In our last article series we present you the main changes regarding procedural law and cooperation in international taxation based on the summer tax package.
Document keeping period
The general document keeping period of 5 five years has been raised to 10 years concerning documents which are in relation to properties and incomes falling under the legal force of double tax treaties. The regulation is effective since July 24, 2019 and shall be applicable to incomes deriving from the date of January 2018.
Changes in EKAER liability
After January 1, 2020, it will become possible to change previously reported data electronically after closing the EKAER number within 3 workdays but only before a tax audit by chance. The modification is HUF 5,000 per data irrespective to the changed item lines.
No default penalty shall be levied for missing or faulty EKAER reporting, if the taxpayer proves that he has acted in a reasonable manner in the given situation. The respective rule is effective since August 23, 2019.
International dispute resolution procedure
An international dispute resolution procedure may be commenced by the taxpayer beyond the limitation period for the right of tax assessment. However, if the disputed period is prior to January 1, 2018 dispute resolution request must be received by the Hungarian tax authority within the limitation period.
Nevertheless, if the dispute resolution procedure is initiated, the tax authority might carry out the necessary inspection activities beyond the limitation period. The amendment has entered into force in July 24, 2019.
Mutual Arbitration Procedures in EU
The Hungarian legislation (Act XXXVII of 2013) has been harmonized with the EU Dispute Resolution Directives in order to effectively resolve disputes between Member States arising from different interpretations of bilateral agreements.
The further amendment to the actual Act also aims at settling the Hungarian practice of dispute resolution procedure under the tax conventions signed by Hungary.
DAC 6
The 5th Amendment to the Directive on Administrative Cooperation (DAC 6), which entered into force in June 2018, aims to uncover cross-border aggressive tax planning structures.
Member States obligated a particular circle of taxpayers to report detected 'harmful' structures and provide data, which are shared within an automatic information exchange between the competent authorities of the Member States.
Reporting, which would involve / involves tax secrets, trade secrets, lawyers' secrets, became the responsibility of those who are involved in tax planning, i.e. tax advisers, lawyers, auditors. However, in some cases, the taxpayers themselves must also provide information on harmful structures. The rules are applicable to Member States from July 2020, but with retroactive effect to June 2018.
