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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

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.

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