Corporate tax payment, rules pertaining to registration and de-registration

If your undertaking conducts economic or business activities in Hungary or if you establish a company in Hungary, you may be liable to pay corporate tax. In this case, entities liable to pay corporate tax must register with the Hungarian tax authority (NAV) if they do not have a tax number yet. The mode of registration and de-registration depends on the form of organisation.

Kulcsszavak: corporate tax entities liable to pay corporate tax undertaking branch place of business foreign enterprise registration tax registration tax number tax number cancellation registration de-registration cancellation

If you conduct economic or business activities through a branch or establish a Hungarian company, you are automatically registered with the Hungarian tax authority when notifying the court of registration (one-stop shop). However, you must report certain data directly to the Hungarian tax authority. The scope of data to be notified to the Hungarian Tax Authority is specified in Annex 1 of the Act on the Rules of Taxation.

Requests for cancellation must be reported to the court of registration as change in company data. The court of registration will send the certificate of change to the Hungarian tax authority. A final accounting report and a final tax return must also be prepared.

If you conduct economic or business activities in Hungary at a Hungarian place of business without establishing a branch or establish your place of management in Hungary, you must register with the Hungarian tax authority directly.

If you relocate your place of management in Hungary to a foreign country, you must notify the Hungarian tax authority thereof. You must also prepare and submit to the tax authority a final corporate tax return.

In the event of failure to comply with the obligation, a fine of up to HUF 500 000 shall be paid. If the tax payment is insufficient, this shall give rise to a tax penalty. If the tax is paid late, this shall give rise to a late payment charge.

You must apply for a tax number before the commencement of the taxable activity.

Certain data must be reported to the Hungarian tax authority within 15 days of incorporation.

Any change affecting tax liability which the court of registration is not required to report to the tax authority must be reported to the tax authority within 15 days of its occurrence. The data to be reported and the rules of reporting changes are set out in Section 16 of the Government Decree on the detailed rules of tax administration procedures.

The deadline for submitting annual corporate tax returns is the last day of the fifth month following the fiscal year.

Special, final tax returns must be submitted within 30 days.

The scope of data to be notified to the Hungarian Tax Authority is defined in Annex 1 of Act CL of 2017 on the Rules of Taxation.

 

If your undertaking has been registered with the Hungarian court of registration (e.g. branch), you must report your data on Form 201T.

 

If your undertaking has not been registered with the Hungarian court of registration, you must request a tax number by submitting Form 201.

 

Final corporate tax returns must be filed on Form 71.

Registration with the tax authority and cancelling a tax number are free of charge.

The competent directorate of the Hungarian tax authority (for foreign undertakings, the Large Taxpayers Tax and Customs Directorate.

The scope of entities liable to pay corporate tax is defined in Section 2 of Act LXXXI of 1996 on Corporate Tax and Dividend Tax.

Within 15 days of the notification of the tax number, branches and commercial presences must submit to the Hungarian tax authority a certified Hungarian translation of the document issued by the tax authority of the country of residence not earlier than ninety days before in proof of the tax residence of the foreign undertaking, and must report other Hungarian branches of the foreign undertaking together with their tax numbers.

Generally, the tax authority establishes the tax number within one working day of the day on which the application for registration with the court of registration is submitted.

The Hungarian tax authority registers the taxpayer under the technical identification number generated for the taxpayer during the tax registration procedure. Until your tax number is established, you must pay your taxes using this technical identification number.

 

Starting date of corporate tax liability:

  1. If a Hungarian company is established, the day on which the articles of association are notarised or countersigned by an attorney.
  2. If a place of management is established in Hungary, the day on which the first legal statement is made.
  3. If a branch is established, the day on which the branch is entered in the companies register.
  4. If a foreign enterprise conducts business activities in Hungary at a place of business not entered in the companies register, the day on which the first legal statement establishing the place of business is made.
  5. If the enterprise conducts construction and installation activities in Hungary, the day on which the construction commences (if the duration of the construction exceeds the duration specified in an agreement, or where there is no agreement, three months). In the case of construction, including construction and installation activities performed through a branch, tax must be first paid together with the taxes due in the fiscal year in which the duration of the construction exceeds the duration required for a place of business to be established as such. In such cases tax payable for the preceding fiscal year(s) must be assessed, reported and paid retroactively, according to the rules effective in the tax return period.
  6. For properties held in trust, the day on which the trust agreement enters into force.

In other cases it is the day on which the taxpayer is established as per the legislation governing its foundation.

 

The day on which corporate tax liability ceases:

  1. For resident taxpayers, corporate tax liability ceases on the day on which the taxpayer ceases to exist or on the following day after which they become exempt from corporate tax for any other reason.
  2. If a branch is operated, tax liability ceases on the day on which the branch is removed from the companies register. If the foreign enterprise faces winding up abroad and the proceedings also involve its Hungarian branch, or if the Hungarian branch faces winding up, corporate tax liability ceases on the day preceding the day on which the winding-up proceedings start.
  3. If as a foreign enterprise you conducted business activities in Hungary at a place of business not entered in the companies register, corporate tax liability ceases on the day on which a statement terminating the place of business is made.

 

 

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Act LXXXI of 1996 on Corporate Tax and Dividend Tax

Act CL of 2017 on the Rules of Taxation

Act V of 2006 on Public Company Information, Company Registration and Winding-up Proceedings

Government Decree No 465/2017 of 28 December 2017

NAV