12
Sat, Jul
62 New Articles

The Extended Rules of the Exit Taxation are Applicable since 1 January 2020

The Extended Rules of the Exit Taxation are Applicable since 1 January 2020

Hungary
Tools
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

The Hungarian Parliament approved certain amendments to the Hungarian Corporate Income Tax Act in July 2019.

Most of the changes, such as the rules of the exit taxation, are applicable from 1 January 2020. The exit taxation has been introduced in Hungary by implementing the Anti Tax Avoidance Directive (ATAD) regulations. In general, exit tax rules would apply when a taxpayer transfers its place of effective management to a foreign country, and as a result becomes a foreign tax resident, or when a taxpayer transfers its assets or business activities connected to its business in Hungary to a registered seat or branch located in a foreign country, and as a result the transferred assets and business activities would not be taxable in Hungary.

In this case the taxpayers will be required to increase their tax base with the amount by which the fair market value of the transferred assets and activities exceeds the book value. The exit taxation is not unknown in the Hungarian tax system, since it has been applicable to the associated enterprises. The new rules extend the obligations, and the Hungarian tax authority has now the right to exam the transactions between independent parties or parties who seem to be independent. Subject to certain conditions, the exit tax can be paid in five instalments if the effective place of management, assets or activities are transferred to an EU Member State or an EEA country that has a mutual assistance treaty for the recovery of claims relating to taxes concluded either with the EU or with taxpayer’s EU Member State. Special exemptions may apply.

By Eszter Kamocsay-Berta, Managing partner, KCG Partners Law Firm

Hungary Knowledge Partner

DLA Piper is a global law firm with lawyers located in more than 40 countries throughout the Americas, Europe, the Middle East, Africa, and Asia Pacific. This positions us to help clients with their legal needs around the world.

With more than 60 lawyers, including 14 partners, and a staff of over 140, DLA Piper Hungary is one of the largest international law firms operating in Hungary. What makes us stand out is that we offer not only legal services but also tax and business advisory support in a fully integrated manner. We maximize synergies between legal, tax, and business advisory services to offer a unique service for our clients, particularly in regulated industries such as energy, infrastructure, life sciences, banking, and telecommunications.

We are a true full-service firm, providing our private and public sector clients with advice on all aspects of their business. This includes transaction-related advice, people and employment, commercial dealings, litigation, information technology, media and communications, intellectual property, insurance, tax, real estate, and restructuring plans.

DLA Piper Hungary has received numerous professional awards and is consistently ranked among the top law firms in Hungary by international rankings. We are ranked #1 by Mergermarket among the law firms active in Hungary based on the volume of M&A deals handled between 2005 and 2024.

Firm's website.

Our Latest Issue