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The main tax law changes in 2009-2010

On 29th of June 2009 the Parliament adopted the legislative amendment of the general and proportional sharing of taxation system as well as the bill over high value property charged with tax.  The government hopes budget revenues from the changes as part of the crisis management.

According to the decisions:

• From 2010 the tax rate of the personal income tax (PIT)  will be 17% up to 5 Million HUF and 32% above that
• 25% VAT shall be paid by the employer after the traveler’s checks and luncheon vouchers
• Tax shall be levied on those company sales which possess real estate
• The excise tax shall rise
• The EVA (Simplified Entrepreneurial Tax) shall be 30%
• From next year tax shall be paid after high value real estates, ships, planes, and automobiles. The new tax shall be collected by the Tax Authorities the tax payers shall prepare self assessment. Tax free shall be the real estates worth no more than 30 million HUF occupied by the owner and a second real estate worth the very most 15 million HUF. The property tax will have three rates: from 0 to 30 million shall be 0,25 %, between 30 and 50 million HUF shall be 0,35 % and above 50 million HUF shall be 0,5
• The law also contains that from 2010 the specific health contribution (EHO) will cease

THE MOST IMPORTANT CHANGES:

• From next year the tax rate of the personal income tax shall be 17% up to 5 million HUF and 32% above that, the employer shall pay 25% VAT after the traveler’s checks and luncheon vouchers, tax shall be levied on the selling of those companies which posses real estate, the excise tax shall rise, the EVA (Simplified Entrepreneurial Tax) tax rate shall be 30%.

Personal income tax, tax base

• Next year the tax rate of the personal income tax shall be 17% up to 5 Million HUF, above that 32% but from 2011 it will be 17% up to 15 Million HUF and 32% above that. Among the fringe benefits the employer shall pay 25% VAT after the followings: traveler’s checks, or service received in the employer’s resort up to the minimal wage, after the luncheon vouchers up to 18.000 HUF per month, costs of the formal trainings up to the two and a half times of the minimal wage, after the school support up to the 30% of the minimal wager respectively after the local travel pass.
• 25% tax shall be levied on the employer payment into the voluntary pension fund up to the half of the minimal wage and in the voluntary health insurance fund up to the 30% of the minimal wage. Among the concepts we can also find that the traveler’s checks can only be exchanged for recreation and cultural services but the area of the specific services are determined by the competent minister.
• The reimbursement of the travel pass and tickets are not regarded as income neither is the reimbursement of the costs for the own vehicle used for commuting. This latter though should not be considered as income up to 9 HUF/km and the private person can not account for cost for cars.
• The fuel saving can be deducted from the tax base up to 100 thousand HUF at the same time the service fee, tips and gratuities qualify as other income.

Corporate Tax

• The corporate tax law introduces the concept of the company with real estate, where more than 75% of the value of the asset is real estate. The owner of such companies shall pay tax if it sales its share or if he withdraws the issued capital.
• These rules affect mainly the companies with real estate which above the tax shall pay fees as well. The rate of this is 4% up to 1 billion HUF, above that 2% but at most 200 million HUF. This means that in case of office buildings for example the duty will cease above 10 thousand square meters.
• The duty of the flats remains 2% up to 4 million HUF, above that it decreases from 6% to 4%.
• If a foreign organization receives interest, royalty or service fee from Hungary then the tax of it is 30 %.

Simplified Entrepreneurial Tax, Local Tax

• The tax rate for the simplified Entrepreneurial Tax shall be 30% from next year.
• Another change is that from 2010 the local tax shall be collected by the Tax Authorities but the local governments shall receive 100% of the collected tax.
• From next year the income “saved” to the so-called tax heavens shall be taxed as well.

Others

• The fiscal law shall be also amended, the tax of almost each excise good – that is petrol, fuel, alcohol, cigarette etc. - shall rise from the 1st day of next year and neither the energy taxes shall remain unchanged.
• The tax on motor vehicles shall be paid not after the volume of the cylinders but after the power of the engine depending on the age of the vehicle. For example in the first three years 345 HUF/kilowatt, while above 16 years the tax is 185 HUF.
• The private pension fund law amendments introduce the guaranteed capital and maximize the cost in case of changing into another fund. It is detailed what steps are to be done in case somebody wants to step back into the state pension scheme.
• The Accounting Law allows for every entrepreneur to prepare the annual report in euros but this intention shall be recorded in the statutory and in the accounting policies as well. The annual report can be prepared in other currency if the quarter of the company’s revenues and costs resulted from that given currency in the current and previous year.
• The National Cultural Fund will be filled by the state in the future from the lottery so that it transfers there 90% of the tax each month.
• The amendments in the Insurance Act have already caused debates in the profession as a sentence was included which can be interpreted in two ways. According to the one the insurer can pay only on invoice with VAT and by this the accelerated settlement of the claims will cease. According to the other interpretation the invoice is needed when you want to settle the claims with VAT, if you want to settle only the net damage, invoice is not necessary.
• Finally the law states that at every flat sale and purchase where the contract will be submitted to the registry of title deeds until 30th of June the VAT is 20%.