Corporate Tax 2010 - BMR Advisors

Gide Loyrette Nouel
Hungary
4.6 Is tax imposed at a different rate upon distributed, as
opposed to retained, profits
No, the corporate income tax rate is the same for distributed and
retained profits.
4.7 What other national taxes (excluding those dealt with in
“Transaction Taxes”, above) are there - e.g. property taxes,
etc.
Property tax on residential properties and vehicles
Property tax is payable on residential properties (including holiday
homes) of high value. The tax will not be levied on residential
properties with a market value up to HUF 30 million
(approximately EUR 109,000) if the apartment is recorded in the
governmental registry as the address of the taxpayer and the
taxpayer actually lives in the apartment. Second homes up to the
market value of HUF 15 million (approximately EUR 54,500) will
also be exempted from the tax but any additional residential
property will be taxed without exception.
The property tax should be paid by the person(s) who officially own
property on the first day of the given year. If property-related rights
(e.g. usufruct, right of use, asset management right) are recorded in
the real property registry the tax has to be settled by the holder of
the right. The tax rate varies from 0.25% to 0.5% of the market
value of the real property.
Property tax is also levied on vehicles of high value including
certain water vehicles, aircrafts and passenger cars.
Other taxes
The most relevant Hungarian taxes (excluding those mentioned
elsewhere in the entire chapter on Hungary) are the following:
personal income tax;
other contributions (social security contributions: pension
fund and health fund contributions, training fund
contributions, contributions to the rehabilitation fund);
health care tax;
transfer tax on the sale, inheritance and gift of certain
properties;
company car tax;
customs;
excise duties;
bank tax;
innovation contribution;
tax levied on energy suppliers; and
environmental charges, etc.
4.8 Are there any local taxes not dealt with in answers to
other questions
1. Local business tax
Companies registered in Hungary are subject to local business tax
at a maximum rate of 2%. The tax base is the sales income less the
costs of materials, costs of goods sold and mediated service fees.
Mediated service fees also include the charges of subcontractors
under a written contract for professional services if used for new
flats (i.e. flats sold before the issue of the occupancy permit or after
that for the first time).
Introduction of the local business tax is an option for local
authorities, it is not introduced (or not at the highest rate) by every
local government.
2. Property taxes
There are two types of real estate taxes which may be imposed by
the local municipalities: (1) building tax; and (2) tax on land based
on the Act on Local Taxes.
a) Building tax
The building tax is an annual levy imposed on the registered owners
of a real property as at 1 January of each given year. At the
discretion of the given local municipality, the tax may either be
calculated on the basis of either the area of the building (in square
meters) or on its adjusted market value. The adjusted market value
of the property is 50% of the market value for transfer tax purposes.
The annual rate is determined by the municipality and therefore
varies from region to region. The Act on Local taxes fixes the upper
limit of the rate at HUF 900/m² (approximately EUR 3.3/m²) or at
3% of the adjusted market value of the building.
b) Tax on land
The owner of the undeveloped land (that is not built on) situated in
the territory of an urban area may be taxed by the municipality. The
tax is payable by the registered owner on the first day of the given
year.
The method of calculation is the same as that for the building tax
(see above).
The upper limit of the tax is fixed by the Act on Local Taxes at HUF
200/m² (approximately EUR 0.7/m²) or at 3% of the adjusted
market value of the land.
3. Communal tax of entrepreneurs
The tax is based on the annual average number of employees and it
may be imposed at a maximum rate of HUF 2,000 (approximately
EUR 7.30) per employee per year.
5 Capital Gains
5.1 Is there a special set of rules for taxing capital gains and
losses
As a general rule, gains realised on investment in another company
(resident or non-resident) are subject to corporate income tax
(19%), while capital losses upon the transfer of shares are generally
deductible.
Special rules apply to capital gains realised on “reported”
investments if not held in a CFC. Capital gains on the sale of
qualifying participations are exempt from both corporate income
tax and solidarity surtax (participation exemption). To qualify for
the relief on “reported” investments, the non-CFC participation
should reach 30%, should be reported to the tax authority within 30
days after its acquisition, and has to be held for at least one year.
The one year holding period is not a criterion for tax relief on
capital gains realised due to a reduction of capital or a termination
without legal succession. On the other hand, the losses incurred on
the qualifying participations will not be tax deductible.
Due to a temporary beneficial tax regime, even CFC capital gains
can be tax exempt in part. Under the tax amnesty, 75% of the capital
gains from the alienation of CFC shares will become tax exempt as
long as 50% is invested into Hungarian state bonds by 31 December
2009 and is held there for at least two years. This benefit is
available for the 2009 tax year only, and cannot be applied for
capital gains from Andorra, Monaco or Lichtenstein.
Hungary
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