On 16 October 2024, the autumn tax package was made available for public consultation. This bulletin summarizes the most important changes expected to come into force in Hungary.
Personal income tax changes
- Under the proposed changes, the family tax base allowance will increase in two stages. The amount will be increased to one and a half times its current level from 1 July 2025, and doubled from 1 January 2026.
- In line with the above, the tax base allowance for chronically ill or severely disabled children will also increase by the same rate and amount.
- The proposal will allow employers to support their employees, tax-free, in repaying their student loan debts or even repaying the full amount.
Corporate income tax
- From tax year 2024 onwards, the accounting depreciation of land and plots used by the taxpayer for the storage of hazardous waste will be deductible for tax purposes.
Financial Transaction Tax
- The increased rates of Financial Transaction Tax (introduced by the government decree on extra profit taxes), effective as of 1 August, would appear to be abolished. Nevertheless, this amendment is likely of a purely technical nature, meaning that the higher rates are expected to be incorporated directly into the law.
- This change does not affect the supplementary Financial Transaction Tax imposed on payment transactions involving FX conversion.
Tax procedural rules
- As of 1 January 2025, the tax authority will be authorized to initiate a data reconciliation procedure following a risk analysis process, giving taxpayers 15 days to comply, or face a HUF 300,000 default penalty.
- From 1 July 2025, a new default penalty of HUF 100,000 per person will apply if taxpayers fail to submit monthly tax and contribution returns for employees or business partners and do not correct the omission after notice.
- The increased penalty rates originally regulated in a government decree will become statutory, thus:
- the default penalty cap is HUF 400,000 for individuals and HUF 1,000,000 for non-individual taxpayers
- failure to report employees, issue invoices or maintain records may incur penalties of up to HUF 2,000,000
- The deadline for the Advanced Price Agreement ( APA) procedure will be extendable twice, by 90 days each time.
- Commencing on 1 January 2025, the tax authority can verify compliance with arm's length pricing records and data accuracy during a simplified tax audit, with a 60-day review period.
Global minimum tax
The draft of the legislative package:
- contains technical clarifications, and
- extends the range of data to be provided to the National Tax and Customs Administration of Hungary (originally required only within the GIR) already in the registration form. The requirement covers identifying data with tax IDs and the tax residency of group members, as well as information regarding the corporate structure and controlling interests of group members.
VAT
- Additional regulations related to the special tax exemption of small taxpayers are proposed, in accordance with EU regulations.
- The sale of natural gas transmitted through pipelines within the territory of the EU (or any other system attached to that) will be subject to a reverse charge if the purchaser qualifies as a taxable person trader.
- Amounts must be rounded to HUF 1 in the Domestic Purchases List.
- References to the Act on Development and Protection of the Built Environment are to be dropped from the VAT Act, insofar as they relate to the VAT regulations on real estate properties.
- Exemption of VAT and excise taxes related to the non-commercial importation of goods will be granted only to individuals living or working in border zones.
- The regulations on the authorization and data provision requirements of e-cash registers are amended.
Customs
- The power of attorney for customs representation must be submitted to the Customs Authority before the start of the customs procedure.
- The requirements of the exemption from providing securities for VAT must be fulfilled by the time the assessment of the request is submitted for the exemption.
