Contrary to previous years, the year-end top-up obligation will be different in 2019. Earlier, by the end of the business year, companies had to investigate whether they are subject to a tax advance supplement (also known as top-up obligation). In this article, we are focusing on the related changes.
Which tax types were subject to the year-end top-up obligation until now?
Previously, the following tax types were subject to supplemented tax advances to be paid during the year to the amount of expected annual tax:
- corporate income tax,
- innovation contribution,
- local business tax,
- income tax on energy suppliers,
- advertising tax,
- simplified business tax.
What has changed in 2019?
In short, from the tax year of 2019, the tax advance supplement (top-up) obligation will cease.
As a result, taxpayers are not required to file a declaration on tax advance supplement or pay tax on that basis, assuming that the 20th day of the last month of financial the year 2019 is later than the effective date of the change (July 24, 2019).
Why shouldn’t we forget about the year-end top-up obligation then?
On one hand, in case of companies whose financial year differs from the calendar year, if the 20th day of the last month of their financial year falls before July 24, 2019, they had to fulfil their uploading obligation by the 20th day of the last month of the selected financial year, i.e. to supplement the tax advances paid during the year to the amount of the expected tax, since they were subject to rules valid earlier.
On the other hand, the statement “the tax advance supplement (top-up) obligation will cease” is not entirely correct, as the obligation to supplement local business tax at year-end remains for those companies where the turnover of the previous financial year exceeded HUF 100 million, thereby keeping the liquidity of local governments.
This year, taxpayers still have the opportunity to file a statement that they would opt for the top-up obligation / apply the top-up obligation. This declaration must be submitted to the tax authority by the 20th day of the last month of the financial year 2019.
But who wants to apply the top-up obligation?
This question rightly arises since the new rule is more advantageous not only from liquidity point of view, but in the case of inadequate calculation the default penalty is also a risk of the taxpayer. But those who wants to make a tax offer, they are strongly advised to opt for applying top-up obligation in 2019 because if the taxpayer selects the top-up obligation in the financial year 2019, then it will have the opportunity to make a tax offer in accordance with the applicable rules.
Based on the above-mentioned, we advise companies to decide in time whether they want to take advantage of the option of top-up or not and be sure to check whether they are subject to the top-up obligation in connection with local business tax.
Should you have any question regarding the tax advance supplement or need help in preparation of the related calculation, feel free to contact our tax experts, who are at your disposal!
Read more about the topic from our experts on LowTax.