Changes in the rules on
taxation
We have begun the introduction of the amendments and
news brought by the „tax package“ adopted in the end of year 2014 in our
previous newsletter (in December) regarding the retail sector.
This time we provide a summary on the most
important changes of the Act on the Rules of Taxation („Art“), within which our
more detailed priority topic is the EKAER system - deserving a great
deal of interest - and the most important questions arising in connection to
it, further we provide a guidance for registration.
-Stemming from a new general fundamental principle, the income can be taxable in Hungary, if the
legal relationship, and the income arising therefrom is affected by an
international contract and the differing taxation system among the member states
and its legal classification would result in the fact that the given income
could not be taxed in none of the states. Tax authority determines the tax – if
the tax base cannot be determined, with estimation - taking into account all
circumstances.
Tha arts provsions of general principles have been
supplemented on guarantee basis and for the purpose of clarification of the
legal practice with such fundamental principles eleveted to statutory level as
the requirement of same classification of identical legal relationships.
Thus the tax authority could not determine a different
classification for a legal relationship already covered by and classified
during an audit when auditing the parties to that legal relationship.
-From now on an auditor may also act as a representative in the
procedure before tax authority, although they did not figured in the list of
the Art as persons entitled to proceed.
-Notification rules pertaining to the persons obliged
to pay health services contribution have been supplemented to the extent that the tax
authority deletes upon request with retroactive effect the contribution payment
obligation of the private individual living abroad, if the private individual
credibly demonstrates that it did not use health services in the given period.
Further condition to abolish the contribution payment obligation is that the
private individual did not use health service financed by Health Insurance Fund
in the given period.
Exemption from notification obligation has been
supplemented in case of foreign taxpayers As a general rule to pursue Hungarian taxable
activites the taxable person must register at the state tax authority for the
determination of a tax number.
The act stipulates among the notification rules – as
exception from the general rule – that a certain foreign scope of subjects
(domestically non-established, or not obliged to establish domestically, but
established in other country of the Union) may be exempted from the
registration obligation if its domestic activity is exclusively limited to the
sale in VAT warehouses, or to export products to third countries from those,
whereas these legal acts are tax exempted. In these cases instead of the
foreign taxable person – based on agreement – the tax obligations pertaining to
the tax-exempt intra-Community supplies are conducted by the operator of the
tax warehouse. However, simultaneously by reporting the commence of the taxable
activity whether the taxable person acts as the operator of the tax warehouse.
New reporting obligation (!): mandatory notification
of the food and beverages
automatic vendor machines. As of 2015 the operators of the automatic vendor
machines carrying out food sales without operating personnel are obliged to
notify the beginning of the sale and its termination and the alteration of the
data content of the notification. The notification must be submitted until the
31 March, 2015 and it is subject to administrative service fee, of which amount
is HUF 30 000,-. The tax authority registers the automatic vendor machines
based on the notification and defines a registration number.
The tax reports and equivalent declarations of
taxpayers subject to increased tax authority supervision will not have to
be countersigned by tax advisors, tax experts or certified tax experts as of
2015 taking into account that this obligation was causing both the tax authorities
and taxpayers administrative burden and extra costs; therefore, the provision
prescribing such obligation was abolished.
In case of employer’s tax determination the new
deadline is the 20th of May (instead of the earlier 10th
of June), thus the deadlines for submitting the reports were unified. The
employer determines the tax base and the tax upon the declaration of the
private individual until the 30th of April following the tax year
and provides certificate on that.
In case of VAT recapitulative statements the limit of
the amount decreases to HUF 1 million. Pursuant to the respective regulations the taxpayer
fulfilling the transaction is obliged to provide data, if the amount of the
output VAT in the invoice issued by it reaches or exceeds HUF 2 million. As of
2015 this amount limit decreases to HUF 1 million.
Furthermore, the taxpayer obliged to VAT
recapitulative statements may upon his choice fulfill this obligation without
taking this limit into account (that is report every invoice not reaching HUF 1
million).
The scope of subjects obliged to provide data is
extended, new deadlines for financial institutions!
The organizations providing telecommunication services
are obliged to provide data on the traffic data of the internet purchases
within 15 days upon the inquiry of the tax authority. The purpose of this is
the promotion of the monitoring and exploration of the tax payment obligations.
The financial and payment institutions and investment
firms are obliged to provide data towards NAV with regard to data managed by
them and deemed to be bank secret. The provision of data happens electronically
since 2013. The Art specifies this time that the inquiry on connection with
enforcement procedure shall be fulfilled towards the tax authority with 8 days
and inquiry necessary for monitoring procedure within 15 days.
The NAV may inform other subject taxpayers during the
monitoring procedure inasmuch as the tax
authority based on the data being its disposal and upon the facts and
circumstances explored during its procedure observed such contractual or other
connections (related with each other) and affecting more taxpayers, regarding
to which conduct obeying tax acts can be presumed or defines or presumes tax
evasion.
This provision was included in the act in accordance
with the practice of the European Union for the purposes that the affected
taxpayers (e.g. contractual partners) are to promote the proper and careful
exercise of rights.
The lengthening of the limitation of the right to tax
determination: The right to tax
determination is prolonged by 12 months instead of 6 months, if the superior
tax authority within the framework of the second instance proceeding, the
minister responsible tax policy or the minister appointed for the supervision
of the NAV within the framework of monitoring measures and in the case the
court renders to conduct new procedure upon the judicial review of the tax
authority’s order.
Higher amount of default penalty can be imposed as a
legal consequence than the general amount of
default penalty in case of hindering the tax investigation by failing to meet
the obligation to appear by infringing the cooperation obligation or otherwise
hindering the investigation. This amount was in case of private individuals
maximum of HUF 200 thousand in case of other taxpayers HUF 500 thousand. From
now on a higher sanction can be imposed, thus in case of private individual tax
payer it may be HUF 500 thousand and in case of other taxpayer HUF 1 million.
The notion of affiliated companies have changed: the conceptual amendment figuring among the
interpretational provisions is in connection with amendment of the act on
corporate tax and dividend tax. The identity of the person of the managing
director also creates the affiliated company relation; whilst via the identical
management the decisive influence on the company’s business and financial
policy is established.
Besides the notions in connection with the
introduction of EKAER system – e.g. EKAER number, hazardous product, end user,
recipient, dispatcher - have been defined as well.
EAKER SYSTEM
NEW INSTITUTION TO COMBAT TAX
FRAUD
One of the most significant tax changes in 2015 is the
introduction of EKAER (Electronic Road Transportation Control System). The
purpose of the system is the tracking of the way of goods, the insurance of the
payment of public burdens and to hinder that goods are put in circulation in
Hungary that were not previously reported to the Hungarian Tax and Customs
Authority (NAV).
The Act on Rules on Taxation (Art.) for the above
purposes regulates in detail the reporting obligation and sanctions applicable
in case of failure to comply with the reporting obligation and providing
security deposit, of which main rules we wish to introduce in summary hereunder
as follows.
Reporting must be fulfilled in connection with
transports initiated on and following the 1 January, 2015.
Who and what activity is concerned by reporting
obligation
Reporting obligation concerns taxpayers involved in
road transportation activity in as much as it is pursued with vehicles subject
to a road toll (having a total weight of over 3.5 tons). The scope of hazardous
goods constitutes an exception from the general rule; whereas in their case the
reporting obligation applies if the product is not transported with vehicle
subject to road toll (exemption from these applies only in case of specific
conditions).
Road transportation activity shall mean and is
mandatory to report to the tax authority:
-
the
acquisitions of goods or importation for other purposes to Hungary from other
member states of the European Union (obliged to comply with reporting:
addressee/ recipient until starting the transportation the latest);
-
the
supply of goods or exportation for other purposes from Hungary to other member
states of the European Union (obliged to comply with the reporting: sender
until starting the loading the latest); and
-
the first
taxable supply of goods to non-final users within the territory of Hungary
(obliged to comply with the reporting: sender until starting the loading the
latest).
Exemptions
Certain taxpayers are exempt from the reporting
obligation upon subjective right (e.g. vehicles transporting goods covered by
excise duty, vehicles participating in preventing or averting damages caused by
a disaster, vehicles transporting non-commercial (free of charge)
humanitarian relief supplies etc.).
The act provides further exemptions from registering
into EKAER system based on the nature and quantity of the cargo in case certain
conditions are fulfilled, namely
-
if the weight of non-risky goods in one
transport does not exceed 2500 kg or if the non-taxed value of those goods does
not exceed 2 million HUF, or
-
if in one transport the
weight of risky food products does not exceed 200 kg or its non-taxed value of
250 000 HUF, the weight of other risky products does not exceed 500 kg or its
non-taxed value of 1 million HUF.
Data
content of the reporting
The notification must be fulfilled with the data
content defined in the Annex 11 of Art, thus among the reportable data include
especially, the name and gross quantity of the goods, customs tariff number, net
value, date of loading and arrival to the place of receipt, further the
personal identification data of the sender and the recipient as well.
It is extremely important to be informed with due
caution about the precise statutory data content during every notification;
whereas, the defective, or false reporting may trigger the validity of the
notification and not least serious sanctions.
The mode of reporting
Reporting shall be made electronically through the
electronic site of the EKAER system – accessible through the internet – by
creating a username and password directly for this purpose (http://ekaer.hu/regisztracio/). The taxpayer may fulfill its reporting
obligation personally or through a representative.
EKAER number
Based on the reporting the tax authority determines an
identification number, a so called EKAER number, which is generated on the site
of EKAER following the notification, in case it is of correct data content it
is simultaneously registered. The EAKER number identifies the product unit
transported by the given vehicle and thus to one EKAER number more product
types identified with customs tariffs number can relate.
It is important that the EKAER number is only valid
for 15 days, thus arrival to the place of receipt and date of the start of
loading must fall under this period.
When shall the security deposit be provided?
Firstly on the 31 January, 2015 based on the value of
the hazardous products registered on EKAER until this date. The security
deposit must continuously reach the 15% of the joint - net (without VAT) –
value of the hazardous products pertaining to a valid EKAER number. The deposit
provision may be provided through payment into a separate deposit account or by
providing a guarantee registered by the tax authority.
Tax authority reviews every day prior to the end of
the month whether the taxpayer providing security deposit has tax debt, whereas
in such case he is in position to set off the amount of the deposit with the
debts and the taxpayer must repeatedly supplement the thus decreased security
deposit.
Guarantee rule is that in case certain conditions
exist it is possible to be exempted from the obligation to provide security
deposit.
Sanctions
In case of failure to comply with the reporting
obligation and other infringements related to the EKAER number various sanctions
may apply, thus for example an unreported product will be will be regarded as having
uncertified origin and the tax authority may impose a default penalty of up to
40 % of the consideration of the unreported goods. In relation to
the default penalty sanction relating to non-compliance with the reporting
obligation the goods qualifying as goods of uncertified origin may be
seized up to the amount of the penalty. It is also notable that the tax authority
may also demand a declaration from the addressee, the dispatcher and the
carrier concerned in the case of transportation of goods of trading quantity on
the transported goods and EKAER number.
Pursuant to the legal regulations the tax authority
planned to introduce the sanctions as of 15th January, 2015;
however, according to the report of the Ministry for National Economy as of 22nd
January, 2015 coworkers of the tax authority will not impose default penalty
until the end of the trial run, but until 1st of March, 2015,
furthermore, until this date the taxpayers are also exempted from the payment
of security deposit.
Based
on the remarks and proposals received from the market actors and upon the
experiences of the trial run the necessity and possibility of the alteration of
the legal regulations pertaining to EKAER are also investigated.
v
In case of individual, specific questions, our
experts remain available at your kind disposal.
reka.ipacs@gfplegal.com
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