According to an amendment to the Hungarian Corporate Income Tax Act approved in July 2018, taxpayers may be eligible for higher tax allowance in connection with an investment project to comply with energy efficiency targets, upon placing the project into operation, in the tax year following the year when the project was placed into operation – or in the same tax year at the taxpayer’s discretion – and in the following five tax years.
The Hungarian Parliament enacted the tax package for 2019 in July 2018, which contains, inter alia, a significant modification in the cafeteria allowances.
The discounted 5% VAT rate introduced in 2016 will be abolished as of 1 January 2020, meaning that the 27% VAT rate will be applicable from that date, which can have significant effect on the market.
On the basis of current practice of the Hungarian tax authority, Hungarian taxpayers are not always able to recover value added tax they pay even the Court of Justice of the European Union had stated the possibility of VAT reclaiming.
Under the Hungarian VAT Act, from 1 January 2016 instead of the general VAT tax rate of 27%, a reduced tax rate of 5% is applicable to the flats to be constructed or existing in a multi-unit residential building with a total net floor space not exceeding 150 square meters.
In 2015 Hungary introduced two special progressive taxes, i.e. the ‘food chain inspection fee’ in order to cover the costs of sanitary inspections and the ‘healthcare contribution’ to reduce the negative effects of tobacco products on public health and the expenses of operating public healthcare.