At its meeting on 13 June 2017, the Hungarian National Assembly accepted Act LXXVII of 2017 on the amendments of certain tax laws and related regulations. The legislative amendments affect the fiscal years of 2017 and 2018. In this article we provide a brief overview of the most significant changes effective from 1 January 2018.
Act on Personal Income Tax
From the tax-exempt items related to housing, the tax-free amount of housing allowance to facilitate mobility provided by the same employer has been increased.
Act on Corporate Tax and Dividend Tax
In the Act on Corporate Tax and Dividend Tax, the definition of reported shares has changed. According to the legislative amendments effective from 1 January 2018, the proportion of acquired shares does not necessarily have to reach 10%, therefore any size of share acquisition can be reported and assessed as an item reducing the tax base.
More items can now be used to reduce the tax base: under certain conditions, tax bases can be reduced with the cost of rental apartments built for employees, or with the cost of the investment when installing charging stations for electric cars.
Together with the legislative amendments for 2018, a change in the definition of start-up companies was also accepted, according to which there is no need to employ at least one employee in the field of research and development. This amendment is effective as of 20 June 2017.
As a result of the legislative amendments, from 1 January 2018 the VAT rate for live fish suitable for human consumption (except for: ornamental fish), for fresh, refrigerated or frozen fish (except for: shark) and for edible offal and pluck of domestic pigs is to drop to 5%. From 1 January 2018, the VAT rate of 5% will be applicable for internet access services as well.
Act on Excise Tax
The definition of small brewery has been modified with regard to the taxation of beer, still and sparkling wine, other still and sparkling fermented beverages, intermediate alcohol products and alcohol products. According to the legislative amendments, a tax warehouse can be defined as a small brewery from 1 January 2018 if it produces no more than 200 thousand hectolitres of beer per year. Consequently, the number of taxpayers applying reduced tax rates for beer produced in small breweries will increase.
Act on Vehicle Tax
The part of the law regulating the assessment and management of vehicle tax has been extended with a new paragraph: if a taxpayer is exempt from tax in a given fiscal year, the tax authority of the local government does not have to adopt a decision, it can simply record the tax-exempt status in its records.
Act on Healthcare Contribution
Under the legislative amendments, the tax payment obligation on income from property renting is to be abolished from 1 January 2018.
Act on Rules of Taxation
Any taxpayer who can only conduct a business activity after their company registration application is submitted must from 1 January 2018 report all active bank accounts managed by foreign financial institutions by providing the name of the account-holding bank as well as the opening and closing date of the account.
A new term is tax payment collateral. As a result of the legislative amendments effective from 1 January 2018, during the tax registration process the tax authority examines whether it is necessary to define tax payment collateral for the taxpayer following the assignment of the tax number, if certain conditions are met. This amount is identical to the tax debt registered at the tax authority less overpayments.
Furthermore, legislative amendments related to tax procedures include a change by the legislator in the date for implementing the online data reporting required for invoices issued by invoicing software with VAT in excess of HUF 100,000 (approx. EUR 320), from 1 July 2017 to 1 July 2018.
Act on Accounting
A new provision is added to the Act regarding the paragraph on significant errors. Consequently, if the tax authority changes one of its findings related to a significant error previously accounted for, as disclosed during a tax authority inspection, and such change is legally binding before the balance sheet preparation date of a subsequent financial year, the impact of the change has to be recorded in the reporting year.
Besides the above, the legislative amendments effective from 1 January 2018 also modify the laws on the simplified contribution to public revenues, the flat-rate tax for small businesses, the small business tax, and local taxes. The legislative amendments affect a wide range of areas, so if you are uncertain it is best to consult an expert.