This article is the seventh and last one in a seven-part series of articles covering the important rules of corporate taxation in Hungary. After covering the Basic Framework and Special Regimes of Corporate Tax in Hungary we provide you with the following summary regarding the penalties for non-compliance with tax regulations.
In Hungary, breach of tax duties triggers the application of administrative penalties and, in specific cases, of criminal penalties.
Tax office introduced a new qualification category for taxpayers based on classifying taxpayer into three categories:
- general taxpayer, with the existing general rules,
- reliable taxpayer, with lighter rules than before,
- risky taxpayer, with stricter rules than before.
The classification is reviewed quarterly, and the Tax office notifies taxpayers electronically of the classification or its change. The rating can also be requested via the customer portal.
In case of tax deficiency, a tax penalty amounting to 50 percent of the tax deficiency is to be paid. The amount of the tax penalty may be reduced ex officio or upon request in exceptional circumstances, or its imposition may be waived, if it can be established from the circumstances 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 taxpayers voluntarily fulfilling their tax obligations. The tax authorities may sanction non-compliance with a non-compliance fine.
Filing delay
If the taxpayer fulfils his reporting obligation late after the reporting deadline, but before the tax authority's notice and inspection, and does not excuse his delay, he may be fined for the tax determined in the return in the case of self-taxation. The extent of this if the delay.
– does not exceed 15 days, 5 percent;
– does not exceed 30 days, 20 percent;
– exceeds 30 days, 30 percent,
-however, it may not exceed HUF 100,000.
False tax declaration
In the case of an erroneously submitted tax return, the default fine is 5 percent of the difference between the correct and incorrect amount of tax and budget support, but a minimum of HUF 5,000 and a maximum of HUF 100,000. The penalty is therefore justified even if the taxpayer makes a mistake at his own expense.
If the error did not result in a difference (difference) in the amount of the tax or budget support, the default fine must be determined in the smallest amount.
Uploading obligation, payment of the tax advance
If the taxpayer who is required to top up the Corporate tax and/or Municipality tax already paid during the year has not supplemented it by December 20 to an amount corresponding to at least 90 percent of the tax to be paid, he will pay a default fine of 20 percent of the tax deficiency.
Deduction, determination and payment of advance tax
In the event that the taxpayer has partially or fully failed to deduct tax, or has not paid the assessed and deducted tax by the due date, he shall pay a 50 percent default penalty in addition to a late fee.
The basis of the fine is the amount of tax that has been deducted or failed to be paid.Obligation to report and provide data
If the taxpayer carries out taxable activities that require a business card or company registration without fulfilling the reporting obligation, the tax authority will impose a non-compliance fine of up to HUF 100,000 for the first time, and up to twice the previous fine for repeated violations.
Delay penalty
Delay penalty is imposed when the tax is paid beyond the deadline, in the amount of twice the central bank base interest rate valid at the time of charging after concerned the tax shortfall.
Penalties may be reduced by 50% if the taxpayer corrects the mistake or omission, paying taxes, interest and (reduced) penalties, before a tax assessment is carried out by the tax authorities.
This article provides a general introduction regarding the corporate tax regulations in Hungary and shall not be considered as specific legal advice.The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.