You can read here the latest tax newsletters of the Hungarian office of Mazars. We would like to inform our clients and partners about actual tax news and changes.
Management of year-end transfer pricing adjustments, introduction of new transfer pricing reporting obligation
One of the most essential points of the Tax Bill package approved in Summer was the management of year-end transfer pricing adjustments. Accordingly, as of 2022, if the prices applied or the profit realized by the tested party does not prove to be at arm’s length, the corporate tax base should be adjusted in line with the median value of the arm’s length range, unless the taxpayer provides reasoning why a value other than the median meets the arm’s length principle the most.
What to pay attention to before the end of the year?
Once again this year, Mazars has prepared its summary of the end-of-the-year tasks. Our current newsletter lists the taxation deadlines and decisions to be made that the financial management of companies need to keep in mind – even when the holidays are just around the corner.
The bill amending certain tax laws has been submitted to the Parliament. Although the autumn tax package will not bring about major changes that would fundamentally transform the tax system as a whole or a tax type, it will affect certain categories of taxpayers significantly. Among other things, the filing obligation of sole traders subject to flat-rate taxation will be simplified, small business tax base will be introduced in local business tax, there will be new, favourable rules applicable to fiduciary asset management, and the 5% VAT for residential properties will remain in effect. Another novelty is that information related to corporate income tax will have to be disclosed in the framework of the public Country-by-Country (CbC) reporting, although this will be an actual obligation first in 2025-2026 only.
An important change for SZÉP cards: the provisions regarding unused amounts have been changed
Government Decree of 381/2022. (X. 6.) on the emergency rules for the use of SZÉP (Széchenyi Recreation) cards has brought a significant change in the treatment of unused amounts. From now on, the SZÉP card service provider will be obliged to deduct a one-time fee of 15% of the amount which has not been used up by the account holder in one-year. In our newsletter, we review the existing regulation as well as the new provisions.
Choosing to enter into corporate income tax groups until 20 November
20 November 2022 is the deadline until which company groups may submit their application to the Tax Authority for establishing a corporate income tax group for the 2023 business year, or in the case of an existing group, to dissolve a corporate income tax group it. Applications to join an existing group can be made also until that date. Companies that miss the above deadline will have to wait a whole business year for another opportunity.
After almost a year, some new information has been published regarding the draft VAT returns (eVAT) prepared by the National Tax and Customs Administration (NTCA). During the long waiting time, the experts at the NTCA were not inactive, they improved the original idea substantially. The proposal was published on the GitHub forum, and it was possible to comment on its content until 30 September 2022.
Surprisingly, Hungary did not support the adoption of the EU Directive at the ECOFIN meeting on 17 June, thus the level of uncertainty remains high around the introduction of the global minimum tax scheme.
The bill for the new KATA (itemised tax of small businesses) Act was submitted to Parliament on 11 July 2022 and passed into law the following day with much more stringent rules. Many small businesses will be now excluded from the scope of this favourable taxation scheme, which cannot be compensated by the increase in the income threshold either.