Value-added tax
5% VAT rate of new residential real estates extended until 31 December 2024
The amendment prolongs the application of the beneficial 5% VAT rate of the sale of new residential real estates by another 2 years, and also contains transitional rules for delayed constructions. Accordingly, the beneficial VAT rate is applicable in case of constructions when the performance date is between 1 January 2025 and 31 December 2028, if either
in case of construction works which are subject to authorization, if the authorization became final until 31 December 2024, or
if the construction work is subject to announcement, the announcement is made until 31 December 2024
The group of building and construction works with reverse charge is broadened:
As of 1 January 2023 works in connection with the functional change of real estate will be added to the group of building and construction works with reverse charge. Furthermore, those works will also belong here when no construction permit or notification to the authorities is required, but a different authority’s authorization is necessary to carry out the construction works. The amended rules are applicable in case of transactions completed after 1 January 2023, except if the date of tax assessment precedes 31 December 2022 based on Art. 60 of the VAT act with respect to the recipient of the service. In case of advance payments made before 31 December 2022 the recipient of the service has a tax payment obligation based on the new rules with respect to the price reduced with the advance.
Extension of application of reverse charge:
The amendment extends the application time of reverse charge until 31 December 2026 in case of agricultural products, metal products and greenhouse gas emission allowance.
Indication of VAT amount in HUF on invoices
The amendment makes it clear that the charged VAT amount is required to be indicated in HUF currency on the invoice where the amounts are otherwise charged in another currency only if the supply of production or performance of service is taxable in Hungary.
Electronic data providing obligation about computer-generated receipts
In the future data has to be provided to the Tax Authority electronically about those computer-generated receipts that where not generated via a cash register. The specific rules of authorization, distribution, operation and maintenance of such equipment are not yet available, this is expected in the near future based on the current amendment’s authorization.
Corporate Income Tax
Losses carried forward
The amendment modifies the deductible amount of the losses carried forward, which were generated before the end of the 2014 tax year and were not yet deducted from the tax base. Previously losses carried forward could be used up to 50% of the tax base. According to the new regulation those modifying items which are reported in the tax return due to the interest limitation shall not be taken into account during the calculation of the 50% of the tax base.
Termination of group membership in corporate taxation
The rules of reporting the corporate tax advance is being changed with respect to the termination of the group member’s membership for reasons other than termination without succession, and for the termination of the group. Based on the amended rules the tax advance has to be reported not within 30 days following the termination of the membership or the group, but within 30 days following the occuring of the circumstances causing the termination of the membership or the group.
Local Business Tax
As of 1 January 2023 small entrepreneurs – which means those entrepreneurs whose annual net turnover does not exceed HUF 25 million (or its proportionate amount for the fraction of the tax year) – will have the option to the simplified assessment of their local business tax base. Up to HUF 12 million of yearly net turnover the so determined simplified local business tax base will be HUF 2,5 million per municipality; between HUF 12 million and HUF 18 million it will be HUF 6 million; and between HUF 18 million and HUF 25 million it will be HUF 8,5 million per municipality. The simplified assessment of local business tax rate may be chosen by declaration in the local business tax return for the previous tax year, until the filing deadline (31 May). Declarations are not required to be renewed every year. Should the net turnover exceed HUF 25 million mid-year, the local business tax base are to be assessed based on the normal rules.
Flat-rate taxation
Independent contractors may choose flat-rate taxation regardless of the amount of their net turnover in the previous tax year. Applicable net turnover limits for the given tax year remain unchanged. Statutory waiting period to re-enter the flat-rate taxation method after quitting it is reduced from 4 years to 12 months.
Financial transaction duty
As of 1 July 2022 the obligation to pay a financial transaction duty was extended to cross-border financial services rendered by foreign financial service providers in Hungary. The current amendment however provides for an exemption from this obligation to payment transactions debited from the payment account maintained by the financial service provider if the owner of the account is a foreign tax resident.