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R&D investment can reduce extra profit tax of pharmaceutical producers in Hungary

Government Decree 317/2023 (17 July 2023) was published in the Official Journal of Hungary on 17 July 2023, amending the effective Government Decree on extra-profit taxes in several points. One significant change is that pharmaceutical companies may reduce their special tax liability for the tax year 2024 by the cost of R&D activity (investment) aimed at the purchase or production of tangible assets.

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Minimise your tax risk by business partner due diligence

Many companies only realise the importance of verifying their business partners and the existence of related documentation during a tax authority audit, when they are required to present their contracting procedure and, for certain business partners selected by the tax authority, their due diligence documentation. However, the outcome of the tax audit is often a tax authority report and decision in which the tax authority - citing certain objective circumstances and lack of due diligence - denies the right to deduct VAT included in the invoice received, and imposes a tax penalty, even though performance was duly made. This is because the legal regulations require a preliminary business due diligence procedure to ensure that the content of the invoice is authentic, i.e. that the actual performance is consistent with the invoice.

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Company assets in marriage

RSM\'s family lawyers often find that when it comes to business property, spouses cannot decide: who owns the \"company\"? Do the spouses own the business shares jointly or separately? In the case of a business share, it would be easy to define ownership as \"in whose name it is held\", but the question is more complex in the case of matrimonial property.

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Helga Kiss, tax director, RSM Hungary
Helga Kiss

2023 summer tax package in Hungary – a summary of the main changes

On 6 June a package of tax bills containing a number of changes was announced, including significant modifications to VAT, personal income tax, corporate income tax, extra profit tax, local business tax, customs and excise regulations, as well as NETA (Public Health product tax). We have summarised the main tax types where taxpayers, especially companies, should expect changes from 2024. However, in many cases, changes could come into force as early as 2023.

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High new EPR fees announced

On 2 June 2023, the Extended Producer Responsibility (EPR fee) rates were published in Hungary. As expected, the EPR fees payable by companies are significantly higher than the previously established environmental product charges for the same and similar product streams.

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Divorce: the family business can go bust if you don't prepare in advance

Although in Hungary many people shy away from the idea of a prenup for emotional reasons, it is irresponsible for couples who run a joint business not to consider a negative scenario. Not only can costly and protracted litigation be avoided in divorce by a prenuptial property agreement, but the future of the family business could well depend on it. The number of contracts designed to protect family assets registered in the Register of Matrimonial and Cohabitation Property Contracts is increasing every year.

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How will the new social contribution tax affect investments in Hungary?

Pursuant to Government Decree No. 205/2023. (V. 31.) published on 31 May in the Official Journal of Hungary, as of 1 July 2023 interest income under the PIT Act – except for interest income from investment units of real estate funds – shall be subject to a 13% social contribution tax (“szocho”) in addition to the 15% personal income tax (PIT) during the state of emergency announced by Government Decree No. 424/2022. (X. 28.). The state of emergency is currently scheduled to last until 26 November 2023, but it cannot be ruled out that it will be extended again.

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Important changes planned by the Hungarian Tax Authority

Ever since the launch of the Online Invoice System, the Hungarian Tax Authority has been implementing both minor and major changes to the platform from time to time. Most recently, a change affecting a large number of businesses was announced by the Tax Authority in January, which was originally planned to go live on 15 May. However, according to the most recent news from the Hungarian Tax Authority, the go-live of the change has been postponed until 18 September. This means that companies that have failed to prepare for the changes involving corrective and cancellation invoices have nearly four more months to get ready

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Petra Palicz

Five cases where VAT is payable abroad

A number of Hungarian businesses are involved in international trade, including intra-Community supplies of goods, import of goods from third parties or supplies of services abroad. For cross-border transactions, a key aspect that should be examined is whether there is a requirement to register for VAT abroad and whether any VAT liability arises abroad. In this blog entry we present five cases where companies are required to pay VAT abroad in connection with cross-border transactions.

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