Happy New Year, happy taxation! Tax changes for 2023
Many of the changes came into force on 1 January 2023, so we had relatively little time to familiarise ourselves with and interpret them. We have compiled the most important details of the changes in this article. For those who would like to look at the amendments in more detail, we recommend that you consult the relevant issue of the Hungarian Gazette, which can be accessed by clicking here. At each point you will find links to our previous articles to ensure that everything you need to know about taxation is in one place.
Definition of group passenger transport
Group passenger transport is where an employer provides transport for the purpose of carrying out work for at least four employees in a vehicle owned (operated), hired or leased by the employer. This means that, from 1 January 2023, passenger transport by means of a vehicle which is not owned by the disbursing agent but hired or leased by him/her will also be considered as group passenger transport.
Tax benefit for young people under 25
From 1 January 2023, the National Tax and Customs Administration will indicate in the draft tax return the amount of the benefit for young people under 25 years of age, based on the information in its records.
The beneficiary can complete and correct this information until the deadline for the personal income tax return.
In the event that someone leaves the flat-rate tax system or exceeds the income threshold applicable to them, they will not be able to opt for flat-rate taxation again in the year in which they did so or for the following 12 months. This is certainly a benefit, as previously there was a four-year waiting period for someone to become a flat-rate taxpayer again, so the period of prohibition on reverting is shortened.
A further change will be that the amount of income earned in the tax year preceding the tax year in question will no longer be relevant for the possibility of opting for flat-rate taxation.
Claiming family tax benefit during the year
If a self-employed wishes to claim a family contribution benefit, they must, at their discretion, determine and declare the advance tax on entrepreneurial income on a monthly basis and the advance tax on flat-rate income on a quarterly basis. This favourable amendment, which will also enter into force from 1 January 2023, means that as a flat-rate taxpayer, we will have to make our contribution declaration on a quarterly basis if we want to use the family contribution benefit.
Income from immovable property
From 1 January 2023, the date of acquisition of property acquired during a matrimonial property period will be the same for both married couples, unless a prenuptial agreement provides otherwise.
The amendment, already in force from 24 November 2022, provides that trust foundations are now also entitled to enter into a long-term investment contract if they are established by individuals for the purpose of making a trust foundation for the benefit of an individual beneficiary.
Grants from public trusts with a public-service mission
Under the provision in force from 28 July 2022, the amount paid as a scholarship / grunt to an individual by a public trust performing a public function in accordance with its public function is exempt from tax as a public benefit.
Pensioner in his own right
Thanks to a provision in force as of 24 November 2022, the law introduces a definition of a pensioner in his or her own right, according to which a pensioner in his or her own right is a natural person who is a pensioner in his or her own right under the Act on persons entitled to social security benefits and the coverage of these benefits.
Assets under management, foundation, trust foundation
The provision is already in force from 24 November 2022, whereby managed assets, foundations, and trust foundations have the possibility to reduce the tax base for the tax year 2022 by the income from long-term investments determined in accordance with the provisions of the Personal Income Tax Act.
The amendment will allow the above entities to submit a declaration; in lieu of a tax return, by the last day of the fifth month of the year following the tax year; if it has not earned any income in the tax year or has earned income in the tax year on the basis of which it is entitled to an exemption.
For the purposes of the provision on assets under management, a trust foundation established by a natural person for the sole purpose of making a benefit to a natural person as a beneficiary is treated in the same way as a natural person as a beneficiary.
Acquisition of assets by a trust foundation
After 1 January 2023; no gift tax is payable on the acquisition of assets by a trust foundation as a beneficiary.
(Note: The acquisition of the trust property and its benefits by a beneficiary shall be treated for the purposes of the levy liability as if the beneficiary had acquired the trust property and its benefits directly from the settlor or founder. The acquisition by the settlor or founder of the trust property and its benefits; including the acquisition of the trust property by the settlor or founder as a beneficiary; shall not be subject to the gift tax.)
Corporate group tax status
From 1 January 2023; where a group member ceases to be a member of a group for a reason other than the termination of the group without legal succession; the corporate group tax taxpayer, and the former group member and, in the event of the termination of the corporate group tax taxpayer,
the former group member must indicate the date of the circumstance giving rise to the termination of the group membership and the date of the termination of the corporate group tax taxpayer within 30 days of the day of the circumstance giving rise to the termination of the group membership or the former group member (not within 30 days of the termination of the membership or the group),
to apportion and declare the tax advance declared by the corporate group tax taxpayer and, on that basis, to pay the tax advance from the day of the termination of the group membership or the termination of the corporate group tax taxpayer until the last day of the sixth month following the end of the tax year.
Amendments relating to advertising tax
For the advertising tax, which we have already discussed, the 0% rate has been extended until 31 December 2023.
Payments of a personnel expenses
The amount of the personal expenses may be reduced by the monthly amount of the gross salary per person; up to a maximum of 50% of the minimum wage per month; in the fourth and fifth year of employment, for women with three or more children entering the labour market.
Exemption from tax liability
According to the provision that will enter into force on 1 January 2023; a person covered by social security conventions who is insured in another state (foreign performer) will not have to pay social contribution tax on his/her income under Section 1/B of the Social Contributions Act.
The exemption from tax liability is evidenced by a certificate issued by the competent foreign authority attesting to the existence of insurance in another state.
Definition of land
Land tax is not payable on land which is water-covered land connected to a river and used as a free port.
Simplified determination of the basis of assessment for local business tax
The simplified method for determining the basis of assessment for local business tax will become applicable from 1 January 2023.
An entrepreneur whose income for the tax year does not exceed
a) HUF 25 million;
b) HUF 120 million; provided that he/she qualifies as a flat-rate taxpayer exclusively engaged in retail trade activities under the Personal Income Tax Act during the tax year;
(a) and b) together being a small entrepreneur) may also determine the taxable base for the tax year as follows.
On the basis of the notified decision of the small entrepreneur; the taxable amount shall be based on the following; according to the municipality in which the small entrepreneur is established and has its seat and establishment
- HUF 2,5 million if the small entrepreneur’s income for the tax year does not exceed HUF 12 million;
- HUF 6 million if the small entrepreneur’s income for the tax year exceeds HUF 12 million but does not exceed HUF 18 million;
- HUF 8.5 million if the small entrepreneur’s income exceeds HUF 18 million but does not exceed HUF 25 million in the tax year.
Transfer of real estate between related enterprises
From 1 January 2023; the transfer of real estate between related enterprises will be exempt from tax only if at least 50 percent of the net turnover of the transferee in the previous tax year was derived from the rental or operation of real estate owned or leased by the transferee or from the sale of real estate owned by the transferee.
- HVG Különszám, ADÓ 2023.