Tax Service News from Grant Thornton Hungary: Grant Thornton Hungary would like to call your attention to the most important tax law changes. Most of the changes will enter into force by 1 January 2015. We indicate separately, if legislation enters into force at a different date. The information provided herein is of general nature and is based on facts subject to change. Such information may not be regarded and therefore in no way interpreted as accountancy, legal or taxation advice provided to the reader by Grant Thornton Hungary. These materials are not aimed at complying with particular scenarios and to be suitable for application in certain situations, therefore the consideration of certain taxation law and other factors not discussed herein may be necessary. With regard to this – should you resolve upon any action whatsoever based on the information provided herein – it is recommended to establish contact with Grant Thornton Hungary or other taxation specialists. Amendments of the taxation laws and other factors may influence the contents communicated herein – in certain cases even with retroactive effect. Grant Thornton Hungary assumes no responsibility of informing the readers of these changes.

1. Grant Thornton
Hungary NewsNovember 2014

2. 2
Dear Clients!
With our current IB Service News we
would like to call your attention to the most
important tax law changes. Most of the
changes will enter into force by 1 January
2015. We indicate separately, if legislation
enters into force at a different date.
Best regards
Contents
Tax changes
Personal income tax and contributions
Corporate tax
Local taxes
Value added tax
Other taxes
Rules of taxation
Waltraud Körbler
IB Grant Thornton Consulting Kft.
E waltraud.koerbler@hu.gt.com

3. 3
1. Personal income tax and
contributions
Secondment
In addition to the previously binding paper-
form, the secondment order may already take
also the form of an electronic document
issued (filled out) and stored in electronic
way in a closed system, provided that it
contains all the data in accordance with the
content requirements applicable to
secondment orders.
Temporary worker
In case of temporary workers hired from
abroad – provided that the contribution
obligations are met by the domestic user
undertaking – the domestic user may act as
employer in respect of the income granted by
it (to the worker), i.e. the user may fulfil in
lieu of the employee the employee’s personal
income tax related obligations (deduction of
tax advance).
Family tax allowance
- In the case of families with two
dependents, the rate of the family tax
allowance would be gradually increased till
2016-2019 up to the double, i.e. up to 20
thousand HUF/child/month. In 2015
the amount will remain at this year’s
amount of 10 thousand HUF/child. The
circle of those entitled to the family tax
allowance will be also extended (with the
foster parent’s spouse).
- The enforcement of the family allowance
is also subject to the condition that each
beneficiary dependent shall have a tax
identification code (adóazonosító jel), which
shall be indicated on the assessment of
the tax advance/drawing up of the annual
tax return. It means, each child, with
regard to whom a tax allowance is
granted, must have a tax identification
code, which may be requested at the tax
authority by filling in the relevant form.
Tax benefit of first married couples
It means monthly 5000 HUF tax benefit for
those couples, who marry in 2015, and at
least one of the spouses marries at the first
time. The benefit will be eligible for two
years from the conclusion of the marriage, or
until becoming eligible for the family tax
allowance. Similarly to the family allowance,
the spouses have to make a joint declaration
on the enforcement of this benefit.
Income-profit minimum
In accordance with the corporate tax rules,
the amount of the entrepreneurial income-
profit minimum will change and it will be 2%
of the entrepreneurial revenue; thus from
2015 the cost of the goods sold shall not be
deductible when determining the income-
minimum.
Fringe benefit (Cafeteria) system
According to the existing legislation, up to an
annual amount of 500 thousand HUF, the
total amount of fringe benefits granted to
employees was taxed at 35,7%. The tax
burden on the portion exceeding the annual
500 thousand HUF was 51,17%. According
to the modification, the total amount of the
subsidised fringe benefits will be reduced to
450 thousand HUF per year, with the
condition, that the portion of the benefit
without the SZÉP card shall not exceed 200
thousand HUF per year. The portion
exceeding the 200 thousand HUF or the 450
thousand HUF will be taxed at 51,17%.

4. 4
Housing loan
Pursuant to the current regulations, no
income originating from interest income has
to be assessed, if the employer grants housing
loan to its employee in accordance with the
conditions laid down in the act. Under the
new rules, the scope of the titles of utilisation
for housing purposes will be expanded: from
2015, also the accessibility as defined in the
government decree on the state subsidies for
housing purposes will be qualified as
utilisation for housing purposes.
Employee securities benefit program
Until the 20th day of the month following
the starting date of the mandatory holding
period the copy of the information booklet
issued for the employees on the
announcement of the benefit program shall
be sent to the tax authority.
Contributions
- The monthly amount of the health care
services contribution will increase from
6810 HUF to 6930 HUF.
- A payer, paying income that forms part of
the consolidated tax base for a private
individual, shall be required to establish
the amount of the monthly family
contribution allowance.
- Non-resident performers shall be liable to
pay 14% health care contribution (EHO)
up to annual upper limit of 450 thousand
HUF.
- The fee defined in an employment
contract governed by foreign law may be
taken into account, too, as an element of
the contribution base, if a Hungarian
personal income tax advance base is not
in place.
- In respect of third country nationals the
expiry date of the unilateral social security
exemption is deferred to 1 July 2015.
- Employers are eligible for 100% social
contribution tax allowance also in respect
of their employees, who are entitled for
maternity benefits (GYES, GYED or
GYET) and are employed as part-time
workers.
2. Corporate tax
Associated enterprises
In line with the amendment of the CIT act
the circle of the associated enterprises is
extended. In addition to the existing
conditions, two companies will be considered
to be associated enterprises, if the executive
director is the same person in the both
companies.
Loss carry forward
Stricter rules will be applicable to the loss
carry-forward.
Under the new rules, the losses incurred in
the 2015 tax year and in the subsequent tax
years may be used only within the next 5 tax
years. According to a transitional provision,
the losses incurred before 2015 may be used
no later than by 31 December 2025
according to the rules in force on 31
December 2014.
Taxpayers who are affected by
transformation or change of ownership, in
addition to the conditions existing so far,
have to meet further requirements for being
eligible to use accrued losses of previous
years.

5. 5
R&D tax incentives
Finally, the provision has not been included
in the final text, according to which taxpayers
may decrease the base of the corporate tax
with the R&D costs only in the case, if they
have a qualification from the competent
authority that the given research shall be
really considered as R&D activity. So thus,
the previous rules shall continue to apply in
the future, too.
Support granted to higher education institutions
From 2015, the corporate income tax base
may be reduced by 50% of the support
granted to a higher education institution
under a support agreement (but maximum by
the amount equal to the amount of the pre-
tax result).
Aid granted to spectacular team sports, film,
performance artist organisations
According to the new rules, not only the use
of tax relief will be available on aids meeting
the conditions of eligibility. Taxpayers may
choose to offer 50% of their assessed
monthly or quarterly corporate tax advance
liability for the above purpose. On the
offered corporate tax grant, taxpayers will be
eligible for tax credit. The amount of the tax
credit – in case of offering from the tax
advance – will be the amount of the offered
tax advance, but not more than 7.5% of 80%
of the payable annual corporate tax, or in the
case of offering from the payable tax, the
offered amount, but not more than 2.5% of
80% of the payable tax.
At the same time, tighter administrative tasks
will apply to the aid, as the application for the
aid certificate shall be submitted jointly by
the taxpayer and the supported organisation.
Expected tax base
Starting from the 2015 tax year, the costs of
goods sold shall not be deductible when
determining the expected tax base (income
minimum).
Transfer pricing regulations
The decree of the Ministry for National
Economy (NGM) further strengthens the
rules applicable to the obligation of transfer
pricing documentation. Pursuant to this,
from the data obtained from the database,
only the comparable data falling in the
middle (interquartile) range can be considered
as the ones reflecting the arm’s length price.
This new regulation need to be applied at the
first time at the determination of the tax
liability for the 2015 year.
3. Local taxes
Self-governments are allowed to introduce
any new municipality tax on private
individuals, which is not prohibited by law, or
which has not been yet imposed on them.
The sales revenue (turnover) and cost of
goods sold (COGS) data of the associated
enterprises shall be taken into account for the
determination of the consolidated tax base
applicable by them only in proportion to the
days and in accordance with the duration of
the associated enterprise relationship.
4. Value added tax
Periodically settled transactions (continuous services)
The new regulations applicable to
transactions with periodical settlement shall
have to be applied as of 1 July 2015 in
respect of accounting, auditing and tax
advisory services and then – from 1 January
2016 – to all other services as well.

6. 6
If the parties agree upon a periodical
settlement or payment, then the date of
supply (date of performance) shall be the last
day of the affected settlement period.
Derogating from the main rule, the act sets
out the following two exceptions:
- In the case, if both the date of issue of an
invoice or receipt and the due date of
payment occur before the last day of the
settlement period, then the date of supply
is the date of issuing of the invoice or
receipt.
- In the case, if the due date of payment
falls on a date following the last day of the
settlement period, then the date of supply
is the due date of payment of the
consideration – but at the latest, the
thirtieth day following the last day of the
settlement period.
VAT treatment of advances
All financial benefits that are granted prior to
performance and that can be counted into
the consideration shall be qualified as
advance payment.
According to the new rule, not only the
transfer, or crediting of the money shall be
considered as an advance, but also the case,
when a seller or service provider achieves
financial benefit by a change transaction.
Reduced tax rate on certain products
From 1 January 2015, the VAT rate
applicable to the sale of large animals (cattle,
sheep and goat) will be reduced from 27% to
5%.
Reverse charge taxation for domestic transactions
Services for hiring-out, secondment of labour
force or for provision of staff shall be treated
under the scheme of reverse charge taxation.
In the building industry the reverse charge
taxation shall be applicable, irrespective of
whether the construction work to which the
labour force was hired out, is subject to a
building authority permit or not.
Starting from 1 January, 2015 the act
introduces reverse charge taxation for the
sale of certain steel industry products.
5. Other taxes
Advertising tax
At the calculation of the consolidated tax
base to be applied by associated enterprises,
the tax base shall be taken into account in
proportion to the days and in accordance
with the duration of the associated enterprise
relationship.
From 2015, not 40% but 50% tax is payable
on the part of the tax base exceeding HUF 20
billion.
In certain cases of sponsoring of sports, the
publication of the advertisement will be
exempt from the tax.
The ordering of the publication of the
advertisement continues to be taxable, except
if
- the party ordering the publication has the
specified declaration of the taxpayer, or
- the party ordering the publication has
asked for the declaration of the taxpayer,
and can provide a satisfactory proof that
he did so, but he did not receive the
taxpayer’s declaration within 10 working
days of receipt of the invoice or
accounting document issued on the
publication, and he announces this fact to
the tax authority together with the
publisher’s name and the value of the

7. 7
publishing, or
- at the time of the ordering of the
publication of the advertisement the
taxpayer is included in the register
published on the homepage of the tax
authority.
Taxable persons may be entered in the
registration as referred to above at their own
request, if they have complied with their tax
and tax advance filing and payment
obligations within the prescribed time limit,
or declare to the tax authority that they do
not have any tax liability in the tax year.
E-toll fee
The drive-through mass measurement points
built into roadways will also form part of the
UD (Road Toll) system.
The state tax authority may use the data
managed in the UD system for the purposes
of its control activities and for the selection
of taxpayers for audit.
The supervisory body designated by the Toll
Road act in respect of the data registered on
the vehicles, will keep records also on the
total mass, the axis load and the sizes of the
vehicles.
The Toll Charger shall keep the data
managed by it for seven years, with regard to
the ex-post tax authority inspections.
Duties
- Pursuant to the Act on Duties, the
purchase/sale of (transfer) of real estate
properties or business shares in
companies with holdings in real estate
properties located in Hungary is exempt
from the duty transfers of property, if the
transaction is made between companies
specified as affiliated enterprises
according to the Corporate Tax and
Dividend Tax act (CIT Act). Under the
CIT Act the circle of affiliated enterprises
will be expanded from 1 January 2015 by
the enterprises, which have common
management. The duty exemption shall,
however, not apply to such affiliated
enterprises.
- In the case of purchase/sale of a
residential property, the base of the duty
will be the difference between the
commercial value of the purchased
residential property and the commercial
value of the other residential property
sold either before or after the purchase.
The tax authority suspends the duty
charging procedure for one year, if the
private individual not later than till the
notification of the purchase of the
residential property for the purpose of the
duty charging procedure declares that
he/she will sell his/her other residential
property within one year following the
purchase. If, within 1 year following the
purchase of the residential property,
he/she fails to comply with his/her
declaration obligation on the sale of the
(other) residential property, then the state
tax administration will impose a duty and
additional duty according to the
commercial value of the purchased
residential property.
- The duty on administrative proceedings
can be paid - as an alternative to the
payment by duty stamp – also by bank
transfer. Similarly, the duty of
administrative authority proceedings
initiated not via electronic means at
district offices and one-stop-shop
’government windows’, can be paid via
electronic payment system, by bank card
or cash transfer order.

8. 8
Public health product fee
The circle of taxable products is extended
with such pre-packed, sugary products,
- the sugar content of which exceeds 25%,
unless it contains minimum 20% honey,
provided that the honey’s sugar content is
maximum up to 40%;
- which are such chocolate or cocoa
containing products, in which the sugar
content exceeds 40% and the cocoa
content is less than 40%, with the
exception of products made using at least
in 50% dairy raw materials.
Alcoholic beverages shall be subject to tax as
well, with the exception of fruit spirits, or
additive-free drinks that have been prepared
with the use of at least seven different sorts
of herbs. The tax rate varies progressively,
depending on the alcohol content of the
product (20 HUF/litre – 900 HUF/litre).
Extra tax on financial institutions
Special tax on collective investment forms
Collective investment forms, the investment
shares of which are traded by a distributor
established or having a branch in Hungary,
will be subject to tax liability. The base of the
tax is the distributor’s fee and the tax rate is
25% of the tax base. The tax shall be
assessed, declared and paid by the distributor
on a quarterly basis till the 20th day of the
month following the given quarter. The
distributor shall be liable to pay the tax also
in the case, if it failed to collect it.
Credit institutions
Credit institutions are allowed to reduce up
to the maximum of 5 billion HUF, their
special tax with the write-offs, accounted for
in 2014 with regard to the crisis in Ukraine
on their equity investments existing at 1
January 2014 and shown under current assets
or financial assets invested in their associated
enterprises established in Ukraine. The
burden of proof of the cause-and-effect
relationship rests with the taxpayers.
Environmental product fee
The range of packagings, electrical and
electronic products being subject to
environmental product fee will be extended
from 1 January 2015. The act specifies new
products taxable with the product fee, such
as: other plastic products, other chemical
products or stationery products (office
papers). In respect of these new categories
polluter of marginal quantity shall mean any
obligor placing products on the domestic
market, using them for own purposes, or
purchasing them for stock (exclusively in the
case of supplies for end-user consumers), if
in the case of other plastic products the
output does not exceed 2 kg, in the case of
other chemical products 200 kg and in the
case of office papers 200 kg.
Those obligors who were considered to be
polluters of marginal quantity before
01.01.2015 and also in respect of these three
new categories would be considered as
polluters of marginal quantity, shall be
exempt from the obligation to register
themselves again.
In the case of these new categories, the
product fee flat rate of obligor polluters of
marginal quantity shall be 4000 HUF/year. In
case of commercial printing papers the rate
of the annual liability increases from 6000
HUF to 8000 HUF.

9. 9
Artificial flowers, foliage and fruits made of
plastic and the parts thereof, goods produced
from them shall be qualified as other plastic
products. Other chemical products are for
e.g.: soaps, scouring pastes and powders,
cosmetic, beauty or toilet preparations, and
hair care, pre-shave or aftershave
preparations. Writing, printing or photo
copy papers being suitable for carrying of
information and without any further
processing for writing, printing or photo
copying shall be qualified as office papers.
Exclusively the beverage packagings made of
metal will remain under the category of
commercial packaging, to all the others the
basic rates shall apply.
The possibility of taking over of the product
fee liability is extended with the case of
packaging carried out as contract work or
under a licenced rental system.
6. Rules of taxation
Qualification of legal relations by the tax authority
The act reinstates the provision that in the
course of inspection of a taxpayer the tax
authority may not qualify differently a legal
relationship already qualified in another tax
inspection at another taxpayer and the tax
authority shall be obliged to take into
consideration ex officio the findings made at
another taxpayer.
Different qualification of legal relations between
convention countries
According to the new rules, the different
qualification from a legal perspective of the
legal relations affected by international
agreement by the jurisdictions of the states
should not result in that a transaction would
be taxable in none of the states. In this case
the tax authority determines the tax liability
by estimation.
Subsequent modification of VAT status
According to the amendment, from 1 January
2015 the taxpayers may modify their choice
relating to their VAT status (choosing of
individual exemption, choosing of taxable
status in connection with property letting)
with retrospective effect by submitting an
application for correction, provided that the
modification does not affect the tax, the tax
base or the refund claim. An application for
correction may only be submitted prior to a
tax audit for subsequent verification.
In parallel with it, the amendment repeals the
correction options, which came into force
last year.
Reporting obligation relating to public transportation
By 1 January 2015, the Electronic Road
Transport Control System (Elektronikus
Közúti Áruforgalom Ellenırzı Rendszer
(EKAER)) will be launched. In the frame of
it, the road transport by a transport vehicle
subject to road toll, in the case of intra-
Community acquisitions of goods, intra-
Community supplies of goods and first
taxable domestic supplies of goods to non-
final customers can only be performed by
taxpayers who have an identification number
(EKAER number). However, we call your
attention that the reporting obligation on
such transports rests not with the carrier, but
with the domestic taxpayers participating in
the transaction.
In the case of intra-Community acquisition
of goods the EKAER number shall be
requested by the consignee, or in the case of
intra-Community supplies or domestic
supplies by the sender in electronic way by
reporting the data of the transported goods
before the commencement of the
transportation. In the case of intra-
Community acquisition of goods and
acquisitions from the domestic market the

10. 10
consignee shall submit by electronic means
the documents on the arrival of the goods to
the tax authority.
The legislation sets out specific provisions
for the so called risky products. Accordingly,
the above rules shall be applied also to
product supplies carried out with a vehicle
not subject to the toll-fee, if the mass of the
sold goods, in the case of foodstuffs exceeds
200 kg, in the case of other risky products
exceeds 500 kg, or its value without tax
exceeds 250 thousand HUF or 1 million
HUF. In the case of supply of risky products,
the legislation also sets the obligation to
furnish a security, from which exemption
may be obtained.
In the case, if the taxpayer fails to comply
with its reporting obligation, then the goods
shall be regarded as goods of unverified
origin and in the case of an eventual
inspection, the tax authority may impose a
default penalty up to 40% of the value of
such goods.
Domestic recapitulative statement
From 1 January 2015, the notification
threshold for the invoices to be included in
the domestic recapitulative statement
(domestic sales list) will change. Following
the amendment, the reporting obligation will
extend to the invoices including more than
1,000,000 HUF output VAT. According to
the new rules, it is an option for the taxpayers
to include – irrespective of the threshold – all
their invoices containing output VAT in the
recapitulative statement, but for this the tax
number of the buyer shall also be required.
In accordance with the amendment, the
mandatory data content of the invoice
amends so, that the tax number of the buyer
shall be a mandatory content element also in
the case of invoices including output VAT in
an amount exceeding one million forints.
Default penalty
Under the new rules, in the case if the
taxpayer repeatedly obstructs the
investigation, the closing-down of the shop
or the enforcement proceedings, then
because of the repeated infringement of the
laws, the tax authority may sanction the non-
private individual taxpayer with a default
penalty up to 1,000,000 HUF instead of
500,000 HUF.
Definition of associated enterprises
From 1 January 2015 the circle of the
associated enterprises will be expanded.
Under the new rules, the taxpayer and
another person shall be deemed to be an
associated enterprise, if in the two companies
the person of the executive (managing)
director is the same and with regard to that
exercising of a decisive influence on the
business and financial policy takes place.
Frequency of VAT returns
According to the new rules, the taxable
persons newly created without a legal
predecessor, shall be required to file their
value added tax returns on a monthly basis
on their value added tax liabilities relating to
the year of their registration and the
subsequent year.
From 1 January 2015, taxpayers filing their
VAT returns quarterly, shall be required to
submit their recapitulative statements on
their Community transactions on a monthly
basis also in the case, if they exceed quarterly
the 50,000 euro value limit in respect of their
intra-Community product purchases (so far,
attention had to be paid only to the total
(aggregated) value of the intra-Community
supply of goods and services).

11. 11
Contact
IB Grant Thornton Consulting Kft.
IB Grant Thornton Audit Kft.
Vámház krt.13.
H-1093 Budapest
T + 36 1 455 2000
F + 36 1 455 2040
M +36 30 992 29 79
E office@hu.gt.com
www.grantthornton.hu
The information provided herein is of general nature and is based on facts subject to change. Such information may not be regarded and therefore in no
way interpreted as accountancy, legal or taxation advice provided to the reader by Grant Thornton Hungary. These materials are not aimed at complying
with particular scenarios and to be suitable for application in certain situations, therefore the consideration of certain taxation law and other factors not
discussed herein may be necessary. With regard to this – should you resolve upon any action whatsoever based on the information provided herein – it is
recommended to establish contact with Grant Thornton Hungary or other taxation specialists. Amendments of the taxation laws and other factors may
influence the contents communicated herein – in certain cases even with retroactive effect. Grant Thornton Hungary assumes no responsibility of
informing the readers of these changes.