On 14 July 2023, Act LIX of 2023 on the contribution of airlines and amendments to certain tax laws, containing the summer tax law amendment package, was published in the Hungarian Gazette.

I. Changes transposed from government regulations

With effect from 1 August 2023, the Summer Tax Package 2023 brings into law the following measures previously published in the Emergency Government Decree, so that these provisions can be applied after the emergency has passed.

• Personal income tax relief for mothers under 30
• Tax relief for families caring for long-term sick or seriously disabled members
• Increase in the amount of travel expenses that can be disregarded when calculating income from 15,-Ft to 30,-Ft per kilometre
• Changes to SZÉP card sub-accounts; and the part of the recreational allowance (450.000,-Ft) above the limit is considered as certain defined benefits
• the obligation for the paying party to pay a simplified tax contribution is abolished
• the public charges payable for employment in simplified employment and the basis for calculating the related pension benefits are based on the minimum wage applicable on the first day of the month concerned
• payment of corporate tax and local business tax in foreign currencythe scope of self-employed
• persons entitled to a flat-rate tax rate of 80% is extended to include the activity of training drivers of passenger vehicles (TESZOR'08 85.53.11)

II. Further changes to the 2023 summer tax package

Corporate tax

Accrual of losses

The time limit on the use of unused losses carried forward up to the last day of the tax year starting in 2014 is abolished. This means that, unlike under the previous rules, losses incurred up to 2015 can be utilised indefinitely, instead of until 31 December 2030.

(Entry into force:  15.07.2023)

Development tax relief

In March 2023, the European Commission issued a Communication on a Temporary Crisis and Transitional Framework for State Aid Measures to Support the Economy in the Context of Russian Aggression against Ukraine (Crisis Communication). As a transposition of the Crisis Communication, a new item in the Corporate Tax Code, the installation and operation of an investment of strategic importance for the transition to a net-zero emission economy, is eligible for a development tax relief. In this context, a new concept has been introduced in the Corporate Tax Law, according to which an investment of strategic importance is an investment which aims to

- manufacture of batteries, solar panels, wind turbines, heat pumps, electrolysers, carbon capture and storage equipment,

- and the manufacture of key components designed and directly used in the manufacture of such equipment,

- and the production or recovery of raw materials for the production of such equipment and components.

For the investment activity, the taxpayer must use the latest commercially available state-of-the-art production technology in terms of environmental emission.

In order to benefit from the tax relief, an application must be submitted to the Minister responsible for tax policy (Minister of Finance) before the investment begins.

The development tax relief is temporarily avaliable, the last date for registration of an application for the tax relief by the Minister of Finance is 31 December 2025.

The transitional development tax credit can only be granted for investments which, in the absence of a state aid, would be made outside an EEA State.

The amount of the temporary development tax relief that the taxpayer may claim may not exceed, together with the total amount of state aid claimed, the amount of the eligible costs of the investment, in present value

- 15% of the eligible investment costs in Budapest,
- 35% outside Budapest

provided that the total amount of a state aid which may be claimed for the investment may not exceed 100% of the eligible costs, in which calculation the temporary tax relief shall be taken into account at current prices.
(Entry into force: 15.07.2023.)

Value added tax

Mandatory return fee scheme

As part of the waste management system, from 1 January 2024, a system will be introduced at national level for the return of products placed on the market with a mandatory return fee (DRS).

 With the introduction of the system the VAT Act is amended and supplemented.  Under the new rules, the taxable amount of the supply of goods does not include the return value of non-reusable products subject to a mandatory return fee, so no VAT liability arises on the return fee when the product is sold. As a result of the changes, while the taxable amount will be reduced retroactively on the return of a product with a deposit fee, the taxable amount will not be reduced retroactively on the refund of the return fee.

A new Chapter XVII/A is added to the VAT Act. According to the special rules, the non-return of a non-reusable product subject to a compulsory return charge is considered a supply of goods and therefore gives rise to a tax liability. Product not returned under the Act: the difference between the quantity of products subject to mandatory return fees placed on the market in a given calendar year up to the settlement date and the quantity returned in that calendar year up to the settlement date. The tax is payable by the taxable person operating the compulsory return scheme. The tax is assessed on the last day of the calendar year, based on the quantity of non-reusable products not returned in that calendar year.

The taxable amount is the return fee on products not returned on the date of supply, and in determining the taxable amount the return fee is deemed to include the proportionate amount of tax payable.

(Entry into force: 01.01.2024.)

Property purchased by a taxpayer established in another EU country

In the framework of a harmonisation amendment, taxable persons not established in the country but established in another EU Member State will be able to recover input VAT on the purchase of domestic real estate under the special VAT refund procedure (ELEKÁFA). Previously, this was only possible by filing a Hungarian VAT return.

Under the transitional provision, refunds may be claimed for input VAT incurred after 31 December 2021 where the deductible tax has not yet been claimed by other means (in a return or special refund procedure).

(Entry into force: 15.07.2023)

E-receipt

An electronic receipt (e-nyugta) is also expected to be introduced from 2024, along with the electronic invoice. The e-receipt is created digitally and is considered authentic. Its introduction is motivated by the increasing digitalisation and the need to reduce the amount of waste generated. In preparation for the introduction, the VAT Act has been amended, which defines the terms necessary for the regulation of e-receipt (e-receipt, e-cash register, receipt register, receipt provider, customer application) and gives the Minister responsible for tax policy the power to issue a decree on the regulation of e-shopping.

According to the related amendment to the Act on the Rules of Taxation, from 1 July 2024, the e-receipt will automatically provide real-time data to the tax authority and the receipt provider via an IT connection.

(Entry into force: 15.07.2023)

Rules for issuing an invoice

The taxable person must ensure that the invoice is issued at the latest by the time of payment or, in the case of advance payment, by the time the tax due is assessed, but not later than a reasonable period of time thereafter. Under the previous legislation, a reasonable period of time was deemed to be an immediate issue of an invoice if the consideration was paid in cash or cash equivalent. The amendment provides that, except for intra-Community supplies, where
- payment of the consideration is made by the time of execution (or, in the case of a summary invoice, on the day of performance),
- where an advance payment is made, the consideration is refunded until the tax due is determined,
irrespective of the method of payment, there is an obligation to issue an invoice without delay.
(Entry into force: 15.07.2023)

Tax rate on sales of newspapers

The VAT rate for the supply of a daily newspaper published at least four times a week is 0%.

(Entry into force: 01.01.2024)

Social contribution tax

Persons eligible for tax relief
Under the amendment to the Act, the definition of a person entering the labour market is clarified.
At the same time, it is specified that a worker who is a third-country national can not be considered as such. In other words, a worker who is a national of a state not covered by a bilateral social security agreement between the European Economic Area and Hungary cannot benefit from the labour market entrants' allowance.

(Entry into force: 14.08.2023.)

Tax liability for persons who qualify as foreigners under the Social Insurance Code

A significant change in relation to foreigners is that a person who qualifies as a foreigner under the Social Insurance Code has not been subject to tax on fringe benefits (Section 71 of the Income Tax Act), certain defined benefits not qualifying as fringe benefits (Section 70 of the Income Tax Act) and income from interest relief (Section 70 of the Income Tax Act). As of 14 August 2023, the scope of fringe benefits and certain defined benefits will also be taxable for persons who qualify as foreigners under the Social Insurance Contributions Act, and the exemption will apply only to income from interest relief.
(Entry into force: 14.08.2023.)

Procedural tax legislation

Reliable taxpayer rating

The tax authority does not take into account enforcement requests that do not exceed HUF 100,000 when classifying taxpayers.

(Entry into force: 15.07.2023)

Qualification as a taxpayer with no public debt

The taxpayer's classification as a taxpayer without public debt is maintained if the taxpayer has no public debt not exceeding HUF 30,000 and no net tax debt not exceeding HUF 5,000 registered with the tax authority on the last day of the month preceding the publication.

 (Entry into force: 01.11.2023)

Cancellation of tax identification number

A new rule introduced in the Act on the Rules of Taxation is that if a taxpayer who is obliged to use electronic administration does not have an official contact (company gateway), the tax authority will cancel his/her tax number.

Under the amendment to the Act on the Rules of Taxation, the tax number will also be cancelled if the taxpayer fails to comply with the obligation to file the monthly 08 return within 180 days instead of the previous 365 days from the statutory deadline, despite a request from the tax authority.

(Entry into force: 15.07.2023)

Vehicle tax

The deadline for paying vehicle tax has been changed from twice a year to once a year, with a lump sum payment due by 15 April. The Act on the Rules of Taxation also contains an easing in this respect, as taxpayers who are unable to pay the tax in one lump sum may submit a request by 30 June of the year in question,to pay tha tax in up to five instalments. The deadline for submitting the application is statute-barred.

(Entry into force: 01.01.2024)

Conditional tax assessment and arm's length price procedure

A significant change is that it will be possible to submit a conditional tax assessment application for type contracts, with a fee of HUF 10 million. A type contract is a transaction between a taxpayer and an indeterminable number of persons or a predeterminable number of persons who cannot be identified.
In addition, the fee for a conditional tax assessment application will also change from HUF 5 million to HUF 8 million, and from HUF 8 million to HUF 12 million in the case of an emergency procedure.
(Entry into force:14.08.2023.)

The fee for the procedure for establishing arm’s length price will also increase again, from HUF 5 million to HUF 8 million in the case of unilateral procedures and from HUF 8 million to HUF 12 million in the case of multilateral procedures.

(Entry into force: 15.07.2023)

Automatic instalment payment for legal persons

To make things easier for businesses, the amendment to the Act on the Rules of Taxation now allows legal entities as well as individuals to apply to the tax authority for a maximum of six monthly instalments of up to HUF 1 million per year, free of surcharges.  

(Entry into force: 12.10.2023)

Tax Authority provides data for the developers

According to a new rule, the tax authority will ex officio inform the developer of the invoicing software providing online invoice data electronically about the technical and IT information needed to identify and correct the causes of incorrect data, as well as the name and tax number of the invoice issuer.

(Entry into force: 15.07.2023)

Local Business Tax

New regulation on temporary work agencies

Under the amended legislation, a temporary work agency is deemed to have a place of business in the territory of the municipality where its temporary workers work for a total of at least 21 000 hours in the tax year.

(Enters into force: 01.01.2024)

Innovation contribution

Determination of the base of the contribution

The definition of the innovation levy base will be aligned with the local business tax base. As a consequence of the amendment, the contribution base will be the local business tax base determined on the basis of the arm's length price.

(Entry into force: 14.08.2023)

New rule for small business taxpayers

A small business taxpayer, if liable to pay an innovation contribution, may also determine its base on the basis of its simplified local business tax base. The choice is made for a tax year and must be declared on the contribution return for the tax year by the deadline for filing it.

The taxpayer may use this method of calculating the innovation contribution base for the first time for the tax year 2023 if the deadline for filing the return has not yet expired on 14 August 2023.

(Entry into force: 14.08.2023)