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Changes Related to the Local Business Tax in Hungary

Changes Related to the Local Business Tax in Hungary

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According to the changes of the act of the local business tax adopted on 26 November 2020, taxpayers have to submit their tax return to the tax authority, which means that what was an option until the end of the 2020 year, has become an obligation. As of 1 January 2021, the tax authority supervises and verifies the tax returns and also indicates immediately the calculation errors to the taxpayers, which can be corrected by correction or self-audit.

It is also worth mentioning the temporary reduction of the local business tax rate as a part of the recovery measures introduced as a result of the economic difficulties caused by COVID pandemic. In the tax year ending in 2021, the entrepreneur – as defined in the act of the local business tax – with a net turnover or balance sheet total not exceeding HUF 4 billion (micro-, small- and medium-sized enterprises) has to pay no more than 1% local business tax (instead of the maximum of 2%). The entrepreneur covered by the rules should pay 50% tax advance due on the given advance payment dates. A special declaration must be submitted to the local government to take advantage of this tax reduction until 25 February 2021.

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

KCG Partners at a Glance

KCG Partners is a Hungarian business law firm providing a comprehensive range of legal services to international and local clients seeking local knowledge and global perspective. The firm comprises business-minded lawyers with sector-specific expertise, creating value for clients by applying a problem-solving approach and delivering innovative solutions.

The firm has a wealth of knowledge in corporate law, M&A, projects and construction, energy, real estate, tax, employment, litigation, privacy and forensics, securitization, estate planning and capital markets.

To address clients’ regional and international concerns, the firm maintains active working relationships with other outstanding independent law firms in Central and Eastern Europe, whilst senior counsel Mr. Blaise Pásztory brings over 40 years’ of US capital market and fund management experience.

KCG Partners Law Firm is the result of the teamwork of passionate and talented lawyers guided by the same principles and sharing the same values: 

  • Our most valuable asset is our people. They are the engine of our business and the key to our success.
  • We push boundaries by looking for innovative solutions that can empower our clients to achieve greater results.
  • We place our experience, commitment and professionalism to your service.
  • We are driven by our vision to shape and lead the Hungarian legal market and become a first choice law firm in our practice areas.

Firm's website: http://www.kcgpartners.com