Mission Statement

There are several changes in the regulations of accountancy, VAT, corporate tax, small taxpayers tax, personal income tax, excise duty, local tax, social contribution tax, health contribution.

Changes in accountancy regulation from 2020

• Private entrepreneurs may establish one-person limited liability companies (Kft.).
• Depreciation of the small value assets - the limit for immediate depreciation rises from 100.000.-HUF to 200.000.-HUF.

Changes in the value added tax (VAT) from 2020

Irrecoverable receivables in VAT legislation

The VAT law will allows irrecoverable receivables to be recognized and the amount to be deducted partly of fully from payable VAT. In order to do so, taxpayers should fulfill the following requirements:

-There is no cover for the receivable during a forced collection process -The receivable was released during a bankruptcy or forced dissolution process or there is no cover for it -There is no cover for the receivable based in a written certificate issued by the officer of the forced dissolution

VAT percentage of the short-term rental activity

The VAT rate of the short-term rental activity from 2020 will decrease from 18% to 5%. This is applicable for bookings made after 1st January 2020.

Expansion of the data submission of invoicing activity

From 1st July 2020, all invoices issued to another domestic VAT subjects must be reported independently of the VAT amount (including VAT free invoices also!). From 1st January 2020, all invoices must be reported whether the invoice is issued to another VAT payer or not.

Data indicated in the invoice

From 1st July 2020, the tax number of the buyer (customer) must be indicated in the invoices. The maximum issuance period (i.e. the maximum time that may be elapsed from the fulfillment till the issuance) is narrowed down from 15 days to 8 days.

Changes in corporate income tax from 2020

The obligation of fill-up

Taxpayer will no more be required to fill up their corporate income tax at the end of the financial years. This obligation was already driven out in 2019.

Improvement tax allowance

From 24th July 2019 the maximum amount of improvement reserve is decreased to 300 million HUF. This sum will further be lowered to 200 million HUF (2021) and 50 million HUF (2022).

Small taxpayers’ tax (KIVA) changes from 2020

The rate of KIVA is decreased to 12%.

The definition of the dividend received will be specified: in the future, dividend received should not be calculated in the overall income and, therefore, is not considered as tax basis.

Changes in personal income tax (SZJA) from 2020

Tax allowance for mothers with 4 or more children

Those mothers, who have more than 4 or more children (including the adopted ones also) and raise them in their own household, receive a full personal tax exempt. In parallel to this, they are entitled to obtain the family tax and social security allowances and get a refund from their salaries.

Social security tax changes from 2020

Social contribution tax

The rate of social contribution tax is lowered to 17.5% from 1st July 2019.

Merge of personal social security contributions

From 1st July 2020, the health contribution and unemployment contribution will be merged into one tax with 8.5% rate.

Minimum basis of contributions

The minimum tax basis of contributions and social security tax for those who are employed will be the 30% of official minimal wage independent of the actual wage. This regulation is “designed” for those who e.g. apply a 2 hours per week employment to minimize the taxes to be paid.

Tax exemption of retired persons

From 1st July 2020, all employment forms (including work, assignment contracts and personal contribution in a company) will fall under full personal social security tax (i.e. the contributions that are deducted from the gross salary) exemption. Those who are retired due to their age, will have not to pay social contribution tax also.

Social security tax of engagements

From 1st July 2020, the tax of any legal employment relationships that are not considered work contracts will be 18.5%.

Health contribution fee, invalidation of social security number (TAJ)

From 1st January 2020, the amount of health contribution fee will be raised to 7.710.-HUF/month/capita.

There will be also a new legislation that requires the individuals to have not more than 3 months of unpaid health contribution fee otherwise the social security number (TAJ) will be invalidated.

Minimum wage 2020

The minimum wage from 2020 will be gross 161.000.-HUF, the guaranteed minimum wage (in case of a job that requires at least a secondary school education) will be gross 210.600.-HUF

Changes in local taxes from 2020

Local turnover tax declaration

Local turnover tax declarations will not be forwarded by NAV unless all the errors that emerge are corrected.

Tourism Improvement Contribution

From 1st January 2020, the short-term rental, in addition to restaurants, will be the subject of tourism improvement contribution. The rate will be 4% of the income realized.

Changes of the excise duty from 2020

Cigarettes

From 1st Janary, 2020 the excise duty of cigarettes will be 20.500.-HUF/1000 pieces. Excise duty regarding to other tobacco products will be 20.100.-HUF. (Whispering Tree Blog)

Personal income tax

Mothers having four children are entitled to full exemption from personal income tax.

Social contribution tax

The social contribution tax decreases from 19,% to 17,5 %.

Local business tax

The only way to submit a tax return through the NAV system if it was correct.

VAT

The VAT rate of hotel and accommodation services is 5%.

Advertising tax

The rate of advertising tax will be temporarily reduced to 0% from 1, July, 2019 until 31. December, 2022.

Health service contribution

The amount of the health contribution will be 7 710 Ft from 1, January, 2019.

EVA

The simplified entrepreneurial tax (EVA) in Hungary is to be canceled from 1, January, 2020.

KIVA

The rate for small business tax (KIVA) is to be reduced from 13% to 12% from 1, January, 2020.

EKHO

The bill would allow employees of international sports organizations to choose the simplified contribution to public revenues (EKHO). Allowances granted as part of sports diplomacy would also be exempt from tax.

Corporate tax

The provisions related to exit taxation are to be supplemented, while provisions are being introduced on tax evasion stemming from different legal classifications of the same situation.

Transfer pricing

Based on the amendment, transfer pricing rules are applicable in the event of non-cash contributions not just for existing controlling members, but also for members (shareholders) becoming controlling members (shareholders) with non-cash contributions.

International tax cooperation

The bill implements the obligation from the DAC 6 Directive that is set for intermediaries to report data to the tax authority in relation to cross-border arrangements. The reporting obligation does not apply to VAT, excise tax and contributions. A default penalty of up to HUF 500,000 (roughly EUR 1,560) can be imposed upon failure to comply with the reporting obligation, or in the case of delayed, incorrect, false or incomplete execution thereof. The penalty can total up to HUF 5 million (roughly EUR 15,600) if the obligation is not met, or not lawfully met, by the deadline given by the tax authority in Hungary for the reporting. The first reporting deadline is 31 August 2020 (for the period between 25 June 2018 and 1 July 2020). (Source: WTS Klient)

VAT changes

50 percent of the VAT on car leasing is not deductible if business use is not clarified

It is needed to examine relation to the business activity. If the taxable person eligible for a tax deduction it can apply the 50 percent VAT deduction regardless the actual level of business and private use.

Tax-exempt status up to 12 million forints

According to the proposal, the value limit of opting for tax-exempt status is increased from 8 to 12 million forints.

Interim regulations relating to 5 % VAT on building flats

According to the proposal, the preferential, 5 % VAT rate will apply to the sale of residential properties that satisfy all of the following conditions on 31 December 2019:

• documents were filed to local government,
• the condition of building is at least structurally completed

Changes in the rules of personal income tax, social security, and social contribution

The autumn tax package includes a number of changes concerning personal income tax, social security regulations and small taxpayers' itemized lump sum tax ("KATA").

Possibilities for dividing family tax base allowance extended

In relation to the incomes included in the consolidated tax base, we have to point out the extension of the possibilities for the division of family tax base allowance. In cases when the individual receives increased amount family allowance but has practically no other income (e.g. in the case of first-degree students of higher education institutions, persons with altered working capacity, persons who have reached the old-age pension age limit etc.) the division will be applicable from 1 January 2019.

Social contribution tax

From 1 January 2019, the tax rate will be 19.5 percent.

The Hungarian Government presented its new tax package and a draft law on the social contribution tax on 19 June 2018.

Personal income tax

SZÉP card remains the only fringe benefit. From 1 January 2019, the three sub-accounts of the SZÉP cards would remain the only way to provide fringe benefits at a reduced tax rate.

According to the above the 100 thousand HUF cash benefit introduced last year will also be canceled. Benefits for giving tickets to sport and cultural events, mobility purpose housing contribution, benefit regarding risk insurance fees and student loan repayment will be also canceled.

Corporate tax

It is to raise the maximum amount of the development reserve from HUF 500 million to HUF 10 billion (roughly from EUR 1.5 million to EUR 30 million) from 1 January 2019. (WTS)

Social contribution tax

Social and health-care contribution taxes will remain 19.5%. Social and health-care contribution taxes will be aggregated from 1 January 2019, therefore the incomes currently taxed with 14 % tax rate will be taxed with 19.5 %. Currently, regarding these incomes such as dividend income, health-care contribution to be paid is capped at 450 000 HUF per year. According to the act the cap will be amended so that social contribution tax shall be paid to the extent the total amount of incomes subject to social contribution tax reaches twenty-four times the minimal wage. Amendments regarding social contribution tax state that benefit for the employment of employees under 25 or over 55 years will be canceled.

Value added tax

The VAT Act is amended with rules on the transfer of vouchers, which primarily differentiates between single-purpose and multi-purpose vouchers regarding tax payment liability. The aim is to levy the tax upon the issuance of the voucher.

If a taxpayer is only settled in one country within the EU, then below the defined threshold tax must be paid on remote services in the country where the taxpayer is settled, according to the local regulations. This simplification refers to remotely provided services provided to non-taxpayers settled in a different Member State from that of the taxpayer, if the aggregate amount of the consideration for the services without taxes does not exceed EUR 10,000 or a corresponding amount in the national currency, either in the reporting year or in the previous year.

Standard 5% tax rate for milk types. UHT milks would be included under the scope of the reduced 5% VAT rate.

Regulation (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data.

The regulation is an essential step to strengthen citizens' fundamental rights in the digital age and facilitate business by simplifying rules for companies in the digital single market. A single law will also do away with the current fragmentation and costly administrative burdens.

The regulation came into force on 24 May 2016 and will apply from 25 May 2018.

The filing of tax return is based on self-assessment. The tax authority prepares a plan for the tax return of private individuals who are not entrepreneurs on the basis of the available data. This plan becomes final if the private individual accepts it or he/she does not file the tax return in any other way.

Employers and payers are obliged to deduct taxes and/or tax advances from wages and other payments. Private individuals are obliged to pay income tax and/or income tax advances themselves if their income is from sources other than payers or employers.

Private individuals must file their annual tax returns by the 22 May, 2018, private individuals required to pay VAT and individual entrepreneurs must file by the 25 February, 2018. The possible outstanding taxes are also to be paid by these dates, taking the already withheld tax and paid tax advance into consideration.

The obligation to file a tax return must be performed on the ‘SZJA form of the current year –in the case of income for the year 2017 on 17SZJA form.

Rental income arose from residential property will be subject to a 15% individual income tax (as earlier) health care charge of 14% will be dismissed even income is higher than HUF 1 million / year.

Increase in amount of housing allowance to facilitate mobility that can be provided tax-free.

Alongside modifying the detailed rules, the bill would significantly increase the amounts that can currently be provided tax free. The monthly allowance would increase from the current ratios to 60 percent in the first 24 months of employment, 40 percent in the next 24 months, and then to 20 percent over the following 12 months.

There are already three properties to choose for a regular flat-rate short-term activity next year. A license is required for the activity and can be provided for the same private individual up to 90 days. The flat tax is HUF 38,400 per room and per year.

The VAT rate on Internet access services will be reduced from 18% to 5% and the VAT rate on fish products will be reduced from 27% to 5%.

The reduction of the limit requiring detailed VAT reporting (monthly returns, domestic statements) from HUF 1 million to HUF 100,000, which was planned to become effective as of 1 July 2017, has been postponed to 1 July 2018.

The requirement to report to the tax authorities invoices with a minimum value of HUF 100,000 has been postponed to 1 July 2018.

Hungarian corporate entities will be required to declare foreign bank accounts by 31 January 2018.

Itemised tax of small businesses (“KATA”)

From next year full-time students registered in institutes of secondary or higher education will no longer be considered as full-time entrepreneurs, which means that they can will only have to pay 25,000 HUF as the small taxpayer’s flat tax instead of 50,000 HUF.

Under current regulation “ KATA” subject status will be terminated if the net tax debt of the small taxpayer exceeds HUF 100,000 on the last day of the calendar year. From next year it will be allowed for the tax authority to suspend the process if the taxpayer pays his debt until the declaration becomes legally binding and confirms it.

Small business tax (“KIVA”)

While it was part of the tax package submitted earlier, it is still worth noting that the “kiva” tax rate will continue to decrease further from 2018, by another percent point, to 13%. In the future, the taxpayer status will not be terminated if the business pays its outstanding tax obligation exceeding 100,000 HUF by the date when the decision on the termination of the tax status becomes effective.

In harmony with earlier interpretations of the law, the text of the legislation will clearly provide now that in case of switching to “KIVA” taxpayer status, an independent business year is to be closed, and the business needs to prepare and publish its report on that business year.

Hungarian legislation had a new requirement for all business organizations to arrange their official affairs through a safe, secure platform.

Business organisations included in the company register must register their contact details used for electronic communication (business gate) at the register for administration orders (hereinafter referred to as: E-Administration Register) or at the court of registration by 30 August 2017.

The online registration site is available at the following addresses (currently only in Hungarian):

• http://cegkapu.gov.hu by clicking on “bejelentkezés”,
• http://ekozig.mo.hu/ugyintezes by clicking on the banner for the business gate at the top of the page,
• http://ekozig.mo.hu/ugyintezes/32/Vállalkozás by clicking on the business gate link or icon, then on the “elektronikusan” button.

http://wtsklient.hu/en/2017/08/01/business-gate-registration/

The Hungarian healthcare system is largely free of charge for anyone who can provide a Hungarian social insurance number and card (TAJ szám, TAJ kártya) or who holds a valid EU International Health Card (EHIC). Medical services in Hungary are substantially financed by the state budget, which takes a monthly contribution from every locally contracted employee’s salary, and no payment is claimed for the actual treatment. With a valid Hungarian social security account, you are entitled to full medical care, excluding prescription charges.

Healthcare for EU citizens

EU citizens who are not paid a salary locally but who possess an EHIC are also treated free of charge to an extent. Only those treatments are free of charge, which are considered urgent and necessary by a given doctor. Any additional hospital care or the cost of non-urgent care would need to be settled personally by the patient. When using the EHIC, reimbursement of the cost of treatment varies from country to country, depending on the agreement between Hungary and the given country. Usually the two health insurance authorities settle the re-invoicing of the cost. Before arrival, please investigate this with your own state health authority.

Should your employment be terminated for any reason, then after 46 days of the termination, you need to take out a private contract with the Hungarian state healthcare authority. The fee payable could be less than 7,000 HUF per month but could be somewhat higher, depending on the level of social security contributions you have paid during the current financial year to date.

For a family member of an EU citizen who has been living in Hungary for a year (this is counted from the issuing date of the address card) it is mandatory to make a private contract with the state health authority. The fee payable depends on the given year’s fees when you have to make this contract.

For children under the age of 18 the health care system is free of charge, though parents will need to apply for a Hungarian social security card for any child, once they have obtained a Hungarian Registration and an address card.

Healthcare for Non-EU citizens

A Non-EU citizen is entitled to take any medical care free of charge in case he or she is on Hungarian payroll and an employee of a Hungarian company, just like their Hungarian and EU colleagues.

An employee’s family members in any case need to present proof of comprehensive health insurance for their residence permit application. This is important as family members of non-EU employees on local payroll are not covered by the employee’s Hungarian state social security payments.

It is possible for non-EU family members to access the state healthcare system via a private contract with the health authority. The fee payable is calculated as follows: for children under the age of 18, 30% of that given year’s gross minimum monthly wage needs to be paid (by yellow postal check) per month. For applicants over the age of 18, the percentage is higher, at 50% of the gross minimum wage. Once the first payment is made, the individual has the right to urgent and necessary treatment only. Full access to the system is only given after 7 months’ payments have been made. An applicant may gain full access to the system immediately but then they must pay in 7 months’ contributions immediately. As a non-EU resident it’s not compulsory to contract with the Hungarian state healthcare system, but it certainly is compulsory to hold private health insurance that would cover any possible eventualities.

Private healthcare

There are plenty of private clinics and healthcare options for anyone looking to be treated in English or another foreign language and in more comfortable surroundings than one might find in a typical state hospital or clinic in Hungary. Payment options include already holding an international insurance policy that one of the private clinics accepts or it is also possible to take out a local private policy with one of the clinics. This would give coverage up to a certain point but it’s important to note that most of the private clinics don’t include in-patient care or more complex diagnosis such as CT and MRI and if the patient doesn’t hold state health insurance or a comprehensive international health insurance policy. In general it’s best to talk to at least one private clinic and get a feel for what they do and do not cover.

https://www.interrelo.com/portfolio/hungary/

The aggregated tax base can be reduced with the family allowance (Családi Adókedvezmény).

The volume of the family allowance is equal to the fixed allowance amount multiplied by the number of “beneficiary dependent children”.

The calculation of the family allowance takes into account the number of dependent children of the tax payer. In case of 1 or 2 dependent children the allowance is HUF 62,500 per beneficiary dependent child, while in case of 3 or more children the allowance is HUF 206,250 per beneficiary dependent child.

What constitutes a beneficiary dependent child is determined in the so-called family law.

The amount of tax allowance can be split between spouses or life partners. (https://www.angloinfo.com)

Those who let out their homes and university students in the small taxpayer category may expect further significant easing of red tape and lower liabilities. The bill will make both the short- and long-term letting of residential properties easier. Provided the National Assembly approves the proposal, owners of rented homes will as of next year see substantially lower administrative burdens and higher tax savings, earning some HUF 3bn more.

As of 2017, owners of residential properties rented for short term may apply the most simple and cost-efficient, so-called flat-rate tax to three instead of the currently permitted one rented flat or holiday home. The payable tax is only HUF 38 400 per room, therefore it is not worth hiding income gained from providing accommodation services. (http://www.kormany.hu/en)

According to the new law, businesses issuing invoices with VAT value of more than HUF 100,000 (EUR 320)- including all modification invoices that relate to the original invoice - must report these invoices online in real time to the Hungarian Tax Authority. The new law also applied to the Hungarian VAT registrations of the foreign entities.

Failure to comply with this obligation may result in a penalty of up to HUF 500,000 (EUR 1,700) per each undeclared invoice.

The deadline of this law will be postponed until 1 July 2018.

Businesses issuing invoices using invoicing software will be required to provide real time data regarding these invoices from 1st July 2018, while businesses will be able to test the real time invoicing reporting as soon as 1 July 2017.

Regarding the new requirements for the invoicing software, companies will need to make invoicing software capable of real time data transfer by 1st of July 2018 at the latest.

It is likely that the new real time reporting obligation will be closely linked to the existing obligation to provide data in the XML format (also known as Standard Accounting File or SAF). We recommend reviewing your SAF export function and extending it further to satisfy the new requirement. Our team of IT and VAT experts can help you to understand these requirements better and provide you with the details of the enhancements needed once the HU TA publishes specification of such communication. (RSM)

Fringe benefits

In accordance with the changes of Act CXVII on Personal Income Tax (hereinafter: PIT) which comes into effect from 1 January 2017 will only be possible to grant fringe benefits to employees on the basis of two legal categories as follows:

• SZÉP Card’s annual frame amount is not changing, payments can be transferred to the existing sub-accounts, not more than 450,000 HUF per year.
• The other item with preferential taxation will be the cash benefit up to HUF 100,000 per year.

The tax base multiplier rete to the fringe benefits will be reduced from 1.19 to 1.18. The employer will pay the 15% PIT and the 14% health care charge on this amount.

Certain specific benefits

Most of the popular and well-known benefits are removed from the scope of preferential tax rated circle, involving the Erzsébet voucher, the school support benefit, the local travel pass, the coverage of school system based educational costs, and the employer contribution paid to voluntary mutual pension, health or assistance fund, or employer pension service institution. Effective from 1 January 2017, these benefits will have a burden of 43.66% instead of the burden of 34.51% paid until 31 December 2016, but will have no upper amount limits.

From year 2017, the opportunity of filing tax return proposals or simplified tax declarations will be overruled. The draft tax declaration will take the previous two methods’ place, and will be based on data reported to the tax authority during the year. The tax authority will prepare draft PIT return for taxpayers who either did not request their employers to prepare it or their request was rejected. The draft tax return will be prepared by the authority for those individuals who are registered for electronic tax filing. Those individuals can also request the tax authority to prepare their draft returns who are not registered for electronic tax filing, but they have to file a written request not later than 15 March 2016.

The draft tax declarations can be corrected and/or supplemented until 20 May. The acceptance of the draft declaration is regarded as the individual’s tax declaration.

The ‘53’ tax return and declaration prepared by the employer are also possible ways of fulfilling legal obligations.

Several VAT rates are used: it has been long overdue in the case of food, the reduction of VAT in hospitality has not really been thought out in detail, and the reduced VAT rate of the Internet is rather a political will than an economic decision. The reporting obligation concerning online billing is significantly tightened and the use of persons authorized to accept service shall also be reported.

The revenue value limit of tax exempt status is increased to HUF 8 million. If the tax-exempt taxpayer exceeded the valid value limit of HUF 6 million in 2015, then he can still choose to be tax-exempt in 2017.

A real property built on the basis of a simple report shall be considered a new real property for a term of 2 years following the date of issue of the official certificate of the completion of construction.

It is obligatory to indicate the tax number of the buyer on invoices if the amount of the charge VAT reaches or exceeds HUF 100,000. This value limit was HUF 1 million in 2016, therefore on invoices issued in 2016 with the fulfillment date in 2017 the rules valid in 2016 shall still be applied.

The VAT rate of Internet provision service is reduced to 18 percent. The beneficial rate may be applied if the date of the issue of the invoice and the date of tax payment are in 2017.

The VAT rate of poultry, poultry offal, egg and fresh milk is reduced to 5 percent. The VAT rate of UHT and ESL milk remains 18 percent.

The VAT rate of hospitality in restaurants is reduced to 18 percent in 2016 and 5 percent in 2018, except the turnover of intoxicating beverages.

Services related to the construction of real properties subject to simple reporting will also fall in the scope of reverse charge VAT.

The supply of certain medical services generally qualifies for exemption from VAT. Provisions for the VAT exemption applicable to medical services are contained in Paragraphs 2(3) and 2 (7) of Schedule 1 to the Value - Added Tax Consolidation Act 2010. Details of the relevant provisions are as follows:

• Professional medical care services recognized as such by the Department of Health and Children (other than dental or optical services), but only if those services are not supplied in the course of carrying on a business that wholly or partly consists of selling goods.
• Other professional medical care services that, on 1 January 2010, were recognized by the Revenue Commissioners as exempt activities.

These provisions transpose Article 132 (1) © of the VAT Directive 2006/112/EC on which Irish VAT law is based.

It is important to note that it is not just the status of the person providing the service that determines whether it is exempt from VAT but also the actual service that is being provided and the purpose for which it is being provided. In general the full range of medical services carried out for the purposes of protecting, including maintaining or restoring a patient's health, or diagnosing, treating, and if possible, curing diseases and health disorders will qualify for exemption.

Those services also include the following when provided by a recognized medical professional:

• Post-offer of employment medical examinations including medical fitness to operate machinery and undertake manual work,
• Health surveillance services, including sight and hearing tests,
• Health screening, stop smoking, and stress management programs.
• Cosmetic surgery procedures where it is clearly shown that they are required to maintain or restore a patient's health or to treat a patient’s disease or illness,
• Vaccination programs to protect employees where there is a high risk of transmission of infectious diseases.

http://www.revenue.ie/en/tax/vat/leaflets/medical-services.html#section2

Hungary: Parliament Approves VAT Cuts for 2017

On June 7, 2016, the Hungarian Parliament approved Bill T/10537, a supplementary tax package to the Ministry of Economy’s 2017 budget. As previously reported, the bill applies a 5% reduced VAT rate to sales of poultry, fresh milk, and eggs, an 18% reduced VAT rate to restaurant services, and an 18% reduced VAT rate to internet access services, effective January 1, 2017. Restaurant services will be further reduced to 5% in 2018, absent further legislation. Finally, the bill reduces the threshold for registration as a taxable person from HUF 1 million to HUF 100,000. The VAT cuts are intended to reduce the tax burden on working families, and to spur economic growth.

Personal income tax

The aim of personal income tax is for private individuals to contribute to public dues and to ensure tax revenues for the state and municipal budgets.

Taxpayers

Resident tax payers shall be subject to tax liability in respect of all their income (all-inclusive tax liability). The tax liability of non-resident private individuals shall apply to income that originates in Hungary, or income taxable in Hungary on the basis of an international convention or mutuality.

‘Resident private individual’ means: any citizen of Hungary (with the exception of dual citizens without a residence or a place of stay in Hungary), citizens of EEC member states if residing in Hungary for more than 183 days in the year, citizens of third countries with residence permits, persons with residence only in Hungary.

If the relevant countries have entered into treaties on the avoidance of dual taxation, that treaty shall prevail.

Advertisement tax

The publication or commissioning of advertisements in media services, in media published or distributed in Hungary, on outdoor advertising spaces, properties, vehicles, printed materials or on the internet in Hungarian or on a Hungarian language website is taxable in Hungary.

Taxpayers are the media content providers and news publishers that qualify as the publishers of the advertisement as well as persons using the designated device for advertising purposes or publishing the advertisement on the internet. In the case of the publication of advertisements in any of the ways specified by the Act, the taxable person is subject to the tax liability irrespective of his residence.

Subject to certain specific exceptions, the publisher of the advertisement is required to make a statement to the party commissioning the advertisement about his advertisement tax liability. Should he fail to do so, the party commissioning the advertisement will be obliged to pay the advertisement tax.

Royalties received

In Hungary, companies are obliged to pay corporate income tax on their income obtained from business activities performed for profit and other similar activities.

Provided that certain conditions are fulfilled, 50 percent of the revenues accounted as royalties reduce the tax base. The amount of this tax base reduction may not exceed 50 percent of profit before tax.

Hungary levies no withholding tax on dividends, interest or royalties, if payment is made to a company. If payment is made to a private individual, taxes are levied in accordance with the provisions of the applicable double tax treaties.