Hungarian tax news – Circular no. 3 “June Newsletter”

By Péter Viczkó
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The tax package of this year brings a lot of small changes. Digitalisation and reduction of the administration will continue.

The digitalisation of tax system will continue, the Tax Authority will take over the preparation of VAT returns from the corporations from 1 July 2021. From 1 April 2021 new rules applied for the Hungarian online invoicing system that have a huge impact on e-commerce exporters. Real Time Invoice Reporting is a new obligation proposed by the Hungarian tax authority for submitting all the invoices reports with the main goal of reducing tax avoidance and whitening the economy. VAT regulations related to e-commerce will be simpler and stricter at the same time. The European Commission amended VAT regulations allowing Member States prepare themselves for the introduction of the One Stop Shop (OSS), set to launch on 1 July 2021. The OSS aims to simplify submitting VAT returns and paying the correct country specific VAT for online retailers in the various Member States where they trade. The extent of obligations in regards of EKAER, the Electronic Trade and Transport Control System, have been reduced from 2021.

In corporate tax the upper cap for development reserve will be abolished, the rate of small enterprise tax will be decreased. As a significant change, the local business tax returns will have to be submitted to the Tax Authority instead of the local municipalities. Data reporting, tax report and registration forms are also going to be standardized as well. The local business tax is reduced to 1% for small- and medium-sized enterprises and sole proprietors in 2021. The rules of local business tax base allocation will change. Temporary business activity will not subject to local business tax. The tax base for small enterprises (“KIVA”) will decrease. There will significantly stricter rules for itemized tax for small taxpayers (“KATA”).

The Hungarian Government introduced a bill covering amendments to tax and duty law as a part of its new family care action plan. For socio-political reasons, a 5% tax rate will be applicable on the sale of new residential units.  Families with children will be exempted from duty when purchasing either new or used residential properties. They can have a loan for home renovation, the half of this amount is a non-refundable aid. Pensions will raise up to a monthly amount.  From 2022 the personal income tax for the youngsters under 25 years will cease.

By the end of the coronavirus epidemic the payment moratorium will be available to those raising children, pensioners, unemployed and businesses in financial difficulty after all credit, loans and financial leasing agreements. Reliable taxpayers and private individuals can apply the automatic instalment payment.

As part of the tools of the economic protection action plan investment aid was given to businesses to promote the job retention and creation, loans with interest and guarantee aid were provided to help them in financing.


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