Tax law changes 2014 16 January 2014. Corporate tax I.Changes to R&D allowance II.Changes to holding...
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Transcript of Tax law changes 2014 16 January 2014. Corporate tax I.Changes to R&D allowance II.Changes to holding...
Tax law changes 2014
16 January 2014
Corporate tax
I. Changes to R&D allowance
II. Changes to holding company legislation
III. Changes to film / sport / artistic performance support
IV. Other changes
2
Intellectual property / R&D
Various tax benefits
• Only 50% of the received royalty is taxed
• Reported IP – exempt from tax
• R&D costs – double deduction
3
What changes?
• The tax deduction can be transferred to the related party of the developer, if
– the R&D is also associated with the activity of the related party
– parties make a joint declaration on the transfer
PARTIAL TAX CONSOLIDATION
4
Holding company legislation
Hungary is an ideal holding company jurisdiction, as
• no withholding tax is levied on outgoing dividends
• incoming dividend is not subject to corporate tax
• capital gain on the sale of participations can be exempt from corporate tax
5
Capital gain – tax exemption
Conditions:
• participation is held for at least 1 year NO CHANGE
• acquisition is reported to the tax authority: DEADLINE: 60 DAYS 75 DAYS
• minimum participation: THRESHOLD: 30% 10%
6
Support to film, sport and artistic performance
No support With support in 2013 With support in 2014
Tax base (w/o support) 2,000 2,000 2,000
Support – 100 100
Tax base (after support) 2,000 1,900 1,900
CIT (10%) 200 190 190
Tax allowance – 100 100
Tax payment obligation 200 90 90
Additional support 7.5
Total cost (tax + support)
200 190 197.5
7
Support to film, sport and artistic performance
• Various admin requirements
• Up to 70% of the tax base only
• Creditable in 6 years - CHANGED
• Scope of eligible organisations expanding - CHANGED
8
Other changes to corporate tax
• Representation costs – receipt and payment slip is sufficient
• Tax deduction on the credit costs of SMEs is increased (from 40% to 60%)
• Sale of a Hungarian real estate creates permanent establishment
9
Personal income tax / Social security
I. Family allowance
II. Stock programmes
III. Investment benefits
IV. Sport, cultural benefits
10
I. Family allowance
• Tax base deduction
– 1 / 2 children: HUF 62,500 / child
– 3+ children: HUF 206,250 / child
• From 2014: excess allowance may be deducted from social security contributions payable by the employee
• Various details elaborated
11
II. Stock programmes
1. Registered stock programme
– If granted outside a programme:
• Benefit is taxed as ordinary salary
– If granted in a programme:
• Tax exempt at grant
• Taxed as capital income later on
12
Registered stock programme
Conditions
• Needs to be announced publicly among employees
• Not more than 25% of the participants can be executives
• Max. HUF 1 Million / person / year
• (Needs to be registered at the tax authority)
• (Min. 10% of the employees need to participate)
13
Employee shares
• Tax benefits
– grant of employee shares is tax exempt
– upon redemption only 50% of the income is taxable
• Legal conditions:
– available at companies limited by shares only
– up to 15% of the stock capital only
– CHANGE: dividend preference may be linked to the share capital income
14
III. Investment benefits
1. Long-term investment account (TBSz)
2. Stability investment account (SMSz)
3. Pension insurance
15
1. TBSz
• If kept for
– 3 years 10% tax
– 5 years tax exempt, no health care contribution
• From 2014: TBSz becomes transferable
16
2. SMSz
• Already enacted in June 2013
• Technical rules adopted in January 2014 IT CAN GO!
• Concept: amount paid to SMSz is taxable income at the time of the payment
– tax payment obligation is suspended until withdrawal
– if not withdrawn beyond 5 years tax exempt
17
2. SMSz - effects
• For past, non-taxed income amnesty
• For current income tax exemption
IS IT REALLY INTENDED?
18
3. Insurance benefits
• Taxation of insurance: completely re-regulated in 2013 and 2014
• 2014: Insurance allowance is reinstated
– only to pension insurance
– tax credited to insurance premium (max 20%, HUF 130,000)
19
IV. Cultural and sport benefits
• Tickets to cultural event: exempt up to HUF 50,000 / person / year
– theatre, concert, cinema, museum, etc.
– deductibility from corporate tax?
• Sport ticket exemption – for 2014: no ceiling
20
VAT
• Continous services
• VAT exemptions of export of goods
• VAT treatment of promotions
21
Continuous services
• What are „continuous services”?
• Up to 30 June 2014 – becomes VATable at the financial settlement deadline
• From 1 July 2014
– uninterrupted services the past rule applies
– others: last day of invoicing period
22
Export of goods
• VAT exempt if the good leaves the country
date of the custom clearance matters
• Until 2013: 90 day deadline final deadline
• From 2014: between 90 – 365 days: VAT is reclaimable
23
Promotions
retailer
A
B
C
producer, wholesaler
consumer
promotion is granted directly
If the promotion is granted in cash: VAT deduction can be applied between C and A
24
Tax procedure
Binding rulings
• Fee schedule changes
• Preliminary consultancy official (+fee)
• Applies only to the applicant’s tax position
• No appeal (only court revision)
25
Tax procedure
Other changes
• Self revision: possible before the expiry of the deadline
• Tax fill-up requirement: no sanction if shortfall is due to exchange rate movement
• Mandate for audit can also be delivered in electronic form
26
Accounting
• Books can be maintained in USD
• Thresholds for consolidated report: increased
• Transfer pricing adjustments they can be fully accounted for in the company’s books
27
THANK YOU FOR YOUR ATTENTION!
Efficiently Yours.
Contact
Pál Jalsovszky
H-1124 Budapest, Csörsz u. 41.
Tel: +36 (1) 889 2800
E-mail: [email protected]
www.jalsovszky.com
Efficiently Yours.