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- Accounting and Tax automation
The Hungarian Tax and Customs Administration (NAV) issued a statement concerning the temporary suspension, until 30 September 2020, of the penalties that may be imposed in connection with the mandatory supply of information on invoice data.
As written in an earlier issue of our newsletter, from 1 July 2020, the scope of the invoice data supply obligation to be performed towards the tax authority is extended to include also those invoices with Hungary as the place of performance where the amount of the VAT charged is less than HUF 100 thousand.
With a view to the fact that, due to the coronavirus pandemic, taxpayers encountered difficulties in their preparations for the application of the new rules, until the above date, the tax authority will not impose sanctions on taxpayers who do not perform the data supply obligation or perform them incorrectly.
The suspension of sanctions covers the following obligations:
- supply of data on incoming invoices with VAT in the amount below HUF 100 thousand charged;
- supply of data on outgoing invoices with VAT in the amount below HUF 100 thousand charged;
- supply of data within 4 days on manually issued invoices with VAT in the amount HUF 100 thousand or more, but less than HUF 500 thousand, provided that the supply of data takes place within 5 days after the invoice is issued.
The suspension of the sanctions also extends to taxpayers who already had a data supply obligation under the rules previously in effect, for invoices with a VAT amount of at least HUF 100 thousand.
In case of invoice issuers for whom the data supply is a new obligation, however, it is an important condition that the exemption from the sanctions can only be applied if they had registered in the Online Invoice system of NAV by the date when they issued their first invoice on which data is to be reported.
We do hope that we could be at your service with this information. Should you have any further queries, please feel free, to contact us!
The Hungarian Parliament passed an amendment of the Duty Act which extends the inheritance and gift duty exemption to the movements of assets between siblings. This has broadened the duty exempt asset transfers between family members that previously were limited to the descendant (ascendant) relatives and spouses (surviving spouses) of the donor or the deceased person. The duty exemption is invariably granted notwithstanding the value of the gifted or inherited assets.
The sibling interpretation in the Duty Act will include also half-blood siblings of the donor or the deceased, as well as his or her siblings acquired through adoption.
The newly-introduced duty exemption will apply also to the duty cases which the tax authority has not yet decided upon on the date of entry into force of this amendment (i.e. on the 15th day following the promulgation).
We do hope that we could be at your service with this information. Should you have any further queries, please feel free, to contact us!
On 16 June 2020, the Parliament of Hungary passed the bills on the termination of the state of alarm and the transitory rules related to the state of alarm. We would like to note, that the future entry into force of the law on the termination of the state of alarm, will not result automatically in the end of the state of alarm situation, the Government will need to make a separate decision on it. The applicability of the – typically favourable, taxation-related – rules proclaimed by decrees, which were discussed in earlier issues of our newsletter, will change as follows:
- The payment moratorium for obligations arising from loan and credit agreements, as well as from financial lease agreements will remain in effect until 31 December 2020, with the performance obligations and contracts also extended until that date.
- The rule also remains in effect that the corporate income tax, small business tax (“KIVA”), local business tax, innovation contribution, as well as the income tax of energy companies that would normally become due between 22 April 2020 and 30 September 2020 can be paid and filed until 30 September 2020. If a business wishes to use the option to file its tax returns later, then the tax advances will be determined on the basis of the payment obligations in effect in the preceding periods. The new amendment makes the effect of the government’s decree concerning spectator sports – which applied earlier only to the period of state of alarm – permanent, according to which the total value of sponsorship certificates in case of national sport associations, amateur sports organisation and foundations can be up to 100% of the expenses and costs in the sports development programme.
- The extended deadline for publishing annual reports (30 September 2020) will also remain in effect in case these would have been originally due by the previously mentioned period of time.
- The exemption of businesses engaged in certain categories of activities from the social contribution tax and the vocational contribution, as well as the reduced rate of health insurance contributions payable after their employees, will be last applicable in case of the obligations pertaining to June 2020. Businesses enjoying this allowance will only have to pay 2/3 of the general rehabilitation contribution for the 2020 tax year (and also, for this year, there is no further advance payment obligation either).
- Subjects of the small business tax (“KIVA”) that are engaged in the beneficiated activities are exempted from taking personnel expenses into consideration as part of the tax base until June 2020.
- Subjects of the itemised tax of small businesses (“KATA”) engaged in these activities do not have to pay the itemised tax until June 2020; however, the tax exemption does not affect the revenue threshold.
- After the termination of the state of alarm, the exemption of businesses in the aviation industry from the social contribution tax can be applied until June 2020 (assuming that the act on the termination of the state of alarm enters into force in June).
- No tourism development contribution is to be paid for the period between 1 March 2020 and 31 December 2020. Further, the tourism tax is not to be collected and paid from 26 April 2020 until 31 December 2020, but the obligation to file the tax returns for the uncollected tax remains in effect.
- The even more favourable conditions with which benefits can be provided to employees by way of a SZÉP card (framework amounts and exemption from the social contribution tax) will remain in effect until 31 December 2020.
- The special payment facility introduced – meaning either surcharge-free payment delay of maximum 6 months, or the option of paying the tax in instalments over a maximum period of 12 months, also free of surcharge (in each case for a maximum tax amount of HUF 5 million) as well as the payment reduction of 20% (for a maximum tax amount of HUF 5 million)– can be requested until the 30th day after the end of the state of alarm.
- The reliable taxpayer status of a business may not be cancelled during the state of alarm and within 30 days afterwards with reference to an enforcement proceeding or a tax difference established due to a failure to pay the tax liability as due. Furthermore, the taxpayer will not lose its reliable status in case of failing to meet the condition of not owing a debt over HUF- 500 thousand or having a positive tax performance in the given tax year.
- In the course of determining a company’s status as a risky, or unreliable taxpayer, the tax authority shall ignore any tax differences established as owed by the taxpayer due to the breach of a tax-related obligation during the state of alarm and 30 days thereafter.
- Until the 30th day following the end of the state of alarm, it is not necessary to provide a risk deposit in the EKÁER system. The risk deposit is first to be paid on the 31st day, and its extent is to be determined on the basis of the EKÁER filings made from that day.
- If the deadline for the annual review of online cash registers or food and beverages vending machines expired during the state of alarm, this can be made up for within 120 days after the end of the state of alarm.
- The healthcare service contribution to be paid during the state of alarm after employees on unpaid leave is to be paid by the employer by the 60th day after the end of the state of alarm. (Earlier, the extension of the deadline had to be applied for.)
- The modified rules of the Labour Code concerning the scheduling of work can be applied until 1 July 2020. The rules applicable to working time banking will remain in effect until the end of the given time banking period, regardless of the termination of the state of alarm.
- The wage subsidies for employees engaged in research and development activities, as well as those working in reduced working hours can be applied for until 31 August 2020, and subsequently used until 31 December 2020.
- The increased transaction limit without strong customer identification in case of payments with bank cards can be used until 31 December 2020.
If you have any further questions in connection with this topic, we are at your disposal.
We do hope that we could be at your service with this information. Should you have any further queries, please feel free, to contact us!
The amendment of the tax laws passed last autumn brought significant changes, primarily in the data disclosure obligation, but also in the domestic summary report (sheet “M”) and in invoicing. We have already written about the amendments in our earlier newsletter; however, since the effective date of the changes is now approaching, we believe it is worth calling attention to these again. If you have any questions, please contact our experts.
Invoice data disclosure obligation
The data disclosure obligation related to invoices will be extended in two steps after 1 July 2020. First, from 1 July 2020, the value limit will be eliminated, and then from 1 January 2021, the scope of the data disclosure obligation will be extended in terms of recipients of the invoices.
From 1 July 2020, data must be reported on all invoices issued by a taxpayer to another domestic taxpayer on transactions performed in Hungary. This means that data must be reported, among other things, on:
– invoices issued under the ordinary VAT system, regardless of their value;
– invoices that are exempt from VAT because of individual exemption or if the goods/services invoiced are exempted;
– domestic invoices issued subject to reverse charge.
However, there is still no data disclosure obligation for invoices issued to persons who are not taxpayers (e.g. private individuals) or to foreign taxpayers on transactions where the place of performance is in Hungary (e.g. tax-exempt intra-Community supplies, export of goods).
The extended data disclosure obligation must be first applied to invoices issued on or after 1 July 2020. (This means that the date when the invoice is issued counts, not the date of performance.)
From 1 January 2021, the scope of invoices subject to the data disclosure obligation will be extended further. Beginning from next year, data must be reported on all invoices that were issued or should have been according to the Hungarian invoicing rules. Thus, the data disclosure obligation will extend to invoices issued to persons who are not taxpayers (however, in this case, there will be no obligation to report the name and address of the customer), as well as invoices for tax-exempt intra-Community supplies, and the export of goods. The only exceptions will be invoices on distance selling of goods or provision of services (transactions realized in the framework of the mini one-stop shop system) in which the place of performance is another member state of the Community.
In case of manual invoices (printed invoice books filled in by hand), the data disclosure must be carried out manually, within
· one calendar day after the date of invoice issuance if the amount of the VAT charged is HUF 500,000 or more,
· four calendar days in all other cases (earlier, there were 5 days for this data disclosure).
In case of invoicing software, there is no change in that the data disclosure must take place immediately when the invoice is issued, automatically, without human intervention. Therefore, the relevant development of the invoicing software used must be completed by the above deadlines. In connection with the necessary developments, we would like to note that from 1 July, also the new version 2.0 file structure must be used (new XSD scheme to be uploaded to the Online Invoice system).
An important change concerning the content of the data reported is that from 1 July 2020, when advance and final invoices are used, data must be reported with respect to the final invoice only on the difference.
We call your attention to the fact that, according to the statement by Norbert Izer, state secretary in charge of tax matters, with a view to the difficulties caused by the coronavirus pandemic, until 30 September 2020, the tax authority will not impose sanctions on businesses unable to comply with the new data disclosure obligation due to the elimination of the HUF 100 thousand limit.
Domestic summary report (sheet “M”)
Simultaneously with the extension of the scope of the data disclosure obligation, from 1 July 2020, receivers of invoices will have a data disclosure obligation on sheet “M” of their VAT returns with respect to all invoices on the basis of which the taxpayers deducts VAT.
With a view to the fact that taxpayers also deduct VAT in case of invoices issued subject to reverse charge, it was not clear if the legislator also wished to involve such invoices into the data disclosure by way of sheets “M” or only intends to eliminate the HUF 100 thousand limit. On the basis of our verbal consultations with the Hungarian Tax and Customs Administration, this latter interpretation is the correct one; in other words, the amendment is only intended to eliminate the HUF 100 thousand limit. Therefore, from 1 July 2020, all incoming invoices issued by domestic taxpayers that contain charged VAT (i.e. invoices issued under the ordinary VAT system) must be reported in case the taxpayer deducts VAT on the basis of such invoices. The report must include:
· the tax number of the taxpayer supplying the goods/service;
· the serial number of the invoice;
· the tax base shown on the invoice, as well as the amount of the VAT charged; and
· the date of performance of the invoice.
It is important that, parallel with the data disclosure, when advance and final invoices are used, data must be reported with respect to the final invoice only on the difference.
The new rules must be applied in case the taxpayer exercises its right of VAT deduction in connection with the invoice in a tax return covering the period including 1 July 2020 or thereafter, or makes any changes to the same (e.g. correcting invoice). For example, if an invoice was issued in December 2019, with the performance date also in December 2019, and the amount of the VAT charged is less than HUF 100 thousand, in case the taxpayer exercises its right of deduction in the tax returns of July 2020 (other in a tax return after that date), then the invoice must be included in sheet “M”.
Changes in the rules of invoicing
From 1 July 2020:
· invoices must include the first eight digits of the Hungarian tax number/group identification number of the customer, if the issuer of the invoice has its registered seat or a permanent establishment in Hungary;
· the time limit for the issuance of invoices is reduced from 15 days to 8 days.
The currently effective provisions of the VAT Act do not prescribe an obligation to issue an invoice in case of certain tax-exempt transactions, provided that the taxpayer issues another accounting document. From 1 July 2020, however, the following activities will be removed from this circle:
· other education;
· tax-exempt sale of real property;
· provision of human healthcare services;
· provision of dental or dental technician’s services;
· certain services provided by a cooperating community to its members.
Therefore, even such transactions will keep their tax-exempt status, but after the amendment becomes effective, it will be required to issue invoices for their performance.
We do hope that we could be at your service with this information. Should you have any further queries, please feel free, to contact us!
On 3rd June 2020, the Hungarian Parliament passed some amendments of tax laws. In the following, we summarize the most important provisions of these amendments.
Retail tax
The new law essentially declares the pandemic-related special tax imposed on major retail companies, earlier introduced by way of a government decree with a view to the pandemic situation (and applicable only until the end of the state of alarm, as a permanent tax called the retail tax.
Like in the case of the pandemic-related special tax, the retail tax will also apply to companies whose net revenue derived from retail activities reaches the amount of HUF 500 million in the given tax year, regardless of the method of retail trade.
There is no change in the definition of retail activities, in the tax base and the tax rate either from the pandemic-related special tax, as discussed in our earlier newsletter. It should be noted that, from the point of view of the tax liability, no significance is attached to the TEÁOR activity classification of the company or whether any the activities listed are performed as the principal activity of the company: the tax liability is incurred simply by engaging in the given business activities. Further, it should be underlined that a special provision prevents tax optimisation in case of affiliated enterprises. The net revenues of such taxpayers derived from retail activities need to be combined, the progressive tax rate must be applied to the resulting consolidated tax base.
The tax should be declared and paid until the last day of the 5th month following the given tax year (in case of companies, where the tax year corresponds to the calendar year, it means 31st May). In addition, the taxpayers are also obliged to declare and pay tax advances, which – according to the main rule – should be fulfilled in two equal instalments until the 20th day of the 7th month and until the 20th day of the 10th month of the given tax year (in case of companies, where the tax year corresponds to the calendar year, it shall mean the 20th July and 20th October).
The taxpayers not obliged to pay retail tax do not need to submit tax and tax advance returns.
The approved law rule will repeal the previous government decree issued on the same subject. In this regard – and with respect to the interim introduction of the tax – special rules will be introduced with respect to the determination of the taxable base for 2020 and on the payment of the corresponding tax advances.
With respect to 2020 the taxpayers, whose tax year is the same as the calendar year should pay the tax for the proportionated part of the year, for the period between 1st May and 31st December.
Assuming, that the bill, which was approved by the Parliament, will come into force in June, calendar year taxpayers should pay
- until 30th June 2020 monthly tax advance based on the government decree (already declared)
- until 30th August 2020 3 months of advance, based on the government decree, as well
- until 20th October 2020 3 months of advance, based on the government decree.
However, considering the tax advance declaration liability as per the government decree, which was due until 31st May, there is no further tax advance declaration obligation for 2020.
Corporate income tax: development reserve
Government Decree 171/2020 (IV.30.), in force from 1 May 2020, introduced more relaxed rules related to the development reserve during the state of alarm. With the amendments now passed, these favourable rules have been made permanent, will be built into the law and the decree shall be repealed. On the basis of the above, with the elimination of the earlier 50% limit, the option to reduce the corporate income tax base related to the development reserve (which practically means depreciation applied earlier) can be used for up to the entire amount of the pre-tax profit. The earlier cap of HUF 10 billion, however, must still be taken into consideration, and enterprises still have four years for the implementation of the investment. This new investment promotion measure may, at the option of the taxpayer, also be applied retroactively, for the 2019 tax year. If the taxpayer decides to apply the new rules retroactively, but has already approved its financial statement for 2019 and has filed its related corporate income tax returns, then these can be modified by way of a self-revision, in accordance with the rules of accounting controls. In such cases, the self-revision of the corporate income tax returns must be carried out by 30 September 2020.
Provisions related to the reduction of the social contribution tax rate
The government decree on the social contribution (“szocho”) and on corresponding amendments will be repealed and they will be introduced to the respective laws. Thus, as a result of the amendment, the reduction of the rate of the social contribution tax to 15.5% (which is in force from 1 July 2020) will remain in effect also after the end of the state of alarm. In connection with the above, in case a private individual is required to pay the social contribution tax after an income, then in the future 87% of the income (instead of the earlier 85%) must be taken into consideration when determining the tax base.
Simplified public contribution (“ekho”) and the itemised tax of small businesses (“kata”)
In line with the reduction of the rate of the social contribution tax, the burdens related to other “small taxes” will also be reduced:
- from 1 July 2020, the rate of the simplified public contribution will be reduced from 17.5% to 15.5%;
- also from 1 July 2020, the base of benefits will also increase in case of businesses opting to pay the itemised tax of small businesses, as follows:
- from HUF 98,100 to HUF 102,000 in case of HUF 50,000 of itemised tax per month;
- from HUF 164,000 to HUF 170,000 in case of HUF 50,000 of itemised tax per month;
- from 1 January 2021, the rate of the small business tax (“kiva”) will be reduced from the earlier 12% to 11%.
The refunding of the pandemic-related special tax imposed on credit institutions
The pandemic-related special tax imposed on credit institutions, which was introduced earlier by way of a government decree, is “built into” the Special Tax Act, and at the same time the government decree will be repealed. The pandemic-related special tax is still only to be paid by credit institutions for the 2020 tax year.
A new provision now introduced is that a tax allowance may be applied for the special tax, and that credit institutions will be refunded the amount of the tax paid, in the form of tax deductions in five equal instalments over the course of five years from 2021.
We do hope that we could be at your service with this information. Should you have any further queries, please feel free, to contact us!
As discussed in our earlier newsletter, (in accordance with Government Decree 140/2020 promulgated as a part of the Economy Protection Action Plan) employers do not have to pay social contribution tax for benefits provided via SZÉP Cards in the period between 22 April and 30 June 2020. It is good news that Government Decree 225/2020 enacted on 22 May 2020 extends the social contribution tax exemption for SZÉP Card benefits until 31 December 2020. Therefore, until the end of this year the tax burden on such benefits remains 15%.
We do hope that we could be at your service with this information. Should you have any further queries, please feel free, to contact us!