In our next article series regarding the company taxation the changes concerning the local business tax and small business tax have been summarized.
Prepayment supplement
Unfortunately, unlike for corporate income tax, the obligation to supplement the advance local business tax payment replenishment at the end of the year is still due. It should only be paid by companies whose net turnover exceeded HUF 100 million in the previous tax year.
Tax return of sport enterprises
As of January 1, 2020, sports enterprises must submit their local business tax returns to the Hungarian Tax Authority (HTA) instead of the local municipalities.
Registration of LBT- establishment to the HTA
Also, as of January 1, 2020, the local business tax subject may report (only an option and not an obligation) its LBT-establishments or its representatives to the Hungarian Tax Authority.
Prerequisites for choosing small business taxation
The requirements concerning the application of small business taxation became stricter from August 23,.2019, so that the taxpayer are no longer eligible to choose it, if it had a controlled foreign company in the tax year preceding the tax year. Further, companies whose "expected financing costs" do not reach the statutory thresholds in the CIT period are also excluded.
Avoiding double taxation
Moreover, from January 1, 2020, the tax base of the small taxpayer will be reduced by the tax-deductible proportion of its foreign establishment’s income paid abroadin order to avoid double taxation. In addition, small business tax rate will be 12% of the tax base.
