Hungarian Tax Changes in 2018 – Good to Know Part 3.

Contribution to Tourism Development

• In connection with the above-mentioned change, a new tax, a contribution to tourism development, was introduced in close connection with the primary aim of a significant reduction in VAT rates.
• The amount of public tax is 4%, which is calculated on the value of the services concerned calculated without VAT. The tax is to be declared according to the rules of self-administration according to the VAT return frequency and in the case of an exempt taxable person until 25 February of the year following the provision of the service. The contribution will be the revenue of the central budget and will, according to the proposal, be devoted to tourism development tasks.

Changes in Corporate Tax

• Change in the concept of the notified share:
  The definition of the notified share changes from January 1, 2018; the ownership interest can be treated as a shareholding declared irrespective of the degree to which it is notified to the tax authority within 75 days of the acquisition.

• Tax base benefit for rental housing construction for workers' mobility:
  According to the provisions of the amending law, from January 1, 2018, the pre-tax profit will be reduced by the taxable person's income to the employees of the rented dwelling (long-lived structure) built to secure their housing, the amount shown as an increase in the cost of the investment. The tax advantage cannot be applied if the taxpayer is affiliated to the employee of his affiliated company and his relative.

Change in the Concept of Controlled Foreign Company

• As of the day following the promulgation of the amending law, the foreign permanent establishment of a resident taxpayer shall not be considered a controlled foreign company in the business year in which each member of the shareholder has at least 25 per cent a shareholding, on the first day he has been listed for at least five years. Another change is that a foreign person does not qualify as a controlled foreign company if the statutory shareholding exists in most of the taxable period of the resident taxpayer.