Before the beginning of the summer break, the Parliament has amended several tax laws and adopted new rules as well. The most important changes are summarized in our newsletter below.


As a result of the amendment, the regulation on the tax payable by small taxpayers („KATA”) becomes significantly stricter:

  • If a business partner  provides income to a small taxpayer who is considered to be a related party of the business partner, the business partner (as a disburser) should assess, report and pay 40% KATA surtax on this income by the 12th day following the month of the payment. The business partner shall indicate the tax number, name, and address of the small taxpayer concerned in its tax return.
  • In case of non-related parties, if a business partner provides income to the same small taxpayer in excess of HUF 3 million aggregated from the beginning of the calendar year, the business partner (as disburser) should assess, report and pay 40% KATA surtax on the income provision exceeding HUF 3 million per annum. Certain amounts should be excluded from  the tax base (e.g. the amount mentioned in the above point, i.e. income provided to small taxpayers considered to be related parties of the business partner).
  • The business partner first assesses, reports and pays the KATA surtax by the 12th day following the month in which the said threshold has been exceeded. These tax compliance steps are to be repeated following each month in which the business partner (the disburser) provides income to the small taxpayer that is exceeding the threshold.
  • The business partner is obliged to inform the small taxpayer concerned about the annual amount after which the business partner paid the 40% KATA surtax by 31 January of the following year.

The provisions regarding the cases when the small taxpayer receives income exceeding HUF 3 million from a foreign payer become stricter as well:

  • If a foreign business partner (foreign disburser) provides income to a small taxpayer with whom they qualify as related parties, the small taxpayer pays a 40% KATA surtax on this income by the 12th day following the month of the payment.
  • If the total income received by the small taxpayer from the same foreign non-related party business partner exceeds HUF 3 million aggregated from the beginning of the calendar year, the small taxpayer should pay 40% KATA surtax on the amount exceeding the HUF 3 million threshold. Similar to the case when the income is provided by a domestic business partner, certain amounts specified by law should be excluded from the KATA surtax base.
  • If the small taxpayer is obliged to pay the KATA surtax based on the above, the small taxpayer shall report the income subject to KATA surtax, as well as the name and address of the business partners concerned broken down on a monthly basis on the annual tax return of the small taxpayer to be filed by 25 February of the following year.

It is important that the income subject to KATA surtax should be disregarded when calculating the general annual KATA threshold of HUF 12 million. Furthermore, the KATA surtax obligation does not exempt the small taxpayer from the itemized tax payment obligation.

The small taxpayers will be obliged to provide certain additional information to their business partners as well. Upon entering a contractual relationship, the small taxpayer should inform the business partner in writing about its small taxpayer status. Moreover, the small taxpayer should inform the business partner about the termination or re-establishment of its small taxpayer status before any of these changes by indicating the effective date of the change.

The above amendments will enter into force as of 1 January 2021.


After consulting the local municipalities, the Government might designate so-called „rust zone action areas” by its decree. In these areas, the sale of new flats with a maximum useful floor area of 150 square meters constructed in apartment buildings will be subject to 5% VAT.

The reduced VAT rate should be applied for the first time where the tax point of the transaction or the determination of the payable VAT falls on or after the date the amendment entered into force. The amendment will enter into force on the 8th day after its publication.

The concept of the rust zone action area is defined by the amendment of the Act on the development and protection of the built environment. According to the act, this area should be considered as an area equipped with transport, utility, and institutional infrastructure (or where these can be established in a sustainable way), which is suitable for residential and other purposes, including typically brownfields. Investments made in this area are considered as investments of high importance for the national economy, therefore, the investors can obtain the necessary permits much faster and easier.


The bill passed amends several points of the current EKÁER system. The amendments were mainly justified by the requirement to comply with the European Union law, and the tax audit experience in the last five years was also an important aspect when drafting the changes. The amendments do not include certain detailed rules (e.g. the exact scope of products subject to reporting), these will be covered in a ministerial decree to be issued later.

Based on the above, the EKÁER reporting obligation for non-risky products will be completely abolished from 1 January 2021. It was also confirmed that reporting via a direct computer data connection is considered to be identical to the reporting made via the electronic interface of EKÁER.

If the obligor fails to fulfil its reporting obligation or performs its reporting obligation incorrectly in terms of weight or value of the transported goods, a default penalty up to 40% of the net value of the goods can be imposed. In all other cases (e.g. swapping letters, typos etc.), a default penalty up to HUF 200,000 for natural person taxpayers and up to HUF 500,000 for non-natural person taxpayers might be imposed.

In addition to the above, the definition of „product unit” is now included in the law.

For risky products, reporting and risk guarantee obligations are expected to be maintained. However, taking into account that the ministerial decree governing the detailed rules is not yet available, it is still in question whether the  scope of risky products are subject to change and under which conditions those products should be reported (i.e. type of the transport vehicle, value and weight limit of the risky products transported).


Based on the case-law of the Court of Justice of the European Union (hereinafter: CJEU), it became necessary to modify the interest calculation rules in special proceedings under articles 195-197 of Act CL of 2017 on the Rules of Taxation.

According to the opinion of the CJEU, the current regulation based on which the tax authority pays interest on the refundable tax at the same rate as the central bank prime rate does not comply with the European Union law, since the market interest rates available for economic operators are higher than the central bank prime rate and thus, interests equal to the central bank prime rate are insufficient to compensate the taxpayers for their financial loss. In light of this, the Parliament modified the interest rate payable to the central bank prime rate increased by two percentage points.

The above amendments will enter into force on the day following the publication of the modifying act. However, in the opinion of the CJEU, the higher interest rates should be provided in cases where the tax authority has already fulfilled the taxpayer’s interest claim under the current rules. Therefore, the amended law clarifies that the new rules should apply also to ongoing proceedings as well as proceedings closed by a final decision, in certain cases.


  • Following the changes in the corporate income tax rules, from this year onwards, the tax advance top up on local business tax will not be due before the end of the tax year. This favorable change also applies to enterprises with financial year deviating from the calendar year, even if their respective tax year has not yet ended when the law enters into force.
  • Associations and foundations will be exempt from paying building tax and property tax in connection with the asset management of state-owned real estate, even if the real estate is not only used to perform their core business or main activity specified in their deed of foundation.
  • To simplify the tax system, the local building tax liability for advertising media (e.g. billboards) will also be abolished.

The above amendments will enter into force on the day following the publication of the modifying act.


The bill passed clarifies the personal income tax treatment of health care contribution (this year’s rate is HUF 7,710 / month) charged to individuals but paid by another person. Health care contribution taken over by another person (e.g. by foundation, local government, former employer) does not qualify as income, thus it should not be taken into account when calculating the individual’s income.

To encourage investments, the Government has previously allowed corporate taxpayers to reduce their pre-tax profit as a development reserve with their total pre-tax profit, but up to HUF 10 billion. The amendment extends the allowance rate to private entrepreneurs: private entrepreneurs can reduce their entrepreneurial income as a development reserve by the full amount of entrepreneurial income remaining after deducting the entrepreneurial costs, but they are still subject to the HUF 500 million limit.

The above amendments will enter into force on the day following the publication of the modifying act.


According to the existing legislation, the base of social security contribution and social contribution tax for employees (including part-time employment) is at least 30 percent of the minimum wage (minimum contribution base). However, this condition could not currently be met in certain cases, since the Economic Protection Action Plan against the Coronavirus Epidemic has allowed employers to employ workers in significantly lower working hours than before. According to the bill passed, if the income subject to social security contribution does not provide sufficient funds for the social security contribution withholding, the employer is obliged to pay the social security contribution on the difference between the minimum contribution base and the actual income of the employee. For social security benefit calculation purposes, the payment on the above difference by the employer will deemed to be paid by the insured person. The bill passed provides a grace period, therefore the payment liability for the difference described above does not have to be applied for July and August 2020, in these months the contribution base should be assessed based on the general rule. The provision will enter into force on the 30th day after the modifying act is put into effect.

An indexation system will be introduced from 2021 for determining the monthly and daily amount of the health care contribution. The results of the calculation will be published on the website of the tax authority by 31 October of the year preceding the given year.

A new provision has been added to the law, in order to clarify when the Social Security Identification Number („TAJ number”) of an individual concerned would become valid again. Nevertheless, it is important to emphasize that subsequent settlement of the unpaid contribution does not result in the retroactive validity of the TAJ number.

As a result of the amendments, the TAJ number will be invalidated only if the health care contribution is unpaid for at least a six-month period.

The above amendments – excluding the provisions relating to the minimum contribution base – will enter into force on the day following the publication of the modifying act.


The DAC 6 Directive imposes a reporting obligation for consulting firms (e.g. tax advisory firms) established in the European Union relating to any advice on establishing a cross-border (aggressive) tax arrangement covered by the scope of the Directive. This reporting is primarily the obligation of tax and legal professionals (“intermediaries”) providing advice for the establishment of international tax arrangements resulting in significant tax saving in certain Member States.

This obligation would have originally entered into force on 1 July 2020, which was postponed by 6 months. Thus, under the new rules, the obligation should be met as follows:

  • Intermediaries (or taxpayers) concerned and involved in tax planning should report by 28 February 2021 if the reportable cross-border arrangement was implemented between 25 June 2018 and 30 June 2020.
  • For reportable cross-border arrangement implemented between 1 July 2020 and 31 December 2020, the 30-day reporting deadline starts on 1 January 2021.
  • In case of standardized structures, the first reporting should be made by the intermediaries (or taxpayers) involved in tax planning by 30 April 2021.
  • The Member States should transfer the data collected on cross-border arrangements to other Member States first time by 30 April 2021.

The above amendments will enter into force on the day following the publication of the modifying act.