Hungary applies numerous other business related
taxes such as sectoral taxes or surtaxes, local taxes, duties, environmental
and health care taxes. This guideline provides for a short summary of them.
Keep in mind, that taxation in Hungary is a swiftly and often changing area,
especially in the category of smaller, sector related taxes. We highly
recommend hiring professional tax advisors in order to meet the expectations of
the tax authority and avoid charges. Please contact us for more information!
LeitnerLeitner offers full-scope tax advisory
services including the following fields
- Environmental protection product fee / green tax “health check”, financial review and corrections, compliance
- Advisory and compliance for public health product tax (chips tax)
- Preparation and review of the local business tax
- Tax calculations, advisory and reporting assistance for duties on the acquisition of property, inheritance and gift duty
- Tax consultation, review and compliance advisory on sectorial taxes (financial, electricity, tobacco, etc.)
- Expert advice in excise and customs issues.
Business activities are subject to trade tax
levied annually on the adjusted net sales revenues. The trade tax amounts to a
maximum of 2% (as a de-minimis support reduced to 1% for certain SMEs), but
determined according to the discretion of the respective local municipality.
The adjusted net sales revenues for local business tax purposes comprise the
total accounting net sales revenues reduced by the costs of materials, the
purchase price of the goods sold, the costs of intermediated services and the
direct R&D costs. Further, the income from business activities carried on
by a foreign permanent establishment is also part of the net sales revenues
whereas royalty income is not.
As trade tax is payable to each municipality on the territory of which an enterprise carries on a business, the tax payable is to be divided by a special split calculation among the respective municipalities.
Special rules apply for taxpayers keeping their accounting books according to IFRS.
Municipal property tax
In particular, the list of property taxes includes building and land taxes levied at the market value of the real estate. The tax base is either the size or the adjusted market value of the real estate, depending on the decision of the respective municipality. Municipalities has the discretion to determine the tax rates.
Duties
In Hungary the Act on Duties determines transfer, inheritance and gift taxation. Procedural fees and fees for administrative and court proceedings are also incorporated in the Act on Duties.
Transfer tax on sales
Transfers of immovable property and of certain movable property such as cars, trailers and an individual doctor’s practice are subject to transfer tax, based on the market value of the transferred property (including e.g. VAT). The purchase of immovable property and cars in the framework of financial leasing contracts triggers tax liability as well.
Real estate transfer tax is levied on the transfer of immovable property (land and buildings) located in Hungary, on the transfer of certain rights related to immovable property and on the transfer of shares held in a real estate company. Taxable transactions include – inter alia – the sale, contribution in kind and exchange of immovable property. Transfer tax is levied on the acquisition of shares of a real estate company if the acquisition results from a non-preferential restructuring (preferential restructuring: preferential reorganizations, preferential exchange of shares and preferential transfers of assets determined by the Act on CIT are exempt if the conditions are met) and if due to that transaction a shareholding of at least 75% in the respective company is obtained.
The acquisition must be reported to the competent tax authorities even in cases where tax exemption is applicable.
The general rate for transfer tax is 4%.
Special rules are applicable for shareholdings in a real estate company, for
transfers of residential properties and of cars. In case of shareholdings in a
real estate company and of immovable properties a transfer tax rate of 4% applies
up to a value of HUF 1 billion (approx. EUR 2,65 million / USD 2,78 million)
and 2% above that threshold. The duty is capped, however, at HUF 200 million
(approx. EUR 525,000 / USD 555,000) per property.
Gift tax
According to the Act on Duties, the taxpayer of the gift tax is the donee only. The transfer of real estate, movable property (which also includes liquid assets) without consideration and the gratuitous creation of a right of pecuniary value is subject to gift tax. A gift will be subject to gift taxation to be duly documented if the transfer takes place in Hungary.
The donation of movable property with a market
value exceeding HUF 150,000 (approx. EUR 400 / USD 420) is subject to gift tax
regardless whether the donation was documented or not. Furthermore, if the
donation of movable property is duly documented the gift tax obligation arises
regardless of the market value. The transfer of cars or shares in companies
owning Hungarian real estate will still be subject to gift tax. Donation between
relatives in direct line (including adoption) and between spouses are fully
exempt from gift taxation.
Inheritance tax
Currently inheritances between relatives in direct line (including adoption) and the inheritance of a surviving spouse are fully exempt from tax obligations.
Stamp duties
Stamp duties are levied as procedural fees on both administrative and court proceedings.
Other taxes
Hungary apply some other and sectoral taxes as follows:
- Innovation contribution
- Company car tax
- Excise taxes
- Customs in line with the EU provisions
- Environmental taxes and public health tax
- Telephone tax
- Financial transaction tax
- Surtax for financial institutions
- Insurance tax
- Sectoral taxes for energy service providers, Robin Hood tax
- etc.
