Page 25 - CEE Tax Guide 2024

Hungary e-VAT system has been introduced in 2024 with the environmental protection charges on products heavily
aim of making VAT administration easier. Under the new polluting the environment (e.g. all kinds of electric
regime, the Tax Authority provides taxpayers with draft VAT equipment, accumulators and batteries, packaging
statements based on online invoice reporting data. materials, etc.) have been replaced by EPR (Extended
Producer Responsibility) fees.
Mazars Kft. VAT options in Personal income tax / Social security system
Váci Greens Office, Building F Hungary Applicable / limits
Fiastyúk utca 4–8, 2nd floor, There is a flat-rate PIT of 15%, and it is generally
H-1139 Budapest, Hungary Distance selling From July 1, 2021, the OSS system applicable both to active (e.g. employment, assignment
Phone: +36 (1) 429 3010 is applicable. fee) and passive incomes (e.g. capital gains, dividend,
Fax: +36 (1) 235 0481 Call-off stock ü and interest). Tax payable on active income is reduced
www.mazars.hu by a family tax allowance. The family tax allowance
VAT group registration ü amounts to HUF 20,000 (approx. EUR 50)/month/
Cash accounting – yearly child for up to 2 children; and HUF 33,000 (EUR 84)/
amount in EUR (approx.) Approx. EUR 320,000/year. child) from 3 children. As of January 1, 2020, a lifelong
Corporate taxes and other direct taxes There is a wide range of tax allowances for new Import VAT deferment ü personal income tax exemption for employment income
investments (for example, for energy-efficiency was introduced for mothers raising or having raised four
In Hungary, a corporate income tax rate of 9% is applicable, investments and for investment in start-up companies), Sale of waste, agricultural products, or more children. From 2022, employees of 25 years of age
which is the lowest rate in the EU. The tax base is the pre- as well as for R&D facilities. Local reverse charge greenhouse gas emission quotas, or under also enjoy tax exemption. Benefits-in-kind are
collaterals. Also, the provision
tax profit modified by several increasing and decreasing of certain construction services, taxed at two rates, depending on the type of benefit: PIT
items. Losses can be carried forward for 5 years and Hungary provides a tax exemption for holding structures: turn-key construction projects. plus social tax calculated on a special tax base altogether
may be used to reduce the tax base up to a maximum capital gains on shares and intellectual property under amounting to 33.04% or 28%, respectively, which
of 50% of the tax base. Loss carryback is generally not certain conditions are tax free, and a 50% tax allowance Option for taxation is to be paid only by the employer. However, as of 2019,
possible. Special limitations are applicable in the case is applicable on royalty incomes. letting of real estate ü most types of benefits-in-kind are taxed as normal
of M&A transactions. employment income.
There is no withholding tax on dividends, interest, and supply of used real estate ü
From 2019, the previous thin capitalization rules have been royalties paid by a Hungarian company to a foreign VAT registration Active income falls under the scope of the SSC system:
replaced by the interest-limitation rules set out by ATAD company. Hungary has a wide international treaty network threshold No the social security contribution payable by the individuals
(30% of EBITDA or approx. EUR 2.5 million). Exit tax and with more than 80 treaties on the avoidance of double concerned is 18.5%; the employer’s social tax was reduced
hybrid mismatch regulations are also applied. taxation. However, the United States-Hungary tax treaty Other indirect tax types in Hungary include excise duty to 13% from January 2022. Some passive incomes are also
has been terminated as of 2024. on energy products, alcohol and tobacco products, subject to 13% social tax; however, there is an upper limit
Group taxation is available in Hungary for CIT purposes, financial transactional tax (payable by banks completing in the case of dividends. Other types of passive income
which allows related parties to avoid some of the transfer The local business tax of maximum 2% is payable on gross such transactions), insurance tax, “chips tax” (levied (e.g. capital gains on shares in stock exchange companies,
pricing documentation obligations. margin (sales revenue minus COGS, mediated services, on unhealthy foods and drinks), and retail tax. The previous or interest) are exempt from social tax.
material costs and R&D costs).
IFRS accounting is optional for larger companies (above
approx. EUR 0.8 million of revenue or 50 employees) and Transfer tax is applied in Hungary to a limited range
is obligatory for financial institutions and listed companies. of transactions. The general transfer tax rate applied to real Wage related taxes in Hungary Minimum wage Average wage
property transactions is 4%, including the acquisition in private sector
of real estate or 75% of the shares of a real property in EUR in HUF in EUR in HUF
holding company. There are some exceptions regarding Exchange rate HUF/EUR 389
Transfer pricing in Hungary intra-group transactions. The transfer tax is 18% on gifts 686 266,800 1,597 621,200
Arm's length principle ü Since 1996 and inheritance, 9% in the case of residential real estate; Total wage cost 775 113.00% 1,805 113.00%
gifts and inheritance within a family are tax-exempt.
Documentation liability ü Since 2003 Social contribution tax 89 13.00% 208 13.00%
A number of windfall taxes have been introduced for the
APA ü Since 2007 financial years of 2022-2024, for example in the banking Gross salary 686 100.00% 1,597 100.00%
Country-by-Country Since 2016 and insurance sectors, but energy suppliers and producers Personal income tax 103 15.00% 240 15.00%
liability ü of pharmaceutical drugs are also affected. Employees' contributions 127 18.50% 295 18.50%
Master file-local file Net salary 456 66.50% 1,062 66.50%
(OECD BEPS 13) ü Since 2018 VAT and other indirect taxes
applicable
Penalty The standard VAT rate is 27%, while the reduced rates are
~ EUR 12,000 / missing 18% (e.g. bread) and 5% (e.g. milk, eggs, newspapers,
lack of documentation ü documentation, books, medicines, certain meat products, new residential
doubled for a recurrence real estate, internet access services, accommodation
50% on tax underpayment services and restaurant services). Due to limited voluntary
tax shortage ü + late payment interest compliance in certain sectors (e.g. retail business
Direct or indirect and certain services), Hungary introduced a number
Related parties > 50% control or common of measures aimed at enforcing the law, such as the online
managing director. checking of cash registers and domestic sales reports. Dr. Dániel H. Nagy LL.M.
Low value-added services: Taxpayers are required to use billing software capable Partner, Head of Tax & Legal Services
Safe harbors ü 3%–7% mark-up. of automatically providing the tax authority with real-time Mobile: +36 20 406 5582
Level of attention paid by Tax invoice data. Thus, from 2021, each invoice is essentially E-mail: daniel.h.nagy@mazars.hu
Authority 9/10 reported to the tax authority in real-time. The so called

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