Corporate Tax Changes – Subsidies 2015

Corporate Tax Changes – Subsidies 2015

Changes in subsidies for films, performing art organizations and prominent team sports in 2015.

Among the corporate tax law changes of the tax package of 2015 submitted to the Parliament the most striking is perhaps the reform of subsidizing films, performing art organizations and prominent team sports.

In the present system, supporters have faced certain perceived or real risks in supporting particular purposes. This fear has often been exploited by specialized agents taking over the non-existent risks. It seems that with this amendment in 2015, this brokerage business will be finished.

Apart from reducing the supporters’ risks, the changes have a negative side as well for the supported organizations. Subsidies have become a fundamental funding element for these organizations, so not only the amount they receive will be interesting but also when they receive it. Henceforth, the organizations will not receive the subsidies directly from the supporters but from the Tax Authority.

Corporate Income Tax Law will be completed with a new subheading: provision for income taxes.

How will it work in the future?

The taxpayer shall declare electronically in a special form used for this purpose the name and the tax number of the beneficiary organization until the last day of the month preceding the advance tax payments. In this way, only up to 50% of the advance tax can be decided on. The taxpayer can decide on up to 80% of their advance tax paid in the current year, so that taxpayers can decide on the amount not used up yet simultaneously with the submission of their tax returns during advance tax supplement. Even if the taxpayers still have not made a decision at this stage, they cannot lose this opportunity, because they can do so until the deadline for submitting their tax returns.

The beneficiaries of the offerings will henceforth receive the subsidies from the Tax Authority within 15 days after the tax liability of the supporter. Hereafter, the beneficiary’s entitlement will be checked by the Tax Authority.

Beneficiary shall meet the following requirements in order to receive the subsidy:

– they have the proper certificate proving that they are entitled to receive subsidies (it shall be submitted to the Tax Authority until no later than the submission of the corporate income tax returns),

– neither the beneficiary nor the taxpayer can have enforceable tax debt exceeding 100,000 HUF,

– the taxpayer has submitted their tax returns in due time,

– the taxpayer has paid the advance tax and taxes,

– the amount of tax decided on does not exceed 80% of the tax liability.

The above also mean that taxpayers shall fulfill their total tax payment obligations in the reference period, which means that they cannot take account of the tax allowance on subsidies in the calculation of the tax payable in the course of the corporate income tax return.

From now on, taxpayers will obtain the tax allowance on subsidies with the credit for tax offerings, namely that 7.5% of the tax advances calculated and 2.5% of the tax filed and offered will be credited on the taxpayer’s current tax account on the first day of the second calendar month following the due date of the tax return. Of course the subsequent self-revision of the corporate tax return will also have an effect on the tax allowance.