In this newsletter we present the most important changes for everyday practice from 2014 in connection to tax legislation in Hungary.
Value added tax: Transactions with periodic settlement
According to the present regulations, if the supply of goods and services is settled in periodic settlement according to the agreement of the parties (this provision applies for example in the case of real estate leasing agreements), then the date of the VAT payment is the due date of the consideration for the given period. Under the new provisions, the due date of the VAT payment is the last day of the period settled. The new rules are applicable to supply of goods and services with a settlement period starting after 30th June 2014.
The present regulations will continue to apply to public services, public supply of goods and telecommunication services.
Due date of export of goods
Under the present provisions, the condition for qualifying extra-Community sales as export, and consequently, for the tax exemption of the sales, is that the sold goods exit the territory of the Community within 90 days from the date of the sale. The amendments increase the 90-day deadline to 360. In case an exit exceeds 90 days but not the 360-day period, the VAT shall be paid firstly, and reclaimed subsequently, on the date of the exit.
Extension of fixed assets’ correction period on intangible property rights
Changes in the usage of real estates and other movable properties (with regards to usage criteria for tax deduction) shall be investigated for a period of 240 and 60 months from the start date of usage, respectively; and in case of any changes, the input VAT (deducted or not deducted until the start date of usage) shall be modified accordingly. From 2014, the regulation will be extended to intangible property rights with usage of more than 1 year.
Reverse-charge tax for construction and repair services
At present, the reverse-charge mechanism is applicable in case of those construction and repair services in connection to real estates that require building permit. From 2014 on, in addition to building permit, reverse-charge mechanism shall be applied on those real-estate related services that require the acknowledgement of the construction authority.
Taxation of passenger car sales
Pursuant to the 2013 interim changes, if no input VAT is charged on the purchase of a passenger car, (e.g. purchasing from an individual or from a vendor using difference VAT), then the resale of the car is VAT-exempt. Before the changes, the condition for tax-free resale was that there should be a charged non-deductible input VAT at the acquisition.