2016 Tax Law Changes in Hungary

This article presents the main tax law changes which affects on foreign investors who have business in Hungary.

Hungarian Individual Tax decreased from 16% to 15%.

The social security insurance expense for those people who aren’t insured by employment increased from 6930 Forints to 7050 Forints.

New Tax categories

From 1st January 2016 the Goverment introduced two new taxation categories.  The „reliable”  taxpayers come in for preferences, and stricter rules prevail  for the „risky” taxpayers.

The Tax Authrority qualifies „reliable” those taxpayers who are VAT registered since at least 3 years, they shouldn’t have more than 500,000 Forints tax debts, and not  „risky” taxpayers. The taxpayer’s total tax margin shouldn’t be more than the 3% of the recent year’s tax output. There is no bankrupt, liquidation, duress cancellation procedure against the taxpayer. No ongoing process of tax number suspending against the taxpayer.

Advantages of being a „Reliable” taxpayer.

The duration of a tax investigation by the Tax Authorities cannot be more than 180 days.

If the taxpayer miss to fulfill his/her commitments of notifications, avowals, supplying of datas, they don’t get penalties automatically, only after the warning of the Authority. The amount of the penalties decreased by 50% for them. They can pay the penalty in portions.

The Authority qualifies „risky” those taxpayers who are on the list of having significant tax debt or deficit, employing unregistered manpower or the Authority closed their business more than one time in a year.

For „risky” taxpayers the duration of tax investigation increases with 60 days.

The deadline of wiring back the claimed back VAT takes 75 days.

The interest rate in case of default of paying is 5 times higher than the basic interest rate of the bank of issue.

The top limit of the maximal penalty can be increased by 50% compare to the regular rules.

Other tax procedure changes

Tax registration process

The rules of tax registration process get stricter. In case of decline the stating of  tax number the examined tax debt limits decrease from 15 and 30  to 5 and 10 million Forints and the duration of the investigation increases from 180 to 360 days.

Integration of tax and customs accounts

The tax and customs office will have a concerted account and records from 1st January 2016. 

Public debt free taxpayer database

In case of the cancellation from the public debt free tax payer database the taxpayer can appeal against the cancellation within 8 days after  he/she receives the notification.

Corporate tax

Growing tax credit

From 15th June 2015 a new postponed tax paying option added to the corporate tax system. This is the growing tax credit . With this construction the companies can postpone their tax paying obligations.

Other new prominent corporate tax law-  All the expenses under 30 million Forints which came up correlated to an advertisement publication are acclaimed expense without any other extra conditions.

Local business tax

Research and development tax allowance

Taxpayers can decrease their basic local business tax with 10%   of the total amount of their  yearly Research / development („K+F”)  direct charged expenses.

From 2017 taxpayers can submit their local business tax  avowal electronically.

7,5% of highway and road fees can be deducted from the local business tax.

Fiscal charge

There is no fiscal charge after onerous buying utility vehicles and green vehicles.

No fiscal charge for  tenants and inheritors after buying real estate.

The owners of green vehicles don’t have to pay vehicle tax.




Value Added Tax

Restriction of validating Tax reduction right duration

In case of purchasing within the EU and in case of VAT established by self taxpaying-  tax reduction right will be validatable only in the period when the reducable tax revealed.

Periodically settling transaction changes

In case of periodically settling transactions the period of performance will be the  last day of the paying period or settlement according to the main rule.

Changes for grouped taxpayers

From 2016 the possibilities to join the VAT group of  economic companies operated by Govt. or local autonomies will be increased.

Exemption of Invoice issuing

If  foreign taxpayer provides telecommunication, media or other  E-communication service for Hungarian individuals, he/she doesn’t have to issue  invoice, only if the customer requires.

5% VAT key for newly built real estates

This new law applies to apartments with have less than 150 sqm place or houses with less than 300 sqm place. The new VAT key can be applied  for invoices issued after 1st January 2016. 

Lump sum price for product fee liable vehicle parts

New option for vehicle manufacturers and dealers. An option for quantity based lump sum price paying. The first domestic distributor or stockpiler can  choose the lump sum price payment for  vehicle parts.

Registration tax

No tax will be applied for the 100% electronic, aerial charged hybrid electronic, zero emission and  extended range hybrid vehicles.