Changes in Government Taxes, Hungary 2023

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The Hungarian parliament enacted the Autumn Tax Package towards the end of 2022. It consists of several changes that are being implemented in 2023. These affect personal income tax, corporate tax, local business taxation, VAT (Value Added Tax) and other related departments. 

Below we look at these changes and how they affect individuals and businesses in Hungary. So, if you’re in trouble with taxation, then consider working with the top tax relief companies to help you out. 

You can begin this new taxation period on a clean slate, as these companies have tax experts who can solve your tax issue. Otherwise, let’s look at the new taxation period in Hungary today.

Personal Income Tax Changes

A couple of changes are being implemented in taxation that affects individual citizens of Hungary in various ways. One of these is using group transportation for commuting. Hired or leased vehicles for this particular use are to be exempt from taxation. 

This is, of course, if they meet specific statutory terms and conditions. These include the state that the transportation is occurring in, holding at least four employees, and the transportation is for work.

More self-employed individuals can consider the flat tax-rate scheme as the condition to consider the previous year’s income has been removed. However, they’ll have to meet new income limit requirements.

In addition, self-employed individuals are prohibited from the flat tax-rate scheme when they’re going through the cessation process. This is during the year of ceasing and 12 months after.

Are There Any Changes Affecting The Business World?

The changes made in Hungarian taxes for 2023 affect individuals and businesses too. So, if you’re an entrepreneur, a small business owner, or part of the corporate world, then look out for these changes:

Entrepreneurs

Due to the new way of calculating taxes and contributions, called the “roll up,” and the conditions concerning flat rate tax, there are partial changes to the entrepreneurs’ calculation of social security contributions. They’ll be due every quarter now instead of monthly. 

Corporate Tax

Corporate income tax can now be paid in US dollars and euros. However, when paying in foreign currency, you must notify the government. Also, corporations still need to declare taxation in Hungarian forint.

Fiduciary trust activities, transfer of assets involving investment income, and electric charging stations are exempted from taxation. This has certain conditions in place.

Local Business

Local businesses can also pay taxes in US dollars and euros. The tax should still be assessed and declared by the HUF. With that, the assessment method has also been changed. The changes ensure that taxation is easier for small businesses and self-employed people.

The simplification is as follows:

• An income of 12 million has a business tax base of 2.5 million HUF
• If it’s between 12 to 18 million, then the base tax is 6 million HUF
• An income between 18 to 25 million has a base tax of 8.5 million HUF

Businesses can continue with the old method or opt for this new one.

What About Value Added Tax?

There are also a couple of changes concerning VAT. The 5% rate on the sale of the new property is still applicable. The condition is that the building permit or construction is announced by the end of 2024. 

The reverse charge mechanism is available to agricultural and steel products until the last day, 2026. Also, the VAT system is simplified in the case of the cessation of self-employed people. The changes include VAT returns not being applicable if a private player’s private entrepreneurial activities do not cease.

Such changes help make up for some things the government has no control over, like the possibility of extremely high fuel prices.

Other Changes in Hungarian Taxation

Other changes in taxation affect levies and duties, advertising and administration rules on transfer pricing records. They are as follows:

• 2023 is the last year of using a stamp duty when paying procedural duties. If you have any unused stamps by the end of 2023, then you have until December 2029 to get a refund.
• The suspension of advertising tax continues till the end of 2023, which means there is currently a 0% tax on this activity.
• Breaching preparation and transfer pricing records of 5 million HUF, which can accumulate to 10 million HUF if this has happened repeatedly.
• Exemption to transfer duty is applied on immovable property. However, the conditions are tightened to avoid it being abused.

It’s Good to Stay Up-To-Date With Taxation

Individuals and businesses must stay up-to-date with tax information and tax payments. Governments make regular changes in tax implementations, but they aren’t always negative. This is significantly more so with the 2023 tax changes in Hungary. 

Most of the changes involve tax exemption, reduced tax rates and suspensions. These include tax exemption in group transportation of employees, reduced taxes on new property, and suspension of advertising tax, to name a few changes. 

These help cut costs for Hungarian citizens. Also, the spectrum of business taxation has been broadened to fit more business settings, primarily self-employed and related activities. 

So, these changes not only favour Hungarian individuals, but also organisations. These range from big corporations to small enterprises. 

With the inflation rate generally high globally, it’s good to see a country that doesn’t have to increase taxation rates to keep up.