Tax changes 2021-2022 in Hungary

Dear Clients! Dear Readers!

On 8 June 2021, the Parliament adopted the tax changes effective from next year, which are summarized below. In addition, the government has announced several tax simplifications for 2021, too, which are described at the end of our newsletter.

1.    Personal income tax, wage contributions

From 2022, compared to the previous revenue limit of 15 million, flat-rate taxation will be optional up to HUF 20 million (up to 10 times the minimum wage).

In the case of retail activity, this limit is approx. HUF 100 million (fifty times the minimum wage.)

Flat-rate self-employed persons can apply a cost share of 40%, which can be increased to 80% for certain activities (construction, photography, taxi, hairdressing) and to 90% for retail and agricultural activities.

The income of a sole proprietor who opts for flat-rate taxation is tax-free up to a part not exceeding half of the annual minimum wage.

There will be tax-free revenue from 2022

• Private use of a max. 300 W company electric bicycle (the acquisition which is also accepted as a business expense by the Corporate Tax Act),
• revenue from electricity generated by private individuals up to 12000 kWh per year,
• a benefit from a state foundation to help the relatives of those who have died as a result of a coronavirus epidemic.

New regulations for cryptocurrency transactions were summarized in a separate newsletter.

From 1 July 2022, the vocational training contribution will be abolished and the rate of social contribution tax will be reduced to 15% from the current 15.5%. (Discounts related to vocational training can also be claimed from the latter.)

2.    Corporate tax

An additional 20 percent (40% in the case of a founder or affiliate order of assets) of the book value of an asset or benefit given to a public interest trust foundation performing a public function may be applied as a new tax base reducing item in addition to the accounted cost and expense.

In the case of an allowance paid to a university maintained by a foundation/church or the maintainer the tax base may be reduced by threefold.

3.    Value added tax

A special VAT refund can be applied for VAT wrongly paid to the seller even within 1 year after the limitation period (so far the application had to be submitted within six months before the limitation period). This option also applies to bad debts.

The conditions for foreign VAT reciprocity with the UK will be enshrined in law, so that the refund of VAT after Brexit will be possible from January 2021.

4.    Other taxes, procedural rules

From 2022, the special tax obligation of venture capital fund managers, the stock exchange and commodity exchange service providers financial institutions will be abolished.

The rules on head office providers are being tightened. If the registered office provider is not registered with the tax authority and the company does not report a suitable registered office within 15 days, the tax authority will cancel the company’s tax number.

With regard to the epidemic, until 31 December 2021, a six-month free of charge payment deferral or a maximum of twelve-month surcharge-free instalments may be requested from the tax authority once, for a tax of up to HUF 5 million.

In case of payment difficulties max. 20% and HUF 5 million tax reductions can also be applied for, only once for a given type of tax.

The tourism development contribution shall not be paid for the period from 1 January 2021 to 31 December 2021.

Until the end of 2021, the Government extended the favourable rules on fringe benefits and certain defined benefits, modified in our previous newsletter on cafeteria

We hope that our newsletter will help you interpret and apply the new tax rules. f you have any questions, we are happy to help.

Kind regards:

ABT Treuhand Group