In this newsletter we present the most important changes for everyday practice from 2014 in connection to tax legislation in Hungary.
Corporate income tax: Disclosed participation
According to the present provisions, if the taxpayer acquires minimum 30% participation in another company, and if the acquisition is reported to the tax authority within 60 days (disclosed participation), after a continuous holding of the participations for at least one year, the gain (loss) from selling of the participation is exempt from corporate income tax (the tax law does not recognise this as expenditure). From 2014, the above option will be applicable from minimum 10% participation, and there will be 75 days for reporting.
Real estate holding companies
In case the foreigner owner sells his shares in a Hungarian real estate holding company, the profit of the sales is subject to 19% corporate income tax (if there is no double tax treaty between the state of residence of the owner and Hungary, or the treaty provides the right of taxation to Hungary). Pursuant to the present regulations, the above tax liability applies to Hungarian real estate companies if the market value of the real estate exceeds 75% value of all of its assets. Based on the modifications, from 2014 on, the book value shall be examined instead of the market value of the real estate.
Recognition of business restaurant costs
In case a taxpayer uses restaurant services as part of a business, official or professional event and pays by credit card, then the cost will be considered as recognised cost.