Dear Clients!
Please let us tell you a few words about the accepted and proposed tax changes for 2020:
Accepted tax changes:
- Cancellation of Corporate income tax advance replenishment
Until this year the corporate income tax and local business tax advances should be replenished until 20th of December for those companies where sales income in the previous year were more than 100 million HUF. The modification cancelled the corporate income tax replenishment from the current year already, but the local business tax was not affected by this change at all.
- The KIVA tax (Small Business Tax) will be changed from 13 % to 12 % from 1st of January 2020.
- One type of old taxes (called EVA) will be cancelled from 1st January 2020.
- The VAT on accommodation services will be reduced from 18% to 5%, but there will be an extra 4% tourism development contribution for this activity.
- The monthly amount of the health care contribution will be changed from HUF 7,500 to HUF 7,710.
- Up to now, 50% of the corporate tax advances and 80% of annual tax could been offered for sport activity. This will rise to 80% uniformly for the 2020-2021. For Clients who get tax benefits from tax offering it is a very important and profitable change.
- In case of intra-Community sales transactions, tax exemptions will not be granted in the future if the company does not properly identify the sales in tax reports. In order to be tax exempt this sales transaction, it is essential that the customer’s EU VAT number is available.
- In the transport sector, the tax exempting can be used only for closely related import services, meaning that (aside from the importer itself) only the importer’s direct subcontractor can invoice tax-free, other subcontractors must invoice with tax.
- It is a positive change that VAT on uncollectible trade receivables become recoverable within strict limits.
Conditions:
+ the seller is not (at the moment) and the buyer was not (at the time of the performance) subject to bankruptcy, liquidation or forced liquidation;
+ the buyer was not (at initial performance) included in the database of taxpayers with a large amount of tax deficit, or in the list of taxpayers where tax numbers have been canceled;
+ the buyer must be informed of the deduction;
+ the uncollectible claim was not recovered in any other way.
The following changes are drafts only and have not been accepted yet. We will inform you in time of their acceptance and entry into force with final version.
- From 1st of July 2020, according to the plans of the Hungarian legislatives the billing should be totally online between companies taxing in Hungary (Now, we have a limit of 100,000 HUF VAT). As a result, you must provide information on all transactions between domestic taxpayers (including tax exempt invoices and reverse charge invoices). We highly recommend that use only audited online software to avoid additional administration.
- From 1st of January 2021, all transaction should be reported online (so invocing to private persons, all third-country and all intra-Community sales too).
- From 1st of January 2020, the institution of “Authority Transition” will be introduced. In this context, the Tax Authority can automatically transfer the taxes between two tax accounts (transfer tax overpayments to tax debts).
- Significant restrictions planned on KATA tax. We will keep you informed of current changes as they enter into force.
The main topics where tightenings are possible:
– 4 from 7 conditions had to be fulfilled by the small taxpayer (Now: 2 is enough)
– if a KATA taxpayer invoices to a client more than two and a half times of minimum wage and this client covers more than half of his / her income, from 1st of February 2020, the KATA taxpayer would pay extra 40% tax on this income.
– if a KATA taxpayer invoices to a company where he/she was employed in the two previous tax years, he/she would pay extra 40% on this income.
– the possibility of multiple KATA taxation would be completely eliminated from 2021.
- The invoice issuing deadline after the performance would be reduced from 15 days to 8 days from 2020.
- From 2020, the draft law mentions significant changes in wage contributions:
– From 1st of July 2020, the social security contribution (currently: pension (10%), in-kind (4%) and cash (3%) health insurance, labor market contributions (1.5%) would be merged (18.5%).
– Self-employed persons and social entrepreneurs could benefit positively from the introduction of uniforming the minimum contribution base with a minimum wage. There is no change in the Social Contribution, so it is expected that the social contribution tax will continue to be paid after 1.125 times of the minimum wage.
Sources: adozona.hu, ado.hu, pallas70.hu
Budapest, 2nd of December 2019
Best Regards,
Perscriptor Accountancy Office
