The primary legal source with respect to corporate tax is Act LXXXI of 1996 on corporate tax and dividend tax.

The subjects of corporate tax

The subject of corporate tax and dividend tax is the domestic person and person with foreign residency listed in the act on corporate and dividend tax. From among domestic persons, the following are persons with domestic residence:

• business enterprises (including non-profit business enterprises), associations and European share-hold companies (including European holding share-hold companies) and European co-operatives,
• co-operatives,
• state company, trust, other state business enterprise, the company of certain legal entities, the affiliate company,
• lawyer’s office, bailiff’s office, patent attorney’s office, ,forestry association and public notary’s office,
• an organisation of the Employees’ Stock Ownership Plan (ESOP),
• the public service alliance, the water corporation,
• foundations, public foundations, social organisations, public bodies, the church (including the structural units empowered with a legal entity by the statutes or founding document of these organisations), building societies and voluntary mutual insurance funds
• higher educational institutions (including institutes established by such) as well as youth hostels,
• European regional cooperation group.

A foreign individual is considered a taxpayer with domestic residence if the place of conducting his business is in Hungary. A taxpayer with foreign residency is a foreign person who performs entrepreneurial activities at a domestic base of operations provided that he cannot be considered a taxpayer with domestic residence because of the place of his business management

Tax-payment obligation, the rate of corporate tax

Corporate tax is to be paid by the taxpayer on his income. For the sake of completeness, we would like to add that the church not performing entrepreneurial activities in the tax year satisfies its corporate tax obligation by making a so-called statement replacing tax returns for the tax year. As a main rule, the corporate tax is 16% of the positive tax base.

Diverting from the general rate, with effect of 1 January 2008 the tax rate – if chosen by the taxpayer – is 10% of the positive tax base not exceeding 50 million HUF, and 16% above this, if

• the taxpayer does not use the tax break in the tax year by virtue of law, and
• in the tax year, the average staff number of its employees is at least one, and
• its tax base in the tax year and the preceding year amounts to at least the minimal amount of income (profit) unless the taxpayer is exempted from the requirement concerning the minimal income (profit), and
• in the tax year the taxpayer corresponds to the requirement concerning labour relations regulated in the act on the state budget, and
• the reported pension and health security allowances in the year amount to at least the double of the amount of minimum wage valid in the tax year – if the taxpayer’s seat is in a small-area according to appendix 3 of the government decree about the list of prioritised areas of regional development, or in a settlement listed according to appendix 5 of the same decree, the minimum wage – calculated for the tax year multiplied by the average staff number of the employees.

The average staff number of those employed is to be taken into account without the employees on whose income only health care contribution is to be paid. When it is established whether or not the tax base corresponds to the requirement concerning the minimal income (profit), the tax payer having no legal predecessor as well as the legal successor tax payer has to act as follows:

• The tax payer having no legal predecessor shall take into account the tax base of the its first tax year (if the period of the company under registration was an independent tax year, the following tax year is to be taken into account as well),
• In the tax year beginning in the year of the transformation the legal successor company shall take into account the tax base of the year closed before the day of the transformation (the same base, the aggregated base or the divided one based on the final balance(s) of assets, depending on the form of the transformation – in case of a merger, the taxpayer taking over the venture is to be considered as a legal predecessor).

The tax base is positive if the enterprise is profit making.

Making the tax returns

Simultaneous with the tax returns, for the 12-month period starting on the first day of the second calendar month following the due date of the tax returns, the taxpayer is to report a tax advance indicating all the amounts for the period of obligation. No tax advance can be reported for that calendar month, quarter, the month of the quarter, for which the taxpayer has already reported a tax advance.

The rate and due date of the tax advance

The tax advance

• is the amount of the tax to be paid for the tax year preceding the tax year if the term of the tax year preceding the tax year was 12 months, otherwise
• is the amount of the tax to be paid of the tax year preceding the tax year calculated for 12 months on the basis of the calendar months of operation.

The tax advance

• is due every month, in equal instalments, if the tax to be paid of the previous tax year exceeds 5 million HUF;
• is due every three months, in equal instalments, if the tax to be paid of the previous tax year does not exceed 5 million HUF.

Filling-up obligation

The taxpayer of domestic residency with double-entry bookkeeping, and the foreign entrepreneur, are to supplement the tax advance in the tax year to the amount of tax expected to be paid in the tax year. In the course of all this attention is to be paid to the fact that the expectable tax to be paid – if the taxpayer receives some subsidy from the European Union or the budget – shall be identical with the amount of the tax established on the basis of the tax base calculated without the amount not received from the subsidies of the tax year by the 15th day of the last month of the tax year. It is important that this provision does not apply to the taxpayer whose annual revenue in the tax-year preceding the tax-year concerned did not exceed 50 million HUF.
 

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