Expected amendments to the tax legislation in line with draft Law No. T/10537

Expected amendments to the tax legislation

As you may be aware, the Government has published its latest tax proposal, according to which several changes may be expected to the current Hungarian tax legislation.


Regarding the procedural rules of taxation, following the introcuction of online tills and the so-called EKÁER, online invoicing rules seem also to become more stringent, whereas the threshold of VAT reporting obligations is to be decreased to HUF 100 thousand, and amendments are expected for the rules of enforcement procedures as well.

With respect to the personal income tax related part of the draft law, we highlight the expected (and increased) mobility related benefits, e.g. tax-free housing benefit provided for mobility purposes and the increased tax free part of the travel to work allowance offered to employees for their travel by car (from HUF 9 to HUF 15 per kilometer).

From a social security perspective, it is important to highlight the further limitation of the unilateral exemption of third country nationals.

Modifications to the Act on Corporate Income Tax and Dividend Tax include certain limitations (mainly of a general anti-avoidance nature), and new allowances will be introduced as well. In line with the new BEPS and EU nexus approach, the definition of royalties would be radically changed both for corporate income tax and local business tax purposes. The Act on LBT would introduce a new definition of royalties, one which will slightly differ from the upcoming one for corporate income tax purposes.

Instead of the currently used cash result tax base, the tax base for small entrepreneurs would be the result of capital transactions, thus new profit before tax increasing and decreasing items would be used and rules for tax advances would also change.

Rules about gaining REIT status would be adjusted to market conditions (original equity, limitations on owning rights); the list of assets that can be owned would be broadened; several definitions would be specified and changes are expected with regard to dividends as well.

Advert publishers who fail to issue ad tax declarations in dealings with their customers and who are not listed in the Tax Authority’s public registry would be called upon to issue their declaration directly to the Tax Authority. Not complying with this liability would result in a HUF 500,000 default penalty. A second transgression regarding the same customer would lead to a HUF 10 million default penalty which would triple for each further occurrence. (“Hungarian Google Tax”).

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