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Summary 191 posts

Transfer pricing 2024 – Record number of direct transfer pricing audits

In 2022, significant changes were made to transfer pricing and the preparation of transfer pricing documentation, with a multiplication of the fine and the introduction of a transfer pricing data reporting obligation. Please note that non-compliance with changes entered into force for the 2023 tax year could result in the imposition of multiple default penalties. Based on the experience of the past year, businesses are increasingly likely to face direct transfer pricing audits on transactions with their related parties.

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Importance of SME qualification – Micro-, small and medium sized enterprises?

The correct SME qualification (micro, small or medium-sized) has a particular importance for Hungarian companies when applying for certain EU tenders or reviewing the eligibility for corporate income tax (CIT) base decreasing items or CIT credits, but also for determining whether a given company is subject to innovation contribution or not. The Hungarian SME qualification has to be carried out based on a complex methodology prescribed by the corresponding act, and the SME status has to be indicated in the annual CIT return.

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CIT and LBT calculations – important aspects to consider

The deadline for submitting and paying corporate income tax (CIT) and local business tax (LBT) for 2023 is approaching. It is not worth leaving the preparation of the CIT and LBT calculations as well as preparing the corresponding returns to the last minute. In our blog, we would like to highlight some of the key areas which require special attention when preparing these calculations.

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Exhibitions, events abroad – foreign VAT issues

Companies organising a conference, event or exhibition abroad – whether it is their own event, or an event organised abroad by an event management company – need to be aware of the circumstances when they are to apply for a foreign VAT number or pay VAT abroad. This is because failure to comply with VAT obligations can lead to heavy default penalties and tax fines.

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The tax authority’s audit plan for 2024

The tax authority\'s 2024 audit plan has been published and shows that this year\'s tax audits will focus on affiliated companies, transfer pricing, employee stock ownership plans and foreign income, but large employers should also expect inquiries. The range of activities identified as high risk has also been significantly extended, including focus on income from controlled capital market transactions and cryptocurrencies.

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Global minimum tax: a minimum rate of 15% tax on the profits of multinationals

This January a Hungarian legal regulation has entered into force on the global minimum tax, introducing the new tax type in Hungary, too. The global minimum tax, developed by the OECD and transposed into EU law, aims to ensure that the effective tax burden for groups of companies with a turnover above €750 million is evenly distributed among group members and that the effective tax rate per country reaches 15%. With the introduction of the global minimum tax, the groups concerned will face complex legal interpretation and administrative challenges

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Fiduciary trusts 2024

Fiduciary trusts (“bizalmi vagyonkezelés” in Hungarian) have spread in the past few years. In recent years, trusts offering complex wealth management solutions have become increasingly popular in Hungary as well, with the number of managed asset accounts exceeding one thousand by February 2024. A legislative amendment contributed significantly to the increase in the number of trusts in 2023: the abolition of the tax-free placement of assets by private trustors encouraged many wealthy individuals to set up trusts before autumn 2023.

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Millions in tax advantages through retrospective reporting of previously non-reported participations in Hungary

In 2024, companies will have the opportunity for a tax amnesty by retrospectively reporting participation acquisitions that were not reported to the Hungarian Tax Authority previously. This will allow corporate income taxpayers who previously failed to report their participations obtained in other companies which could have exempted them from paying Corporate Income Tax (CIT) upon sale. The general deadline for the retrospective reporting of participations is 31 May 2024. The biggest beneficiaries of the retrospective reporting could be those companies expecting a significant market value growth of their subsidiary.

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