This article is the seventh and last in a seven-part series on the important rules of corporate taxation in Hungary. After explaining the basic framework and special rules of corporate taxation in Hungary, we will now give you an overview of the penalties for non-compliance with tax rules.
In Hungary, administrative and, in certain cases, criminal sanctions are imposed for violations of tax obligations.
The tax authority has introduced a new qualification category for taxpayers based on dividing taxpayers into three categories:
- general taxpayer, with the existing general rules,
- reliable taxpayer, with less strict rules than before,
- risky taxpayer, for whom stricter rules apply than before.
The classification is reviewed quarterly and the tax authority notifies taxpayers electronically about the classification or its change. The assessment can also be requested via the customer portal.
In the event of tax shortfalls, a tax rebate of 50 percent of the tax shortfall must be paid. The amount of the tax penalty may be reduced ex officio or upon request in exceptional cases, or it may not be imposed if the circumstances show that the taxpayer or his representative, employee, member or agent acted with the prudence expected of him in the given situation.
The tax system is based on the voluntary fulfillment of tax obligations by taxpayers. In the event of non-compliance, the tax authority may impose a fine.
Delay in filing
If the taxpayer fails to comply with his reporting obligation after the reporting deadline, but before the tax authority sends a reminder and checks it, and does not excuse his delay, he may be subject to a fine in the amount of the tax determined in the declaration in the case of self-assessment. The extent of this delay.
- does not exceed 15 days: 5 percent;
- does not exceed 30 days, 20 percent;
- exceeds 30 days, 30 percent,
-but it may not exceed HUF 100,000.
Incorrect tax return
If a tax return is submitted incorrectly, the penalty for failure is 5 percent of the difference between the correct and the incorrect tax and household allowance amount, but not less than HUF 5,000 and not more than HUF 100,000. The penalty is therefore justified even if the taxpayer makes a mistake to his detriment.
If the mistake did not result in a difference (difference) in the amount of tax or household allowance, the penalty for failure is set at the lowest amount.
Obligation to upload, payment of advance tax
If the taxpayer who has to pay the corporate tax and/or local tax already paid during the year has not topped up this by December 20th with an amount that corresponds to at least 90 percent of the tax to be paid, he will be charged a late payment surcharge of 20 percent of the missing tax.
Deduction, assessment and payment of advance tax
If the taxpayer has failed to deduct tax in whole or in part or has not paid the assessed and deducted tax on time, he must pay late payment interest of 50 percent in addition to the late payment fees.
The basis for the amount of the fine is the amount of tax withheld or not paid.
Reporting and provision obligation
If the taxpayer carries out taxable activities requiring a business card or company registration without complying with his reporting obligation, the tax authority will impose a fine of up to HUF 100,000 for the first violation, and up to twice the previous fine for repeated violations.
Delay penalty
If the tax is paid after the due date, a late payment surcharge of twice the base rate of the Bundesbank at the time of collection will be charged, after deduction of tax losses.
The penalties can be reduced by 50% if the taxpayer corrects the error or omission and pays tax, interest and (reduced) penalties before the tax authority makes a tax assessment.
This article provides a general introduction to corporate tax rules in Hungary and should not be considered as specific legal advice.