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Changes regarding the top-up obligation in Hungary at the end of 2019


Contributed by Accace
November 25, 2019



Previously, Hungarian businesses had to investigate by the end of the business year whether they are subject to a tax advance supplement (or the so-called top-up obligation). However, the rules will be different starting this year, and not all companies are required to fulfil the obligation.

Who was subject to the obligation?

Until now, the tax advances paid during the year had to be added to the amount of the expected annual tax for innovation contributions, corporate income tax, local business tax and simplified business tax, income tax on energy supplies and advertising tax.

What is changing?

As of 2019, the obligation regarding the tax advance supplement is abolished, therefore, taxpayers are no longer required to file a declaration on the tax advance supplement or pay related taxes, provided that the 20th day of the last month in the 2019 financial year comes later than the effective date of the amendment, which was July 24, 2019.

Exceptions apply to those companies, whose financial year is differing from the calendar year, with the last day falling before July 24, 2019, therefore the obligation had to be fulfilled, given that they were subject to the previously valid rules. Furthermore, the abolishment of the top-up obligation at the end of the calendar year is not applicable for those companies, whose turnover of the previous financial year was more than HUF 100 million. Therefore, their obligation to supplement local business tax at the end of the year remains, maintaining the liquidity of local governments.

Other taxpayers still have the opportunity to still file a statement on applying the top-up obligation this year, but the declaration needs to be submitted to the local tax authority till the 20th day of the last month of the 2019 financial year.

Why would companies still fulfil the obligation?

Some companies would still voluntarily fulfil the obligation. The question as for why arises legitimately, since the new regulation is not only more advantageous in terms of liquidity, but the taxpayer also risks receiving a default penalty in case of incorrect calculations. However, those who wish to file a tax offer are strongly advised to voluntarily fulfil the obligation regarding the tax advance supplement, because when the taxpayer opts for the top-up in the statement for the 2019 tax year, they will be able to make a tax offer in accordance with the applicable regulations.

Based on that, companies are advised to make a decision in time whether they want to take advantage of the obligation related to tax advance supplement, and make sure whether they fall under the top-up obligation related to local business tax or not.

 

Tags: Hungary | tax | tax rates | corporation tax

 

 

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