Global Tax Alert | 25 November 2013

Hungarian Parliament approves 2014 tax amendments

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On 18 November 2013, the Hungarian Parliament approved the proposed amendments to tax and contribution rules to be effective as of 1 January 2014.

This Alert summarizes the most relevant changes to direct taxes.

Minimum shareholding reduced to 10% for capital gain exemption

Under the amended law, the rules change on reported participation. Effective 1 January 2014, capital gains will be tax-exempt upon acquisitions equaling at least 10%.The 60-day deadline by which the acquisition of a participation must be reported will increase to 75 days.

Tax-free step up of assets upon the transfer of the place of management to Hungary

For companies that transfer their effective place of management to Hungary, taxpayers that qualify as tax residents as a result of the transfer will have the opportunity to determine depreciation based on the market value of their assets effective on the date upon which residency is obtained. This means that Hungarian tax law provides for a tax-free step up in basis upon the migration of a company to Hungary.

Statutory binding ruling fees reduced

The ruling fees decrease substantially for all types of rulings filed after 1 January 2014. Requesting a standard binding tax ruling will be subject to a fee of HUF 5 million (US$23k) (or HUF 8 million (US$36k) if the ruling is urgent). For permanent binding tax rulings, the fee will be HUF 8 million.

The authorities will introduce preliminary consultations with respect to binding tax rulings. This will provide taxpayers with legally controlled opportunities to have a consultation before officially initiating the binding tax ruling request procedure. Consultations will subject to a US$400 fee.

Books kept in foreign currencies

The amendment of accounting rules provides the unconditional opportunity to keep books and prepare financial statements in US dollars. This option should be available for 2013 as well.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Kft, Budapest
  • Balazs Szolgyemy
    +36 1 451 8608
    balazs.szolgyemy@hu.ey.com
Ernst & Young LLP, Hungarian Tax Desk, New York
  • Miklos Santa
    +1 212 773 1395
    miklos.santa@ey.com

EYG no. CM3986