The year 2021 will bring a number of novelties for businesses in the field of taxation. Below are some of the most important modifications that we compiled for you.
Value added tax (Általános forgalmi adó, ÁFA):
From 2021, the reporting obligation related to online invoicing will further be expanded. From 1st January, invoices issued to individuals must be reported to the tax authorities as well.
From the second half of 2021, NAV will prepare a draft of VAT return for businesses.
The e-commerce VAT package of the European Union will enter into force next year, abolishing, among other things, the tax exemption for import consignments not exceeding the value of € 22. Therefore, from 1st July 2021, all goods ordered from abroad (non-EU countries) are subject to VAT. They will also introduce a one-stop shop system for EU cross-border selling, which aims to reduce the administrative burden on businesses trading B2C online within the EU, according to which the cross-border seller can fulfill his tax obligations in his own language through a single portal – under certain conditions.
Reverse charge VAT for temporary employment will be eliminated, so this tax regime may be used for construction and installation work related to real estates only.
Corporate income tax (Társasági adó, TAO):
From 1st January 2021, the definition of controlled foreign companies will be expanded.
Thus, for example, a foreign person who is resident in a non-cooperating state and a foreign establishment located in a non-cooperating state cannot be exempted from the classification as a controlled foreign company.
The legislation on reducing profit before tax will also change.
According to the law, the profit before tax is reduced by the income received in the tax year as dividends and shares received, except for dividends received from a controlled foreign company. Capital withdrawals may also reduce the profit before tax.
Amendments regarding uncollectible receivables against affiliated companies
Corporate taxpayers who deduct their profit before tax in respect of the part of the cost of a receivable from their affiliate that has become uncollectible shall provide information in their tax return about the affiliate concerned.
Small business tax (Kisvállalati adó, KIVA):
The most important change affecting the regulation of KIVA is that tax rate will be reduced to 11 % from 2021.
In addition, the current HUF 1 billion entry limitation will be increased to HUF 3 billion.
Fixed-Rate Tax of Small Taxpayer Enterprises (Kisadózó vállalkozások tételes adója, KATA):
According to the current rules, those who chose KATA taxation have so far been subject to two types of tax liability: the fixed-rate tax liability per month, and, on the other hand, if the annual income of the small business exceeds HUF 12 million, respective additional tax of 40 %.
However, from 1st January 2021, the current rules will be amended as follows:
- for a part of the amount invoiced by a small taxpayer enterprise to a domestic payer (sole proprietor, partnership, other organizations) in a tax year exceeding HUF 3 million (net), the domestic payer is obliged to pay an additional tax of 40 %;
- for a part of the amount invoiced by a small taxpayer enterprise to a foreign payer in a tax year exceeding HUF 3 million (net), the small taxpayer enterprise is obliged to pay an additional tax of 40 %;
- the small taxpayer enterprise is obliged to pay an additional tax of 40 % of the total amount of turnover paid by an affiliated company.
The small taxpayer enterprise is obliged to inform his customers about their classification at the time of the first contact, or by 15th January 2021 in case of existing legal relations.
As a conclusion, it can be established that the rules will be considerably tighter. It is important that in the case of domestic payers, it will be the payer’s responsibility to establish, pay and declare the additional tax.
It is important to note that from January 1st, a person can only operate one small taxpayer enterprise at the same time.