M&A in the pandemic

During the last six years of economic growth, the number of insolvency proceedings in Hungary has reduced. As a result of the coronavirus epidemic, however, the positive trend is likely to reverse from the second half of 2020 and even more so from 2021.

VAT Reverse Charge or Not

One of the most important questions in the construction industry is properly determining the VAT treatment of transactions from the domestic reverse charge point of view. Although the legislation has been valid for a while, our experience shows that implementation is not consistent across the market, which results serious penalties.

Collective corporate taxation opens new perspectives for companies

Next year the so-called collective corporate taxation which is a popular tax planning technique in Germany and Austria will also become available in Hungary. Thanks to the new opportunity for companies the Hungarian tax system might become more attractive, i.e. it can catch foreign investors' attention and improve the competitiveness of Hungarian corporate groups. Let's see how it works!

Future of 5% VAT on residential properties in Hungary

The reduced 5% VAT rate on residential properties undeniably played an important role in strengthening the real estate industry. Although from the outset the reduction was incorporated for a fixed period of four years, between 2016-2019, many expected the long-term continuation of the rule. The Minister of Finance’s summer announcement cut an end for these hopes. The return of 27% VAT on such real estate will significantly affect the overall market; the consequence may be the further increase of property prices, but also the reduction of investors’ profits. Certain prepayment constructions may help to extend the validity of the reduced VAT period, but these require due care and attention from developers, buyers and financing banks.

Actions against tax fraud bring a better world for the good-faith taxpayers too

Considering the low direct tax rates similarly on corporations (9%) such as on private persons (15%), the reducing social security charges (19.5%) and the ceasing sectoral taxes; Hungary has a more and more attractive tax environment, even in a wide international comparison. At the same time, Hungary is continue to play increasing attention to compliance and introducing new and new actions – mainly administrative measures – against tax evasion. This, especially during implementation, undeniably triggers significant costs and administrative burden for the stakeholders. The new era of digitalization; however, gives the role for control solutions that will finally reduce manual administration and “competitive advantage” of tax fraud too.