1. Corporate income tax
Top-up liability
According to the regulations effective so far, until the 20th day of the tax year’s last month taxpayers had to supplement their tax advance payment up to an amount corresponding with 90% of their corporate income tax of the subject year. With effect from the tax year 2019, depending on the decision of the entrepreneur, and from the tax year 2020 on a mandatory basis, the legislative amendment will abolish the top-up liability in the case of corporate income tax, income tax of energy suppliers and innovation contribution, which is a major administrative relief for business organisations.
Corporate income tax group
From 1 January 2019, corporate income tax group can be established, when certain legal criteria are met. The following amendments will be applicable from 2020 regarding corporate income tax groups.
The amendment will abolish the precondition of using the same currency among the members of the group.
According to the tax law amendment, business organisations commencing their activity during the year may request their membership in the corporate income tax group.
Based on the amendment, if the criteria for qualifying as corporate income tax group are not or not fully met regarding any group member in the future, then the tax authority, instead of terminating the corporate income tax group status, abolishes the group membership only of the group member concerned, that is, the corporate income tax group remains, and only the group member not complying with the conditions is excluded.
Exit taxation
If a foreign company relocates assets from its domestic place of business to its foreign place of business, or if the business activity carried out by the domestic place of business is relocated to a foreign state, the domestic place of business shall increase its tax base. The tax base increase is the difference between the market value of relocated assets, activities and the registered value calculated based on the corporate income tax (net tax value).
2. Amendmanets of VAT 2020 in Hungary
From 1st January 2020 the refund of VAT on grounds of irrecoverable receivable can be applied to transactions completed after 31 December 2015. The VAT law lays down strict regulations regarding tax base decreasing due to irrecoverable receivable.
3. Decrease of social contribution tax rate
From 1st July 2019 the rate of social contribution tax decreases from 19,5% to 17,5%, which is also a favourable change.
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