Company car tax 2013: when and who shall pay?

Vehicle Tax Act LXXXII. of 1991 Chapter IV governs the tax liability on company cars.

1. When shall and shall not pay?

• Company car tax shall always be paid if the car with a Hungarian registration number is owned by a legal person or an unincorporated organization whether costs associated with it are charged or not. In all other cases car tax liability arises only if costs on cars are reported item by item.

• Tax shall be paid after private cars if car-related costs are reported item by item. Costs directly related to the operation of the car, which arise only from the ownership and use of the car, are considered to be expenditures and costs paid on the car. In particular, this includes the costs of fuel and lubricants, spare parts which wear out within the tax year, repair and maintenance fees, car rental and leasing fees, depreciation charge, car liability insurance, accident tax and casco insurance fee, motor vehicle taxes, toll and parking fee.

• Private cars are not subject to tax if costs are reported not item by item.These are the followings:

1. If the reimbursement of the travelling expenses paid after the use of a private car, on the basis of a mission order, in respect of business travel cost, taking into account the accomplished distance in kilometers, does not exceed the fuel standard published each month on the tax authority’s website + HUF 9/km.
2. A private individual using their own car receives HUF 9/km as a reimbursement of the commuting expenses for the days spent at work or for travelling home, taking into account the distance between the workplace and the individual’s home back and forth.
3. Company car tax liability shall not arise even if the employee receives higher reimbursement than HUF 9/km by virtue of the same title. However, the amount exceeding HUF 9 will generate income for the private individual.

2. When and who pays?

In principle, the taxpayer is the owner of the car according to the official record. In case of a car registered abroad but not put into use in Hungary, the taxpayer is the individual who reports car-related costs.

To sum up, the company pays the company car tax on company owned cars. In case of cars owned by private individuals, if costs are reported item by item (based on an invoice), there are two options:

– if the private individual asks the invoice for their name, the private individual is required to declare and pay the company car tax,

– if the individual asks the invoice for the company name, the company is required to declare and pay the company car tax, since it is not about the reimbursement of business trip expenses, because the company uses the company car and not the individual. In this case the documentation of the statutory use of the car emerges (e.g. rental agreement). If the costs on the car are not reported by the private individual owner, the user is bound to notify the owner in writing about the fact and date of the first cost report within 8 days. If this deadline is missed, the user is obliged to declare and pay the tax.

3. The rise and termination of tax liability:

– In case of an officially registered car (with a Hungarian registration number), owned by a legal person or unincorporated organization, tax liability arises on the first day of the month following the month when the acquisition occurs and remains valid until the last day of the month in which the owner sells the car.

– If the officially registered car (with a Hungarian registration number) is owned by a private individual, tax liability arises on the first day of the month following the month when car-related costs were reported item by item. Tax liability terminates on the last day of the month in which car-related costs were last reported item by item.

– Tax liability arises on cars not registered officially (with a foreign registration number) on the first day of the month following the month when car-related costs were reported item by item. Tax liability terminates on the last day of the month in which car-related costs were last reported item by item.

4. Tax rate

The monthly rate of the tax has not changed in 2013 either. The capacity of the cars given in KW and their environmental classification per car is indicated in the following chart:

5. The exclusion of double taxation

Vehicle tax established by the municipal authority is deductible from company car tax paid for three months after the car and against the taxpayer for the months of the quarter when both company car tax and vehicle tax liabilities exist provided that the taxpayer complied with the vehicle tax liability within the given period.

If two different persons are liable to pay these two taxes, the deduction cannot be validated.

6. Declaration, payment:

Company car tax shall be determined on a quarterly basis by self-assessment. The tax return shall be submitted to the tax authority until the 20th tax shall be paid until this same date to the company car tax revenue account of the National Tax and Customs Administration of Hungary (NAV) no. 10032000-01076167. The declaration shall be submitted on formula #1301, which can be done on paper if the taxpayer is not obliged to submit electronic return.

Source: www.nav.gov.hu Information sheet #31.