Taxation that follows postings

Employment posting questions emerge in both short- and long-term relations. In practice, long term-postings are usually handled by the HR department; however, short-term business trips and trainings that may get a lower emphasize also require due care from a taxation and administration perspective. In addition, the logistics sector also has some special treatments.

Serving the investment…

LeitnerLeitner primarily focuses on national and international tax advisory, accounting and payroll, statutory and merger audit, and financial advisory services such as M&A and DD assistance to Hungarian subsidiaries and branches of international companies. Thus we are the first to meet the intension of a business foundation or the launch of foreign companies in Hungary. Our recent experiences truly reflect a notable growth in starting or expanding business in the country. Many contact us with an interest in new investments, mergers and acquisitions; they ask us to support them in the due diligence of their targets, their accounting and tax integration and also to help maximize the tax incentives available for their business.

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!

Breaking news - The latest tax package draft has been released

On 19 October 2018, a new tax package was presented to the Parliament. Please find the most important amendments of the package here: the threshold of VAT exemption for SMEs will be raised to HUF 12 million, collective corporate taxation is coming, the international tax information exchange increases, the personal income tax liability of insurances taken out by employers is re-regulated, and, last but not least, the rules on the abolition of employer housing subsidies will be clarified.

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.

LeitnerLeitner established a new transfer pricing business line led by a new colleague

As of April 2018 Ágnes Fotiadi joined LeitnerLeitner as the leader of the newly established transfer pricing business line. She has so far headed the Transfer Pricing Unit of the Hungarian Tax and Customs Administration from its establishment. Due to her work, the field has become an internationally recognized area within the Hungarian Tax Authority.

Transfer Pricing: Too Expensive to Ignore

Up to now – Hungary was the first in CEE that introduced statutory transfer pricing documentation requirements in 2003 – very complex transfer pricing requirements pertained to affiliated companies. Therefore, group-pricing should be measured in line with the arm’s length principle and be strictly documented. Moreover, unlike in international practice, the Hungarian transfer pricing documentation obligations cover domestic intragroup transactions too. As tax authorities examine transfer prices very closely, it has become vital for groups to have a consistent, reliable TP-system. This is especially so, considering the record high Hungarian penalties for non-compliance that amount to HUF 2 million (appr. EUR 6,500) per transaction per year.

The tax Aspects of Hungarian Real Estate

No wonder that real estate plays a major role in the overall M&A market, since these properties represent financial and emotional security too. Both buyer and seller try to maximize their cost-benefit ratio and are dependent on reliable data. Next to identifying, for example, future rental income and maintenance costs, the owner/lessor has to be absolutely sure about the funding of fiscal circumstances, including taxes. In this article, we would like to give an insight into the specialties of real estate taxation in Hungary.

Taxation of the automotive industry – problems along the chain

The automotive industry plays a significant role in the Hungarian economy; it already makes over 10% of the GDP and employment, while it is the fastest growing sector. Hungary’s strategic geographical location, highly developed logistics and infrastructure, cost effective and high-level production capability determines the country as a regional distribution centre and a service hub for the CEE region.

How to manage the tax affairs of foreign managers

It occurs often that a multinational company employs a foreign manager based on an employment contract or secondment. In the first case the Hungarian company is considered as the legal and the economic employer as well, therefore the salaries are payed directly by them. In the second case, the employee maintains the employment contract in the „mother country”; therefore, the salaries are still paid by the parent company (naturally the Hungarian company pays a „service fee” for the secondment to the parent company). The mentioned cases differ from many points of view; therefore, an improper classification may trigger many issues.

The protocol is in your hands – is this the end of the world?

As written in our former article about the process of tax controls, the audit ends with handing over a protocol. Is there any hope left in case of negative result and can we challenge the opinion of the tax authority?

In our view, nothing is lost yet, even if you have the minutes of tax audit in your hand: the solution may be in the legal remedies. Referring back to our already cited article, it would be the best to avoid such by acting totally rightful without contextual or even formal mistakes, to have time-to-time health checks to mitigate chances for negative tax audit outcome situations, or finally to involve a tax expert into the process from the very beginning who can represent your interests effectively by knowing the rules of the game. Nevertheless, if sand gets into the machine somehow, there is not all lost by the takeover of the minutes. In this article we show the steps of remedy in details.

 

We let you know how a tax audit is carried out in Hungary

Aiming at the prevention of tax evasions and their fast detection, the Hungarian financial government introduced various arrangements and also planning more. Among them one can find creative new solutions, systems that are based on the new technology and on the international information exchange, but even the old time classic methods too. Now we are presenting one of these evergreens: the process of tax audit.

New Advertising Tax Rules Will Give Many a Headache: Important Not Only for Media Companies

As of January 1, foreign advertisers without a presence in Hungary should prepare for extremely strict sanctions for attempts to avoid Hungarian advertising taxation. The aim is that the threats are now so significant that it would not be worth the risk for anyone, says Judit Jancsa-Pék, partner and leading tax expert of LeitnerLeitner.

2017 amendments in the Hungarian VAT legislation

From 1 January 2017, the scope of goods and services subject to the reduced VAT rates will be extended.

Amendments to the taxation of employment

Hungary even historically provided very attractive taxation of corporations in an international comparison; our social security system however is quite robust. As part of the agreement between the social parties, employers and the government, a decision was made about the increase of the minimal wage and parallel reduction of employment taxes too. In our present post, we summarize the most important changes affecting employment in Hungary.

More attractive taxation alternatives for SMEs

As part of the 2017 new tax legislation, also the special taxes for small taxpayers became more attractive. Moreover, some of the opportunities might also fit to bigger taxable persons too.

New rules relating to controlled foreign companies and other low-taxed income

The fourth tax package published on 19 December 2016 completely redefines the rules of controlled foreign companies and the system of sanctions applied against them. The amendments will take effect on the 30th day following promulgation (18 January 2017); however, taxpayers may choose the application of the new rules as early as in the 2016 tax year. The rules conform to the European Union’s anti-tax avoidance recommendations, but the rapid introduction makes it almost impossible to prepare for the changes.

Tax allowances and other advantages in Hungary

The newly introduced flat 9% Hungarian CIT rate combined with the various tax allowances and tax base reductions; further, with the withholding tax exemption of dividends, interests, royalties and any other services fees to corporate recipients make Hungary a very attractive location for foreign investments. In our present post, we would like to give a hint to the wide range of tax allowances and other advances offered by the Hungarian corporate income tax legislation, with special focus to the 2017 amendments.

The world of M&A transactions according to a tax advisor

Mergers and acquisitions can have many advantages if all goes well. But they can also be harmful and produce integration difficulties, resulting in financial losses and a less productive workforce if the process does not work as planned.