Affiliated companies have the opportunity to be treated as a single taxpayer for corporate income tax purposes, subject to approval by the tax authority. For corporate groups, group corporate taxation can provide a range of tax and administrative benefits.
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What Is the Deadline for Electing Group Taxation?
To establish a corporate tax group, all participating companies must submit
a joint application to the tax authority. Both the formation of a new tax group
and the admission of new members to an existing group may be requested annually
between 1 and 20 November.
Why Consider Group Corporate Taxation?
- The overall tax burden of
the group may be reduced through the coordinated utilization of tax
losses.
- Available tax incentives
and tax credits can be used more efficiently.
- Transfer pricing
compliance may become less burdensome, as transfer pricing documentation
only needs to be prepared at the level of the tax group.
Key Requirements for Joining a Tax Group
To qualify for group corporate taxation, the following conditions must be
met:
- at least 75% ownership
linkage among the group members,
- a common financial
year-end and balance sheet date,
- accounting records
maintained in the same currency,
- financial statements
prepared in accordance with Hungarian accounting rules or IFRS.
The experts at LeitnerLeitner provide comprehensive support on year-end tax matters, including the assessment of group taxation opportunities, tax planning, transfer pricing issues and tax optimization strategies. We help businesses determine whether group taxation would be beneficial for their corporate structure, assist in designing the most appropriate tax framework, prepare the necessary documentation and support the application process. We also advise existing tax groups on addressing tax-related challenges and compliance issues.
How Does Group Taxation Work?
- There is no limitation on
the number of members within a tax group.
- A company may belong to
only one tax group at a time.
- New entities may join an
existing tax group based on a joint application submitted by the group
representative and the prospective member.
- Each member continues to
determine its own tax base and tax liability and must submit a declaration
equivalent to a tax return to both the tax authority and the group
representative.
- The group tax return is
prepared and filed by the group representative using the information
submitted by the members.
- The group representative
is also responsible for maintaining the records related to the group's tax
calculations.
