Priority audit targets of the Hungarian Tax Authority in 2023

In 2023, the Hungarian Tax Authority will continue to support, control or punish the taxpayer based on the taxation behavior.

It strictly punishes tax fraud and intentional tax evasion. The authority can act more and more quickly, thereby collecting the planned revenues more and more effectively. Based on the risk analyses, it conducts legal compliance investigations, tax and customs inspections or support procedures.

Activities carrying a significant budgetary risk

Based on the experience of the previous years, it is apparent which are the most risky areas, and these will be checked with special attention:

¬   e-commerce

¬   food industry, agricultural trade - with special attention to the price-fixed products - and manufacturing

¬   trade in building materials

¬   trade and repair of motor vehicles and motor vehicle parts

¬   IT and telecommunications trade

¬   tourism and hospitality

¬   couriers, food carriers

¬   passenger transport

¬   sales at temporary outlets

¬   sellers of Far Eastern products

¬   textile trade

¬   food supplements, medicinal products trade

¬   trade and installation of fuel, heating equipment, air conditioners and their components

¬   personal and property protection, building management, cleaning, temporary staff

¬   advertising, marketing, media services, film production

¬   IT and administrative services, consulting.

Audits based on risk analysis

The data received from online data reporting obligations is constantly analyzed and compared with the declaration data. Special attention is paid to taxpayers registered at registered seat providers, as well as to activities requiring a lot of live labor (e.g. construction industry, film industry), where the right to deduct VAT is often created by involving subcontractors and building subcontractor chains. Analyzes in the background enable a quick and efficient response, especially before tax disbursements. The international automatic exchange of information also covers more and more areas: e.g. for dividends, interest, yield, for the digital platform-based economy. Those who make profits from non-cooperative countries from a tax point of view can also expect to be audited, as well as businesses that minimize taxes and do not realize sales revenue but claim tax back.

In 2023, taxpayers and flat-rate taxpayers will also be audited from the point of view of the correct application of income thresholds and cost ratios, as well as those who did not choose either taxation method, because they are likely continuing their activities without a license, in the context of on-site inspections.

The registration tax and VAT of new vehicles imported from third countries and placed on the market in Hungary are also audited. In the case of procedures involving indirect customs representatives, special attention is paid to the disclosure of importers and the collection of public charges.

Audit of preferential taxpayers

They continue to pay special attention to taxpayers with the highest tax performance. In 2023, the focus will be on the use of tax incentives (development, energy efficiency investment, renovation) and on transfer pricing.

Large employers will also be audited, especially the Employee Part-Ownership Program, the correct handling of group, risky personal insurance policies (life, accident and sickness insurance) granted to their employees.

Support for voluntary compliance

Supporting procedures

Real estate sellers and private health care providers will to be supported in the future as well in order to properly fulfill their tax obligations, but this year ex-flat-rate taxpayers will also become a target group for the support procedures. Based on the 2022 data, taxpayers with discrepancies between their employment declarations and tax returns, further taxpayers who do not pay company car tax based on the vehicle and motor vehicle tax data, and taxpayers who claim the family tax allowance will be audited in the framework of the supporting procedures.

Continuous monitoring of basic deviations

The Hungarian Tax Authority constantly monitors the newly established businesses, especially if they immediately realize an extraordinary income, and if they are affected by a change in the management/ownership. In addition to tax-minimizing and permanently unprofitable taxpayers, taxpayers with risky tax history, taxpayers with cancelled tax numbers, additional businesses of managers of unreachable businesses and those who "wake up from a dormant status" can also be expected to be audited.

Those who employ many people, while not issuing invoices and having no control data for the invoices they accept, are also in focus, as well as those who realize a large turnover without employees. If there is a discrepancy between the VAT return and the online invoice data, or if someone does not submit a VAT return, declares zero tax liability, but has activities based on control data, can expect a tax audit. The tax authority exams the fulfillment of public health product tax obligations.

Employer notifications are also continuously monitored, for which purpose legal compliance checks are carried out for new employers, and the status of notification obligations is reviewed for previous employers. On-site inspections are being intensified in order to take action against illegal employment. They examine the regularity of simplified employment and the fulfillment of the obligation to notify the termination of the legal relationship in the case of employees are included in the insurance application, but not included in the regular declarations. Personal income tax refunds are also checked before transfer, further attention is also paid to check the tax obligations of individual entrepreneurs.

Thematic audits

This year, among others, real estate agents, lawyers, legal practitioners and executors can expect to be inspected. Transactions classified as risky based on country-by-country reports and cross-border constructions will also be checked. Those financial institutions that have an obligation to provide data services can also count on a legal compliance investigation of their compliance.

Thanks to the transaction-based digital data collection, the tax audits initiated by the tax authority are becoming more targeted and efficient. For this reason, it is necessary to maintain constant audit readiness on the part of the taxpayer, and the correctness of the tax treatment should be ensured even before the tax authority's investigations. If you are unsure, ask LeitnerLeitner for expert help. 

We can not only review your tax-related processes, but also provide assistance in handling and correcting discovered errors - which is always cheaper than facing failures during tax audits and the additional tax and fine burdens they cause. If you are starting a new business transaction or planning to expand abroad, you should also consult our experts! And at last but not least, you can count on us even if tax authority is already knocking on your door, or there is a prospect of conviction in the inspection that has already started.

In addition to LeitnerLeitner's consulting experience, we have more than two decades of tax authority experience in the field, which is a guarantee for our clients to find effective and practice-oriented solutions.