The most important change is the introduction of Corporate tax groups. In case of fulfillment of the conditions set by law at least two resident taxpayers are entitled to create a Corporate tax group. The most important characteristics of Corporate tax groups are the calculation of the tax base of group members and the simplification of transfer pricing obligations.
The creation of Corporate tax groups is subject to the authorization of tax authority. For the year 2019 between 1 and 15 January 2019, it is possible to submit a relevant application. This deadline is loss of rights concerning year 2019.
From 1 January 2019 the provisions on thin capitalization are ceased, instead the new rule on limiting interest deductions enters into force in line with the concerning EU regulations. Under this rule, the tax base is increased by 30% or HUF 939,810,000 (EUR 3 million) of fiscal-year earnings before interest, taxes, depreciation and amortization (EBITDA). At the same time, the amount of the tax-base increase can be reduced by any unused interest deduction that accrued in previous fiscal years.
Contracts for financial costs concluded before 17 June 2016 may not be subject to the new rule.
The maximum amount of a development reserve is to be raised from HUF 500 million (roughly EUR 1.5 million) to HUF 10 billion (roughly EUR 30 million).
From 1 January 2019, the definition of controlled foreign company and the related tax base adjustment items are to undergo significant changes.
Value added tax
The threshold for choosing VAT-exempt status will be raised from HUF 8 million (roughly EUR 25,000) to HUF 12 million (roughly EUR 32,000).
For cases where leased passenger cars are used for both business and private purposes, then the VAT on rented company car hire can be deducted 50% automatically, without proof. In case of a deduction of more than 50%, the proportion of business and private use should be verified in detail (e.g. driver log).
The rules on the transfer of vouchers differentiate between single-purpose and multi-purpose vouchers. In the case of a single-purpose voucher, the tax liability arises when the voucher is transferred; in the case of a multi-purpose voucher, the tax liability arises when the voucher is redeemed.
Act on Rules of Taxation
There will be an increase in late payment interest from double the base interest rate of the central bank (1.8%) to the base interest rate of the central bank plus five percentage points (5.9%).
The amount of the self-audit allowance fee will not change as a result of the modification of late payment surcharge, it will continue to be adjusted to the central bank base rate.
In case of missing the completion (upload) of tax advances payment, the default fine will be reduced from 20% to 10%.
This summary provides general information, does not constitute as an expert advice for a decision. For this reason, please turn to our colleagues if you have any specific questions regarding the content of this brochure.
Budapest, 7th of January, 2019
Dr. Boros Anikó Emese tax advisor
Gubicza Krisztina chartered tax expert