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Deletion Instead of Suspension of Tax Number From 1 January 2018 in Hungary

Deletion Instead of Suspension of Tax Number From 1 January 2018 in Hungary

Hungary
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According to the bill on the new tax procedural rules entering into force on 1 January 2018, a tax number cannot be suspended by the tax authority any longer. The bill is now before the Hungarian Parliament under discussion. 

According to the current provisions, the suspension of a tax number functions as a sanction, for example in case the official documents cannot be delivered to the taxpayer or if it is not available on its registered seat. Taxpayers with suspended tax numbers have limited rights (e.g. in case tax refund or when exercising the right of tax reduction, etc.), however, they may pursue business activities, and they must fulfil their tax obligations. With regard to the fact that in practice it is difficult to interpret this sanction by the taxpayers, and the duration of the suspension is usually short, which is not in compliance with the periods for tax assessment and tax returns, this sanction is planned to be ceased by the bill. Bad news is that in cases where tax suspension would be applicable under the current rules, the bill orders the sanction of the deletion of the tax number. 

It is likely that the Hungarian VAT Act will also be modified in connection with tax suspension. However, it is also likely that the sanction of the VAT Act, according to which the right of tax deduction expires in case the tax number is deleted by a final decision, will remain in force.

By Eszter Kamocsay-Berta, Partner, 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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