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.

New CIT rate in Hungary

As of 1 January 2017, Hungary reduces its corporate income tax rate to flat 9% instead of the currently applicable progressive 10% / 19%. The new rate is applicable for all taxable persons without any activity restrictions.

Time traveling into the world of transfer pricing documentation

The Hungarian transfer pricing documentation obligations may be the strictest system in Europe. Since its implementation it is repeatedly modified which makes the compliance even more complicated.

Learn about the Hungarian transfer pricing rules!

In our current article we reviewed the common rules of transfer pricing. We are giving answers such basic questions like: what is transfer pricing, how is evolved, why is needed, how strict is the Hungarian regulation, what are the consequences of default, what is exactly the transfer pricing documentation in Hungary, who-, when-, and about what should this be prepared, what kind of review obligations and simplifying options are available.

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Do you know that you can get tax incentive with subsidies?

New tenders for subsidy were announced in February 2015 under the „Versenyképes Közép-Magyarország Operatív Program” (Competitive Central Hungary Operative Programme, hereinafter referred to as VEKOP) and the „Gazdaságfejlesztési és Innovációs Operatív Program” (Economic Development and Innovation Operation Programme, hereinafter referred to as GINOP). Good news to the concerning companies that under certain conditions, development tax allowance and other tax incentives may also be available as an investment-related support concurrently with the above subsidies.

Globalizing word requires interdisciplinary solutions

At the age of globalization there is an increasing need for specialized advices on the taxation of "world citizens".

Increased capital requirements under the Civil Code

On 15 March 2017 the grace period relating to the increased capital requirements of the new Civil Code will expire.

IFRS – it is worth starting preparation in time

Certain Hungarian enterprises may already opt for bookkeeping according to IFRS (International Financial Reporting Standards) from 2016, while the number of IFRS transitions is expected to increase significantly as of 2017 onwards.

Personal income tax amendments as of 2016

The amendments to personal income taxation offer better conditions for 2016, decreasing tax burden and simpler tax administration for private individuals, support for taxpayers who newly return to the social security pension scheme, enticing taxpayers to bring back to the country untaxed income accumulated abroad.

Changes in the Accounting Act, 2016

Our current post provides you with information about the major changes in the Hungarian accounting legislation effective as of 2016. The amendments mainly aim to comply with EU directives unification. In addition, the modifications also aimed to converge the Hungarian thresholds with the EU levels, and also to harmonize the accounting legislation with tax and civil law regulations.

Growth tax credit for corporate income tax in Hungary

The most important amendment to the corporate income tax rules in Hungary for 2016 was the introduction of the so-called growth tax credit. This is a form of tax deferral which is available to limited number of taxpayers who meet the strict conditions. Please find below a summary of the respective rules.