term investment account – extending the scope of eligibility

Under the proposal, from the beginning of next year the scope of those eligible to enter into long-term investment contracts would be extended to trusts carrying out fiduciary activities, subject to certain conditions. A simultaneous amendment to the CIT Act would ensure that the income from a long-term investment account would be taxed in the same way as if the private individual beneficiary of the trust had concluded the long-term investment contract. This means that full tax relief is available on the interest earned on the long-term investment at the end of the five-year commitment period.  

If the long-term deposit is broken before the end of the five-year commitment period or a partial withdrawal occurs at the end of the third year, resulting in a tax liability, the tax liability is settled by the trust against the assets of the trust. In order to ensure that the income from the long-term investment is not treated as a taxable dividend when distributed by the trust to the individual beneficiaries, it is important that the trust maintains records that clearly identify the amount of the interest from the long-term investment account.

Relief for the taxpayers who opted out of the kata and opted for a flat-rate tax 

Under the bill, it will be possible to opt for the simplified contribution to public revenues after the fixed rate tax of small taxpayers (“kata”) (this option was previously prohibited by law) and, if a person has previously opted out of the flat-rate taxation, the period of the prohibition to opt back in will be shortened. After the kata, most people opted for flat-rate taxation under the PIT Act, which is supported by the proposal by reducing the frequency of contribution liability for flat-rate taxpayers to quarterly.    

Local business tax – relief for small businesses

A further relief in the field of local business tax is the introduction of the itemised taxation for small companies (small companies are defined as businesses whose annual revenue does not exceed HUF 25 million, or HUF 120 million in the case of retailers). The point here is that the law assigns a tax base amount to the income bands, and the tax is paid once a year, at the end of May, and no tax return has to be filed.  The lowest rate of itemised local business tax is HUF 50,000 (calculated at a rate of 2% LBT),which can be applied up to HUF 12 million of annual income.

Advertising tax – the 0 tax rate remains

An exciting development is the further extension of the advertising tax suspension until 31 December 2023. The advertising tax is one of the "digital taxes" that Hungary should have abolished in the framework of international cooperation if the OECD had developed a uniform taxation of international technology companies as part of the first pillar of a global tax reform.  However, this has not been done so far, and instead the focus has been on the introduction of the second pillar, the global minimum tax.  In view of the current economic situation, the action of advertising market players leads to the reintroduction of the advertising tax only one year later.

Tightening of transfer tax on real estate transactions of related companies

Companies should move quickly if they are now planning to restructure their group of companies and have a high-value property in one company that they would like to transfer to another company.

Under the bill, real estate transactions between affiliated companies will no longer be exempt from the transfer tax if less than 50% of the net revenue of the acquirer in the previous year is derived from real estate transactions.

At the same time, the bill also provides that the acquisition of assets by a trust as a beneficiary will be exempt from transfer tax, given that the trust is also the beneficiary of the assets it manages under the relevant legal provision".  

Excise duty - changing the definition of marked gas oils

In the field of excise duties, the amendment aligns the definition of marked gas oil with the application of the common fiscal marker in EU legislation. As a result of this change, we refer to products marked with Solvent Yellow 124 or ACCUTRACE PLUS as marked gas oils. Also in order to align with EU excise legislation, the electronic documents used to prove exemption from duty in the duty suspension procedure will change. 

Customs administration - clarification of the customs fine procedure

As regards customs administration, a clarification is made in the case of a customs fines that do not involve a customs deficit. In the assessment of the fine, the amendment provides that the frequency of infringement should be examined only within one year for the entity concerned.  The criteria for the application of a warning as a sanction has been clarified.    If the entity concerned commits the infringement for the first time within one year and fulfils the other criteria, a warning may be issued.

Special employee stock ownership plan 

Special ESOP participants may place their membership shares into fiduciary trusteeship, whereby they will receive their shares as beneficiaries of the trust.  In this context, the bill amends the provisions of the PIT Act on the acquisition value of assets acquired in the form of securities.  For the company providing the shares the benefit will be a recognised cost, whereas for the trust the benefit will be exempt from tax.

E-charging stations – “de minimis” aid

The electric charging station would qualify as "de minimis" aid under the bill, but you can also opt to receive this support under the rules of the European Commission's emergency communication. Please note that the latter is for a transitional period, but for those who would still make use of it, it is positive that the amount of aid received under this heading will not count against the de minimis limit. 

The new rules may be applied to tax returns filed after 31 January 2022, so it will be possible to decide as early as the first time whether to claim the benefit under the de minimis or the emergency communication rules. 

“De minimis” aid is a form of low value state aid which is capped, i.e. the total amount of aid received under this heading in any three consecutive years may not exceed HUF 200,000.

VAT: two years extension of the reduced VAT rate

According to the proposal, Government Decree 267/2022 (29 July) on the application of a reduced VAT rate on new residential property – which extends the period of application of the reduced rate of VAT of 5% on the sale of new residential property by 2 years – would be incorporated into law, and it also contains transitional rules to treat delayed construction.

Is the e-receipt coming?

Building on the experience gained with online cash registers and invoice data reporting service, the cash register system could be renewed in the future, taking into account the requirement of data reporting and the acceleration of digitisation, which could also encourage the spread of electronic receipting in the spirit of environmental awareness.  As a first step in this direction, the proposal now submitted authorises legislation at ministerial level to lay down detailed rules on general data reporting from receipts and on the use of devices and techniques other than cash registers for issuing electronic receipts.


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