01 Corporate Income Tax
- The level of the tax base was raised from 50 million HUF to 500 million HUF which distinguishes between tax payment obligations of 10% and 19%. (After the amounts falling below HUF 500 million 10% and above it 19% shall be contributed to the state.)
- The level of Topping up obligation must be met above the revenue of 100 million HUF. This rule can be applicable for the year of 2010 also. This regulation applies to the tax residents with other business year than the calendar year also.
02 VAT
- Changes of the territory of VAT concerning the following services:
I. Scientific, educational, cultural, entertainment, artistic and sport services.
II. The sales of gas / energy for heating passed through EU network.
III. Tickets for events.
- The territory of the VAT is the place of the consumers’ (tax resident) economic interest except for the tickets for events. In this case the territory of the VAT is the place of the event actually organized.
03 State Pension Funds
As adopted by the Parliament in November 2010, in order to raise additional public funds for state pension fund system, it is decided that the 10% of gross income of employees must be paid to State Pension Funds. The sum was increased from 9,5% to 10%.
04 Personal Income Tax
There will be significant changes to the taxation of personal income, mainly due to the introduction of the 16% flat tax rate.
Private individuals will have to pay 16% personal income tax on all of their income, i.e. income comprising the consolidated tax base.
When calculating the income comprising the consolidated tax base, a tax base addition must be applied. In the case of revenues from capital, no tax base addition will have to be applied. The tax base addition will remain 27% in 2011, while, in accordance with bill it will be halved to 13.5% from 2012 and will be abolished from 2013.
The term of the income not taxable but tax base increasable was totally eliminated. For example the pension fee fell in this category. It was calculated as tax base but the tax of it was not paidd by the individual.
Huge family allowances will be introduced:
After one child: HUF 62 500 / month deducted from the tax base.
After 3 children: HUF 206 250 / child / month deducted from the tax base.
Tax credits are capped at HUF 12,100 per month and will be fully available for annual incomes not exceeding HUF 2,750,000 and partly available (in gradually decreasing amounts) for annual incomes of up to HUF 3,960,000.
There will be significant changes to non-cash benefits.
There will be significant changes to non-cash benefits. Benefits-in-kind will no longer be treated separately for tax purposes: as a general rule, private individuals will have to pay tax on all benefits as part of their consolidated tax base.
Tax rate: 16 % (calculation: gross salary (27% tax base addition) X 16%)
Non-cash benefits with favorable tax rate as follows:
- vacation voucher
- hot meal and cold food vouchers,
- voluntary contributions to pension and health funds,
- internet allowance,
- local travel passes,
- school – start support (for children of the employees)
- Recreational card (New element). It is under development. (Limit : 300 000 HUF/year/employee)
The tax base will be calculated with the 1.19 multiplier and tax rate will be 16%. The total tax burden is 19,04 % instead of 25%.
Non-cash elements not possible to set per-capita:
- Private use of telephone
- Corporate hospitality
- Group insurance
- Business entertainment cost / business present (the part which is taxable)
The tax base will be calculated with the 1.19 multiplier and tax rate will be 16%. The total tax burden is 19,04 % and 32,13% health care tax.
Tax tip:
- The vacation voucher can be provided not only to the spouses but to live-in partner in one household. (One employee can get only one vacation voucher).
- Meal voucher (up to 18 000 HUF / month) can be rendered to the employee once a year and in one sum also.
These elements can be used as employee incentive elements.
Important deadline:
Topping up of the corporate tax / local tax by 20th of December!
Feel free to contact us for any further details:
Accace Kft., tel.: + 36 1 802 7690, e-mail: [email]hungary@accace.eu[/email]
