Hungarian Autumn Tax Package effective January 1, 2018

Budapest, 21 December 2017

The Hungarian Parliament adopted significant amendments to the tax legislation relating to the procedural rules of tax authorities and income taxation.

On 1 January 2018, the new Act on the Rules of Taxation and the new Act on the Rules of Tax Administration will enter into force. We note some important rules provided in the aforementioned pieces of legislation: (i) a tax authority ruling is now subject to stricter appeal rules and become enforceable; (ii) the audits of the tax authorities will be much simpler and cannot extend more than 365 days; (iii) the tax payer has the right of self-revision provided that the tax authority did not commenced the tax audit; (iv) in case of start-up companies the tax authorities may provide assistance for the first six months of their activity.

With respect to corporate taxation changes, we note that the development tax related to corporate income tax can be obtained for investment in tangible assets whose present value is at least HUF 8 billion or for investment in job creation with a value of at least HUF 3 billion. VAT will also be reduced to 5% in connection with internet access services, food and non-alcoholic beverages supplied in the course of restaurant services, fish for human consumption and some special pork products. Lastly, the rate of the social tax will be 19.5% as of 1 January 2018 while the rate of the health care charge will be 19.5% as well from January 1, 2018.