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Tax Penalty Amounts Doubled in Hungary

Hungary
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Default penalty amounts generally has been doubled in Hungary as of 1 August 2024. According to the Governmental Decree published in the Hungarian Gazette on 8 July 2024, overwriting the Act on the Rules of Taxation, the increase is due to the Ukrainian war and is theoretically effective by the end of the emergency period.

According to the amendments published in the Hungarian Gazette, as of 1 August 2024, the amounts of the default penalty that can be imposed by the Hungarian tax authority (NAV) as a general default penalty is capped:

  • for natural persons at HUF 400,000 (instead of HUF 200,000);
  • for legal entities (non-natural persons) at HUF 1 million (instead of HUF 500,000).

The specific default penalty cap is also increased from HUF 1 million to HUF 2 million for employing undeclared workers, failing to issue a proper invoice or receipt or in compliance with archiving rules.

The current changes do not introduce any new penalty scenarios in the Act on the Rules of Taxation, ‘only’ the amounts of the penalties are increased. The new penalty amounts will apply to taxpayers who fail to fulfil their tax obligations due after 1 August 2024 and can be already applied during the targeted tax inspections by the tax authority at the popular holiday sites in the remainder of the summer season.

As mentioned, the increase has been introduced via a governmental decree for the state of emergency, period, the Act on the Rules of Taxation has not been formally changed. Based on recent experience and also taking into consideration the inflation in past few years in Hungary as well, it is expected that the increased amounts will stay with us permanently.

By Bálint Zsoldos, Head of Tax, 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