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Hungary - TAXES ACCOUNTING |
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Corporate tax
Tax rate for resident companies |
The rate of common law of profits tax applying to companies is 16%.
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Taxe rate on long-term capital gains |
Capital gains are taxed in Hungary at the rate of 16%.
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System governing groups of companies and dividends paid by subsidiaries to their parent companies |
Dividends are subjected to a 5% withholding tax of their gross amount, if the actual beneficiary is a capital company which possesses directly at least, 25% of the capital of a distributor company, 15% in all other cases. (20% except agreement).
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Tax rate on branches |
Branches are taxed in the same way as the other companies in Hungary.
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Income tax
Fiscal year |
The fiscal year begins on January 1-st and ends on December 31 of the same year.
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Income tax rate |
The incomes of individuals are subjected to a progressive tax rate which varies between 18% and 38%.
Tax schedule 2004:
| Income | Rate | | 0 - 800 000 HUF | 18% | | 800 000 - 1 500 000 HUF | 26% | | > 1 500 000 HUF | 38% |
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Tax deductions or
other allowances |
In Hungary tax deduction allowances can be either a reduction or a tax credit.
The main tax deduction allowances are:
20% of the annual income (4,000 HUF a month, 48,000 HUF a year maximum)
30% of school fees at the level of 60,000 HUF a year.
1,500 HUF a month for disabled people.
20% of interests paid annually for the purchase of a house.
30% of sums paid to charity sales.
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VAT rates
Standard rates |
25% is the rate of common law in Hungary.
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Reduced rates |
Imported IT products are exempt from VAT w.e.f. 1/4/02. Reduced rate of 15% (increased from 12% w.e.f. January 2004) applies to libraries and museums etc. VAT on food increased from 12% to 15% w.e.f. 1 January 2004. Zero rate on medicines and school books increased to 5% reduced rate w.e.f. 1 January 2004.
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Other important taxes
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Name of tax |
Rate |
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Successions and donations
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11 - 15%*
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Tax on transfer of large patrimony
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2 to 6% for the housing and 10% for the rest of the patrimony.
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Accounting
Introduction
Accounting as in all ancient soviet countries is regulated by the Ministry of Finance and undergoes a big influence on behalf of the government.
General accounting principles
The balance sheet is presented into accounts with liabilities composed of constant capital and debts, because there is a distinction between long and short-term debts.
The profit and loss account gives priority to the repository of the global production and lets the choice of the cost classification either by nature or by function.
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Obligations and publications
Companies have to produce a balance sheet, a profit and loss account and an appendix.
Certification and auditing
The external control of the accounts must be given to a body of external auditors chosen by the company.
Professionals and representative organizations
Accountants associations have some difficulties to get organized, because of the importance of the State in the accounting system.
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Last modified in
January 2003
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