31
Sun, May
98 New Articles

From 1 January 2020, the reduced tax rate of 5% applicable to the flats to be constructed or existing in a multi-unit residential building with a total net floor space not exceeding 150 square meters and to the single-unit residential building with a total net floor space not exceeding 300 square meters will be terminated and the general VAT rate of 27% will be applicable for the sales of such residential properties.

According to an amendment to the Hungarian Corporate Income Tax Act approved in July 2018, taxpayers may be eligible for higher tax allowance in connection with an investment project to comply with energy efficiency targets, upon placing the project into operation, in the tax year following the year when the project was placed into operation - or in the same tax year at the taxpayer’s discretion - and in the following five tax years.

As Mr. István Nagy, Minister of Agriculture explained in September 2018, „the undivided joint ownership paralyses the Hungarian economy, and from a competitiveness point of view it is essential to be deleted”. The Hungarian agricultural land and forestry ownership conditions are not optimal, since the average plots are too small and they have many owners. This situation affects 3.5 million citizens and 1 million hectares.

The establishment and renovation of shopping centers will be governed by stricter rules according to a new regulation approved in the summer 2018. The so-called “Plázastop” (in English: Law on stopping malls) was introduced in 2012 for the purpose of preventing the spread of shopping malls. The regulation was originally planned to be in force until the end of 2014, however, it had been amended only in 2015 when the extension and establishment of shopping malls exceeding the floor area of 400 sqm was prohibited.

The Hungarian Parliament enacted the tax package for 2019 in July 2018, which contains, inter alia, a significant modification in the cafeteria allowances. The aim of the reform is to simplify the proliferated cafeteria system and to reduce the associated administrative burden.

The Hungarian Minister of Finance announced on 7 August 2018 that the maximum number of third-country nationals who might be employed in Hungary with work permit shall be 55,000. Last year the limitation was 59,000, which means that the maximum number of third-country nationals has been reduced with 4,000. The decision may be surprising, since according to the statistics severe labour shortage is experienced in key sectors and there is a need for the employment of third-country nationals.

The legal practice analyser group of the Curia (i.e. the Hungarian supreme court) published a summarizing opinion on the judicial practice of the possession protection cases initiated before Hungarian notaries. Under the provisions of the Civil Code, the owner shall refrain from any conduct that would unnecessarily disturb others, especially his neighbours, or that would jeopardize the exercise of their rights. The possessor is entitled to request the termination of the disturbance from the notary public within one year.

The discounted 5% VAT rate introduced in 2016 will be abolished as of 1 January 2020, meaning that the 27% VAT rate will be applicable from that date, which can have significant effect on the market. In order to avoid a possible market chaos, the Hungarian Real Estate Development Roundtable Association (IFK) proposed introducing flexible, gradual VAT and stamp duty regulations that may result in increasing tax burden in the next 3-4 years. The new system could ensure that the supply and the sales of the new real estates are not reduced drastically from 2020.

The Hungarian Parliament amended the Hungarian Data Protection Act in June 2018 in order to ensure the consistency of the Hungarian legislation with the provisions of the GDPR.

The European Commission („EC”) has launched an infringement proceeding against Hungary in July 2018. According to the EC, the Hungarian law excludes certain cost types from the electricity and internal gas network charges, which are in infringement of the prescribed cost recovery plan set out in the Directive of Electricity and Internal Gas. In addition, the EC also stated that Hungary had accepted certain amendments in its electricity legislature that restricts the right of market operators to ask for a complete judicial review on the decision of network charges of the national regulatory body.

The Hungarian real estate and housing market is experiencing golden days. Although the market took a serious hit during the financial crisis in 2008, today enormous sums are again being invested in office buildings, shopping malls, hotels, residential areas, and retail. In order to map the underlying reasons behind the market’s boom, and to better understand how the country is dealing with the high demand for development lands and properties, CEE Legal Matters sat down with six Hungarian lawyers specialized in Real Estate & Construction and a Legal Counsel from Prologis, a Real Estate & Supply Chain Logistics company. 

On the basis of current practice of the Hungarian tax authority, Hungarian taxpayers are not always able to recover value added tax they pay even the Court of Justice of the European Union had stated the possibility of VAT reclaiming.

The first Hungarian BIM Handbook has been prepared and published on the website of Lechner Tudásközpont on 22 June 2018, free of charge. Building Information Modelling (BIM) is a new approach to design, construction and facility management, where the digital representation of the building process is used to facilitate the exchange and interoperability of information in digital format. BIM is beginning to change the way buildings look, the way they function and how they are designed and built.

Several amendments to the Company Registry Act entered into force on 1 July 2018. The new provisions include a new information obligation for the legal representatives, meaning that in case of the indication of personal data in addition to the statutory data content of the company register, the legal representative must draw the attention of the natural person to the fact that his/her consent to include his/her natural data in the document means that such data will be available for the public.

The so-called Integrated Legislation System (ILS; in Hungarian: Integrált Jogalkotási Rendszer) is planned to be implemented in Hungary by the end of 2018. The main purpose of the ILS is the reduction of the administrative burdens of the public administration and the increase of the quality of the services for citizens and companies by the administration.

Hungarian businesses have the “sword of Damocles” hanging over their head as the new European data protection regulation (“GDPR”) is applicable as of 25 May 2018. Due to the fact that the majority of the Hungarian companies are micro-enterprises, the administrative burdens cause an impossible obstacle to them.

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