At the beginning of June 2021, Act LXIX of 2021 on Amending Certain Tax Laws containing the latest tax package was published in the Hungarian Gazette.

CORPORATE INCOME TAX

Public trust foundation with a public purpose

The Act on Corporate Income Tax is extended to include provisions on public trusts foundation with a public purpose.

These foundations will also benefit from a tax base allowance for donations to public benefit organisations, whether the donation or grant is made by the founder or by another taxpayer.

In addition to accounting, the tax base is reduced by

• in the case of a grant to a university of this type of foundation or ecclesiastical foundation, 300 per cent
• 20 per cent, and in the case of a founder's or contributory trust, 40 per cent

of the grant (benefit) paid to a public foundation with a public purpose, but in each case, or in the aggregate, not more than the amount of profit before taxation.

The taxable amount can be reduced if the taxpayer has a certificate issued by the university or the public trust foundation performing a public function for the purpose of determining the tax base.

However, the taxable amount must be increased by twice the amount of the deduction if the taxpayer was unable to comply with the agreement.

Based on the transitional provision, the reduction of the tax base amount in respect of a grant to a public trust performing a public function is available for the first time for transactions after the date of publication of the Act on the Public Trust Foundation with a public purpose, i.e. for transactions performed after 30 April 2021.

(Effective from 10 June 2021)

VALUE ADDED TAX

E-VAT return

The most significant change this year is e-VAT return. Based on the amendment to the law, which was already announced in 2020, the tax authority will prepare a draft return for businesses for the tax assessment period covering 1 July 2021. The draft return will be prepared by processing the data received from the invoice data disclosure and the online cash register data disclosure, and will be made available to taxpayers by the tax authority from the 12th day after the end of the tax assessment period. However, in special circumstances (succession, change of return frequency, compulsory or voluntary liquidation), this new possibility will only be available to businesses from 1 January 2022 or 1 July 2022.

The draft VAT return can be corrected, amended or completed, but it will not automatically become final in the absence of acceptance as the e-szja (electronic personal income tax return).

The exercise of the right to deduct will still be decided by the taxpayer per invoice. Once the taxpayer submits the draft, it will be deemed to declare its deductible tax and thus to have fulfilled the obligation to submit the required recapitulative statement.

The business does not have to accept the draft return provided by the tax authority, but can choose to submit its own VAT return on its own form. If the business entity also submits his return in the usual form and also accepts the draft return, the return submitted first will be considered valid.

(Effective from 1 July 2021)

Online data disclosure

The new VAT rules on e-commerce will enter into force on 1 July 2021, so from that date online reporting obligation will no longer cover supplies of services to non-taxable persons carried out in another Member State, intra-Community distance supplies and distance supplies of goods imported from third countries where the taxable person fulfils his tax obligations through the one-stop shop (OSS, IOSS).

(Effective from 1 July 2021)

Brexit - possibility of VAT refunds for taxable persons established in the United Kingdom

The United Kingdom has left the European Union, so based on a change in legislation, taxable persons established in the United Kingdom will be entitled to a refund of VAT charged domestically on a reciprocal basis for transactions carried out after 31 December 2020. Before that date, VAT refunds were provided under EU law. VAT refunds will be available as long as they are granted on a reciprocal basis between the two states.

(Effective from 10. June, 2021)

Rules for importing low-value products

Currently, import consignments with a value of less than EUR 22 are exempt from VAT. According to an amendment to the law adopted last year, this VAT exemption will be abolished, and all imported goods will be subject to import VAT. Imports of goods up to a value of EUR 150 will remain to be duty-free, but it will be possible to submit a customs declaration with reduced data content.

(Effective from 1 July 2021)

Exemption from the obligation to issue invoices

From 1 July 2021, a receipt can be issued also for an immediate transfer payment if the taxpayer is not requested to issue an invoice. However, this cannot apply to intra-Community supplies of goods.

(Effective from 1 July 2021)

SOCIAL CONTRIBUTION TAX

The tax rate

The social contribution tax rate will be reduced from 15.5% to 15% from 1 July 2022.

Tax allowance for vocational and dual training

This new tax allowance will appear in connection with the social contribution tax as a result of the restructuring of the vocational training contribution. Taxpayers who conclude a vocational training employment contract or a student employment contract as an employer will be able to benefit from the social contribution tax to claim the allowances previously available for the gross liability in respect of the vocational training contribution.

(Effective from 1 July 2022)

TAX PROCEDURAL LEGISLATION

Providers of corporate headquarters services

Based on the current provisions of the Act on the Prevention and Combating of Money Laundering and Terrorist Financing, only persons registered with the designated supervisory body may provide corporate headquarters services. This change is followed by the amending provisions on the provision of corporate headquarters services in the Acts on the Rules of Taxation. If the taxpayer registers a service provider not listed in the register of the supervisory body, the tax authority will ask the taxpayer to register another suitable headquarter or withdraw its registration for the use of the headquarters service. If the taxpayer fails to do so, the tax authority will cancel the taxpayer's tax number.

(Effective from 10 June 2021)

Determining arm’s length price

The procedures for determining the arm's length price are transferred from the competence of the tax authority to the Minister responsible for tax policy. This will allow the Minister responsible for tax policy to exercise complex professional control over the transfer pricing area.

(Effective from 1 October 2021)