Page 25 - Mazars Central and Eastern European tax guide 2023

Hungary VAT options in completing such transactions), insurance tax, 'chips tax'
Hungary Applicable / limits (levied on unhealthy foods and drinks) and retail tax.

From 1 July, 2021 OSS system Personal income tax / Social security system
Distance selling is applicable.
Mazars Kft. There is a flat-rate PIT of 15%, and it is generally applicable
both to active (e.g., employment, assignment fee) and
Váci Greens Office, Building F Call-off stock ü passive incomes (e.g., capital gains, dividend and interest).
Fiastyúk utca 4–8, 2nd floor, VAT group registration ü Tax payable on active income is reduced by a family tax
H–1139 Budapest, Hungary Cash accounting – yearly allowance. The family tax allowance amounts to HUF
Phone: +36 (1) 429 3010 amount in EUR (approx.) approx. EUR 320,000/year 20,000 (approx. EUR 50)/month/child for up to 2 children;
Fax: +36 (1) 235 0481 Import VAT deferment ü and HUF 33,000 (EUR 84)/child) from 3 children.
www.mazars.hu As of 1 January 2020, a lifelong personal income tax
Sale of waste, agricultural products, exemption for employment income was introduced for
greenhouse gas emission quotas,
Local reverse charge collaterals. Also, the provision mothers raising or having raised four or more children.
of certain construction services, From 2022, employees of 25 years of age or under also
Corporate taxes and other direct taxes There is a wide range of tax allowances for new turn-key construction projects. enjoy tax exemption. Benefits-in-kind are taxed at two
investments (for example, for energy-efficiency rates, depending on the type of benefit: PIT plus social
In Hungary, a corporate income tax rate of 9% is applicable, investments and for investment in start-up companies), Option for taxation tax calculated on a special tax base altogether amounting
which is the lowest rate in the EU. The tax base is the pre- as well as for R&D facilities. letting of real estate to 33.04% or 28% and payable only by the employer.
tax profit modified by several increasing and decreasing ü However, as of 2019, most types of benefits-in-kind are
items. Losses can be carried forward for 5 years and Hungary provides a tax exemption for holding structures: supply of used real estate ü taxed as normal employment income.
may be used to reduce the tax base up to a maximum capital gains on shares and intellectual property under VAT registration No
of 50% of the tax base. Loss carryback is generally not certain conditions are tax free, and a 50% tax allowance threshold Active income falls under the scope of the SSC system:
possible. Special limitations are applicable in the case is applicable on royalty incomes. the social security contribution payable by the individuals
of M&A transactions. concerned is 18.5%; the employer’s social tax was reduced
There is no withholding tax on dividends, interest and Other indirect tax types in Hungary include excise duty
From 2019, the previous thin capitalization rules have been royalties paid by a Hungarian company to a foreign on energy products, alcohol and tobacco products, to 13% from January 2022. Some passive incomes are also
subject to 13% social tax; however, in the case of dividends
replaced by the interest limitation rules set out by ATAD company. Hungary has a wide international treaty environmental protection charges on products heavily there is an upper limit. Other types of passive income (e.g.,
(30% of EBITDA or EUR 3 million). Exit tax and hybrid network with more than 80 treaties on the avoidance polluting the environment (e.g., all kinds of electric capital gains on shares in stock exchange companies,
mismatch regulations are also applied. of double taxation. equipment, accumulators and batteries, packaging or interest) are exempt from social tax.
materials, etc.), financial transactional tax (payable by banks
Group taxation is available in Hungary for CIT purposes, The local business tax of maximum 2% is payable on gross
which allows related parties to avoid some of the transfer margin (sales revenue minus COGS, mediated services,
pricing documentation obligations. material costs and R&D costs). Wage related taxes in Hungary Minimum wage Average wage

IFRS accounting is optional for larger companies (above Transfer tax is applied in Hungary to a limited range in private sector
approx. EUR 0.8 million of revenue or 50 employees) and of transactions. The general transfer tax rate applied to real Exchange rate HUF/EUR 390 in EUR in HUF in EUR in HUF
obligatory for financial institutions and listed companies. property transactions is 4%, including the acquisition 595 232,000 1,445 563,600
of real estate or 75% of the shares of a real property
holding company. There are some exceptions regarding Total wage cost 672 113.00% 1,633 113.00%
intra-group transactions. The transfer tax is 18% on gifts Social contribution tax 77 13.00% 188 13.00%
Transfer pricing in Hungary and inheritance, 9% in the case of residential real estate; Gross salary 595 100.00% 1,445 100.00%
Arm's length principle ü Since 1996 gifts and inheritance within a family is tax-exempt. Personal income tax 89 15.00% 217 15.00%

Documentation liability ü Since 2003 A number of windfall taxes have been introduced for the Employees' contributions 110 18.50% 267 18.50%
financial years of 2022 and 2023, for example in the
APA ü Since 2007 banking and insurance sectors, but energy suppliers and Net salary 396 66.50% 961 66.50%
Country-by-Country Since 2016 producers of pharmaceutical drugs are also affected.
liability ü
Master file-local file VAT and other indirect taxes
(OECD BEPS 13) ü Since 2018
applicable The standard VAT rate is 27%, while the reduced rates are
Penalty 18% (e.g., bread) and 5% (e.g., milk, eggs, newspapers,
~ EUR 12,000 / missing books, medicines, certain meat products, new residential
lack of documentation ü documentation, real estate, internet access services, accommodation
doubled for a recurrence. services and restaurant services). Due to the limited
50% on tax underpayment voluntary compliance in certain sectors (e.g., retail
tax shortage ü + late payment interest. business and certain services), Hungary introduced
Direct or indirect a number of measures aimed at enforcing the law, such
Related parties > 50% control or common as the online checking of cash registers and domestic sales
managing director. reports. Taxpayers are required to use billing software Dr. Dániel H. Nagy LL.M.
Low value-added services: capable of automatically providing the tax authority with Partner, Head of Tax & Legal Services
Safe harbours ü 3%–7% mark-up. real-time invoice data. Thus, from 2021, essentially each Mobile: +36 (20) 406 5582
Level of attention paid by Tax invoice is reported to the tax authority in real-time. E-mail: daniel.h.nagy@mazars.hu
Authority 9/10

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