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Autumn Tax Package In Hungary Is Approved

Autumn Tax Package In Hungary Is Approved

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On 22 November 2016 the Hungarian Parliament approved the autumn tax package. In addition to the two main objectives of the changes (i.e. reducing the tax charges and increasing competitiveness), decreasing tax bureaucracy has also become important.

According to the new rules, the income level for the fixed-rate tax of low tax-bracket enterprises (“KATA” in Hungarian) will be increased from HUF 6 million to HUF 12 million, in order to ensure higher tax savings and to widen the scope of tax payers choosing this form of taxation. The limit for the individual exemption from VAT will also be increased from HUF 6 million to HUF 8 million. The Hungarian Government intends to support small businesses by doubling the so-called expected revenue limit to 1 billion HUF under which tax payers may be eligible to pay ‘small business’ tax (“KIVA” in Hungarian).

Regulations on healthcare contribution (“EHO” in Hungarian) will be simplified by reducing the five-rate system to a two-rate system maintaining the 14% and 27% tax rates. Furthermore, no healthcare contribution shall be paid on interest income, which is currently 6%.

In addition, a new service of the Hungarian Tax Authority will debut next year, i.e. the so called “supporting process”, where the authority will not audit and impose sanctions, rather suggests self-revision and, if necessary, it provides professional support to eliminate errors and defects.

The Government has also announced the introduction of a one-rate, unified 9% corporate income tax system from 2017. This would replace the current two-rate system, i.e. 10% up to a positive tax base of HUF 500 million and 19% above HUF 500 million.

By Eszter Kamocsay-Berta, KCG Partners Law Firm

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

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