Changes in tax administration

On 21 November 2023, bills T/5893 “on the amendment of certain tax laws” and T/5877 “on additional taxes to ensure a global minimum tax level and amending certain tax laws in this context” (hereinafter jointly: the Autumn Tax Package) were submitted to the Parliament of Hungary. The Autumn Tax Package proposes to make comprehensive changes to the Hungarian tax system and introduces a number of new legal institutions. In order to provide a more detailed and comprehensive picture of the changes, the Autumn Tax Package is presented in a series of professional articles, the second of which covers the changes affecting tax administration (the first part on corporate tax can be found here).

As in previous years, the changes to the tax procedure and administration rules aim to further reduce administrative burdens and to whiten the economy.

E-cash registers

With effect from 1 July 2024, the requirements applicable to e-cash registers are included in the tax administration rules.

Instead of paper receipts, e-cash registers will generate electronic receipts that will be sent to customers using a digital application. According to the bill, merchants would be required to retain the e-receipt for a period of 10 years.

In the case of omissions in connection with e-cash registers, the sanctions would be fundamentally the same as before for both distributors (fines of up to HUF 10 million) and users (fines of up to HUF 500,000 for natural persons and up to HUF 1 million for legal persons); however,

• the business premises may be closed for 12 days after the first violation by a user, and
• a fine in the maximum amount of HUF 1 million may be imposed on distributors for failure to attempt to repair a hardware-based e-cash register within five days of the date on which the distributor received the operator’s notification or for any other breach of the obligation to service a hardware-based e-cash register.

eVAT

The National Tax and Customs Administration (NAV) may not audit the VAT return submitted by a taxpayer with “reliable taxpayer” status and using the eVAT system’s machine interface until the 15th day after the due date.. Exceptions to this rule can only be made if there are reasonable grounds to suspect, on the basis of the information available, that the taxpayer is concealing income or using false supporting documents for tax purposes.

As an additional benefit of the e-VAT system, no self-revision fee will be charged introduced if the taxpayer has submitted a VAT return using the eVAT system’s computer interface and 15 days have not yet elapsed since the return was submitted or since the due date of the return if this is an earlier date.

List of taxpayers with large tax deficits / tax arrears

The rules on public disclosure concerning taxpayers with large tax deficits and tax arrears will be tightened: under the Autumn Tax Package, it is only the data of natural persons carrying out business activities, legal persons and other organizations not subject to bankruptcy, liquidation or statutory deletion proceedings could be subject to public disclosure by the tax authorities.

Further to the above, only those with tax deficits / tax arrears exceeding HUF 100 million would be included in the list, which would significantly narrow the list of those concerned (currently the limit is HUF 100 million for legal persons and HUF 10 million for natural persons). A new feature is that NAV will remove a taxpayer from the list within 8 days upon request if the taxpayer has fully complied with the prescribed payment obligations.

The possibility to query the above lists on the website of the National Tax and Customs Administration is now limited to data generated between 31 December 2014 and 10 June 2021.

The disclosure threshold for the municipal tax authority (for local tax) has been increased from HUF 100,000 to HUF 500,000 and, in this case too, is only applicable to natural persons, legal entities and other organisations carrying out business activities.

Corporate income tax groups

Under the current legislation, a company starting its activities at a time other than the start of the year may submit its application for authorisation to join a corporate income tax group at the same time when it registers with NAV.

The Autumn Tax Package will relax this: such companies will have 30 days from the date of registration with NAV.

Tax audit rules

In the case of a successor company, the time limit for a tax audit covering the tax liabilities of the predecessor is increased to 120 days if one of the predecessors was a taxpayer of highest tax capacity during the period under review or any part of it. Although the current deadline is still 120 days for taxpayers with the highest tax capacity, for other companies it is – as a general rule – only 90 days (and it may happen that a successor company is no longer a taxpayer of highest tax capacity).

Under the current rules, no comments may be made on the report containing the findings of the audit of the tax returns in case of a voluntary liquidation of a company.
The Autumn Tax Package relaxes this rule by allowing comments on the report within 8 days of its receipt.

Tax enforcement rules

The proposed new rules set forth that in case the tax authority has filed an unauthorised income withholding notice, it must pay interest at the rate of the late payment surcharge (twice the base rate of the central bank) from the date of the enforcement of the income withholding notice until the date of repayment of the tax or budgetary support unlawfully collected.

As of 1 July 2024, assets seized in the course of a tax enforcement procedure (both movable and immovable property) may be sold by the National Tax and Customs Administration under a new form, a consignment contract, if it is assumed that the price thus obtained would be higher than the price likely to be obtained at an auction or electronic auction.

This summary is based on the information available at the date of its publication and is written for general information purposes only; therefore, it does not constitute or replace personalised tax advice in any respect.