Act XLV of 2022 amending certain tax laws has been promulgated, and the more relevant tax changes that came into force on 1 January 2023 are presented below.
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General sales tax
Creation of tax liability
The scope of tax liability of a person or organisation not acting as a taxable person is extended to cases where a person or organisation not otherwise acting as a taxable person sells a built property (part of a property) and a part of the land belonging to it in series, provided that the first use for its intended purpose has been made, but the purpose or number of the units of use as a separate destination has been changed and 2 years have not yet elapsed between the issue of the official certificate certifying this and the sale.
Succession - Transfer of agricultural holding
The legal effect of the supply of goods or services does not apply to the transfer of a holding, i.e. the transfer of a holding under Act CXLIII of 2021 on the Transfer of Agricultural Holdings constitutes a succession for VAT purposes under the rules in force from 1 January 2023.
Reverse charge
In the future, work to change the purpose of real estate and work that does not require a building permit or simple notification, but may require other official permits, will be subject to reverse charge in the context of construction and installation services.
This amendment was necessary because, although the concept of building permit was to be interpreted broadly in this area, it was also the reason for a certain degree of uncertainty as to its interpretation.
As a result of the change, a transaction (real estate related - construction works) will be subject to reverse charge taxation even if the real estate related project is subject to other official authorisations or notifications (e.g. heritage protection authorisation, notification).
In principle, the amendment will apply to transactions completed after 1 January 2023. The exception to this general rule is if the date of assessment of the tax due (Article 60 of the VAT Act) for the recipient of the service is earlier than 31 December 2022. In the event that an advance payment is made to the recipient of the service before 31 December 2022, the tax liability arises on the consideration less the advance payment.
Tax exemption
The exemption does not apply to intra-Community distance and import distance supplies, so these receipts are not included in the threshold for the exemption.
A taxable person who is exempt from VAT will also be entitled to deduct input tax and import VAT, provided that the conditions for deduction are otherwise met.
The ceiling also does not include the consideration for the sale of immovable property (part of immovable property) and of a part of the land forming part of it, the first use of which for its intended purpose has been made, but the use of which as a separate use has been changed or the number of uses has been changed and the period of 2 years between the issue of the official certificate certifying this and the sale has not yet elapsed.
Applicability of a reduced VAT rate of 5%
The period of applicability of the reduced VAT rate for newly built residential property has been extended until 31 December 2024.
Special rules apply if the date of completion falls between 1 January 2025 and 31 December 2028, in which case the reduced rate applies if, in the case of construction work subject to a building permit, the permit for the construction of the residential property becomes final by 31 December 2024 or the construction work subject to a simple notification under the Act on the Shaping and Protection of the Built Environment is notified by 31 December 2024 at the latest.
Questions relating to invoices and receipts
If the invoicing between the parties is in a foreign currency, the tax passed on must be indicated in HUF if the supply of goods or services is subject to tax in Hungary.
In the case of receipts issued by machine, but not by cash register, the obligation to report the data will continue to apply.
Income from the transfer of immovable property or rights
In the case of property acquired during the marriage, the date of acquisition is the same for both spouses (unless the matrimonial property contract provides otherwise).
In other words, if the title is registered in the name of only one of the spouses at the time of acquisition and the other spouse's title is registered later, the date of acquisition of the property is the same for both spouses (linked to the first acquisition date).
Confidential asset management
As a result of the amendment, a trust set up by a private individual for the purpose of making a distribution of assets for the benefit of the individual as beneficiary will be entitled to enter into a permanent investment contract.
Special Employee Beneficial Ownership Scheme
The amendment seeks to clarify, inter alia, the issue of the acquisition value in the case of an acquisition of a security from a KMRP organisation through a trust.
Securities acquired by a KMRP without a trust and by a KMRP with a trust will be subject to the same tax treatment as a result of the amendment.
Corporate tax
Group corporate tax residence
As a result of the amendment, a group corporate taxpayer will cease to be a member of a group as a result of the opening of winding-up, liquidation or compulsory liquidation proceedings or the termination of the taxpayer without winding-up or liquidation proceedings.
Item reducing the taxable amount
As a result of the amendment, income from a permanent investment established under the Personal Income Tax Act acquired by a trust, foundation or trust management foundation will be treated as a tax base reducing item (e.g. foundation).
A tax base reduction may also be claimed for the establishment of an investment in an electric charging station.
The taxpayer has a choice in this respect and may declare that the relief is being claimed on the basis of the Crisis Communication (Commission Communication 2022/C 131 I/01 on a Temporary Crisis Framework for State Aid Measures to Support the Economy following Russia's aggression against Ukraine) instead of the de minimis Regulation.
Accrued losses
The amendment on the accounting of carry-forward losses provides that the deductible amount of carry-forward losses not yet claimed against the tax base, but incurred up to the last day of the tax year starting in 2014, is set at 50 percent of the tax base excluding adjustments for interest deduction limitations, instead of 50 percent of the tax base.
Local Tax Act
Simplified determination of the tax base
An entrepreneur whose income for the tax year does not exceed HUF 25 million (HUF 120 million for traders opting for a flat-rate tax under the Personal Income Tax Act), calculated on an annual basis, i.e. annualised on the basis of calendar days of operation for tax years shorter than 12 months, is entitled to a simplified assessment of his business tax base.
That is, their tax base is determined on an itemised basis per income band, they are only liable to pay once a year, they only have to file a tax return under certain conditions, and they do not have to split their tax base between municipalities.
The small entrepreneur must pay the tax advance once a year or, if his income does not exceed the ceiling of the given income band for the tax year, he does not have to pay any additional tax on top of the tax advance paid for the tax year.
A new category of exemption from gift tax is added. For example, the acquisition of a gift on which the donor or donee is liable to pay social security contributions or social contribution tax will be exempt from the levy.
(e.g. a gift from an employer exceeding HUF 150,000).
Exemption from transfer duty on the transfer of property in rem
In the future, transfers of real estate between related parties will be exempted from the levy if at least 50% of the net turnover of the transferee in the previous tax year was derived from the rental, operation or sale of real estate owned or leased by the transferee. If the exact figure for the previous year is not yet available, the grantor is exempted from the levy on the basis of an estimate. If the estimate is inaccurate, a penalty of 50% is imposed, and if the tax liability is discovered in the course of a subsequent audit by the tax authorities, a penalty of 100% is imposed on the taxpayer.
Tax Administration Act (Art.)
As a result of the amendment to this Act, the rules on, inter alia, refusal to assign a tax number, registration of the taxpayer, and the rules on the filing of an extraordinary return for a period not covered by a return are changed.
Act on Tax Administration (Air.)
As a result of the amendment, inter alia, there is no right of appeal against a decision rejecting a request for certification, but a decision rejecting a request for closed processing can be appealed independently, and changes are made to the place of summonses issued by the tax authority.
