29
Fri, Mar
38 New Articles

Annulation of the Municipality Decree Provisions on Air Passenger Tax by the Curia

Annulation of the Municipality Decree Provisions on Air Passenger Tax by the Curia

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

On 28 March 2023, the Curia established that certain provisions of the municipality decree of the 18th District of Budapest on local taxes are contrary to other legislation, and therefore annulled the provisions on air passenger tax with retroactive effect to 1 January 2023.

On 30 November 2022, the municipality of District 18 of Budapest created a municipality decree that introduced the air passenger tax. The tax obligation was based on the arrival, departure, transfer and transit journeys made by private individuals as civil aviation from the airport in the jurisdictional territory of the municipality concerned, provided that they are not subject to a statutory public tax and that the air travel is not used by the individual for business activity. The Decree stated that a tax of HUF 1,000 per person per air journey must be collected jointly by the ground-handling service provider and the passenger air carrier. In addition, these parties were required to keep a register of the subjects of the air passenger tax.

On 25 January 2023 the Capital Government Office claimed the Municipality Council of the Curia to establish that the provisions of the decree relating to the air passenger tax are contrary to other legislation and to annul of these provisions. The Curia imposed a provisional application prohibition on the concerned parts of the decree, as it needed more time to reach a final decision. The Curia examined the objections raised by the Capital Government Office and found them to be well-founded. Accordingly, the municipality did not fully comply with its obligation to carry out a prior assessment of multiple taxations, the regulation of the decree also raises data protection concerns and it does not regulate fundamental issues such as the method and due date of the tax liability, the way to tax exemption, rules for recording and documenting collected tax and tax exemptions and the rules for assessing tax in foreign currency.

The Curia found the Capital Government Office’s concerns well grounded, therefore, with retroactive effect to 1 January 2023, annulled the provisions on air passenger tax of the decree. In its decision, the Curia stated that a municipal decree that does not specify how the tax is to be paid, when it is due, how tax exemptions are to be evidenced, the rules for recording and proving the tax collected and the tax exemptions, and the rules for assessing the tax in foreign currency, violates the requirement of clarity and creates legal uncertainty for the recipients (taxpayers and those liable to collect the tax).

By Lidia Suveges, Attorney at law, 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