SUMMARY OF AMENDMENTS OF TAX LEGISLATION OF THE YEAR 2024
Based on the legislation adopted until the end of 2023, in our newsletter we summarize the amendments made to the Hungarian tax laws.
This summary only contains the major lines of the most significant amendments, due to the numerous detailed rules. The analysis of the details goes beyond the scope of this newsletter, however at your request we are standing at your disposal concerning their essential contents.
VALUE ADDED TAX (VAT)
New rules, applicable to compulsory returnable but non-reusable products are introduced in the Hungarian VAT Act. A taxpayer operating a compulsory return fee scheme under the Waste Act will be obliged to charge a redemption fee and pay tax on it if the product is not returned.
CHANGES REGARDING TAX PROCEDURE, AND TAX ADMINISTRATION ORDER
As a result of the changes to the Act on Tax Procedure and the VAT Act, from July 15, 2024, online cash registers shall gradually be replaced by other technical devices capable of issuing electronic receipts.
Further to the changes in the Act on Tax Procedure being effective since September 13, 2023, if the taxpayer fails to comply with the legal deadline for the community summary declaration obligation related to VAT and the monthly tax and contribution declaration obligation within 180 days from the legal deadline, despite the call from NAV, their tax number will be deleted. The change compared to the previous regulation is that the deadline for compliance is altered from the previous 365 days.
CORPORATE TAX CHANGES
The taxpayer will be able to write off deferred losses incurred by the last day of the tax year starting in 2014, and claim against the tax base without time limit – as opposed to the deadline of December 31st, 2030 applicable before – from July 15, 2023.
An income-increasing item must be applied if the taxpayer pays royalties or interest to a foreign individual or branch of any state listed in the tax “blacklist”, or if a corporate tax rate, which is lower than the 9% Hungarian corporate tax rate, is applicable to them.
Under the research and development support title, changes were introduced. The new tax incentive can be applied to basic research, experimental development activities, and specifically listed direct costs related to these on the decision of the taxpayer, who can opt for this instead of the previously regulated R+D tax incentive. The incentive rate is a maximum of 10% of the accounted cost.
An additional corporate tax incentive is introduced for investments in electricity storage. The tax incentive is available for a period of 6 tax years, the first year of which may be either the year of installation or the following tax year, at the choice of the taxpayer. The intensity of the grant, together with the total State grant, is 30 or 45 percent of the eligible costs of the investment, depending on the region, up to a maximum of EUR 30 million.
The definition of Affiliated Companies has been clarified: a 25% stake was sufficient to determine the affiliated nature, but this was only applicable to companies in a direct parent-subsidiary relationship. The amendment extends this and allows for a 25% stake among sister companies to also result in an affiliated relationship.
ACCOUNTING LAW DIFFERENCES
In relation to the implementation of the global minimum tax, Hungarian resident subsidiaries, branches and establishments of large global companies may become subject to additional tax liability, which must also be reflected in the profit and loss account of the relevant entities. This includes groups of companies whose annual revenue in the final consolidated accounts of the parent company equals or exceeds EUR 750 million in at least two of the four years preceding the tax year.
A new legislation imposes new reporting obligations on the companies concerning their corporate social responsibility, in line with EU rules; these rules will be included in the Accounting Act.
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This summary is intended to raise awareness and does not constitute legal advice.
If you have any questions or need further information, please do not hesitate to contact us.
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