Tax changes 2020

Dear Clients! Dear Readers!

In this Newsletter your attention is drawn to the provisions for the tax package adopted by Parliament for the year 2020, and you are reminded about some previously adopted changes which will come into force early 2020 or have already been effective from mid-2019.

Personal income tax

• The interest income from the debt securities issued on 1 June 2019 by the Hungarian state for the population is tax-free.
• Tax allowance for mothers of 4 or more children will become effective as of 1 January 2020, which might be eligible based on the separate statement of the private individual when her monthly tax advances are paid.

Contributions, social contribution tax

• Changes in rates

 On 1 July 2019 the rate of social contribution tax was reduced to 17.5 %.

 As of 1 January 2020 the monthly amount of health contribution to be paid by non-insured private individuals will be HUF 7710 (HUF 257 per day) instead of the present HUF 7500 per month (HUF 250 per day).

• The new Act on social insurance

The law being in force since 1998 will be replaced by a new one from 1 July 2020, which will introduce the concept of a unified 18.5 % social contribution, and will pool the individual contributions charged to the income of private persons which were previously paid to three different funds.

• Benefits from incomes in addition to pension

As of 1 January 2019 only 15 % personal income tax was imposed on the income of persons employed in addition to their being old-age pensioners. The employer did not have to pay other dues after retired employees.

As of 1 July 2020 incomes paid to retired persons in their own right for all occupational activities (for instance contract of engagement) will be exempt from any additional tax and contributions.

Corporate tax

• The start-up companies created during the year from the very beginning can join a corporate tax group (in other cases joining the group is to be reported until the 20th day of the last but one month of the tax year).
• Replenishment obligation until the 20th of the last month of the tax year will be ceased (no replenishment will be necessary as of 2019 tax year either). But this obligation will remain mandatory concerning business tax.
• As of 2020 instead of the previous 50 %, 80 % of the tax advances can be offered and 7.5% tax will be credited.

VAT

• The Act on VAT will make issuing invoices mandatory for certain tax-free activities (for instance education, dental services).
• As of 1 July 2020 the first 8 digits of the buyer’s tax identification number shall be displayed regardless of the amount in case the taxpayer is registered in Hungary.
• As of 1 January 2020 the deadline for invoicing will be reduced to 8 days instead of the previous 15 days.
• The service of Invoicing online wll be extended:

 As of 1 July 2020 the VAT limit of HUF 100,000 will be ceased, which means that every resident taxpayer will have to file each domestically made transaction in the system;

 As of 1 January 2021 the reporting obligation will be extended over each domestically made transaction (with the exception of invoices filed in the MOSS scheme).

• Regarding irrecoverable claims under particular conditions it will be possible to reimburse VAT.
• VAT rate will be reduced to 5 % from 18 % regarding the provision of accomodation for commercial purposes.

Regarding any additional questions our staff are ready to help you.

Best regards:

ABT Treuhand Group