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Tax Changes 2019 – Positive Changes

Tax Changes 2019 – Positive Changes

| Wrote: Renáta Béres; Csilla Bögre; Ildikó Kóródiné Kovács, Péter Biharvári
The first round tax package has been adopted. Therefore, in order to facilitate timely preparation for the changes, we have collected the most important positive changes to be known when planning for next year.
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The amount of penalty concerning tax fulfillment obligation is reduced by half

The penalty can be up to 10% on the difference of advance tax paid, tax fulfillment and 90% of the tax for the relevant tax year. The new penalty rate also applies to advance tax supplement liability for tax year 2018.
 

Business tax 2019

The limit for business tax exemption will be raised. Those entrepreneurs can be exempt from local business tax in Budapest, whose tax base – calculated as set out in the Act on Local Taxes - does not exceed 1 million forints.  According to the ruling, from January 1, 2019, in order to receive the exemption, the tax base shall not exceed 1.5 million forints.


Positive changes concerning corporate income tax

  • From 2019, corporate income tax group will be optional with at least two resident taxable persons. 
  • The grants provided to prominent team sports will be supplemented by the possibility of covering the costs of the operation of properties for sports purposes.
  • From January 1, 2019. development reserve may be 10 billion forints instead of the previous 500 million forints.
  • The amount spent on the operation of a nursery at a workplace will be recognized as cost from 2019.
     

Changes in small business tax from 2019

  • From 2019 the threshold for income and balance sheet total will be 1 billion forints as a condition for small business,
  • the threshold for income in the excess of which small business taxability ceases was raised from 1 billion forints to 3 billion forints. 
     

VAT exemption for small businesses is increased to 12 million forints

The threshold for taxpayer exemption will be uniformly12 million forints from 2019 instead of the current 8 million. However, according to the transitional rule, for those who exceed the 8 million forints threshold in 2018, but do not reach 12 million forints. This is especially good news for those opting for itemized tax of small-tax paying businesses, as in their case the threshold for both VAT and itemized tax will be uniformly 12 million forints.


Deduction of input VAT on hired cars is simplified

From 2019 taxpayers may apply a 50% dictated deduction on hired cars regarding the deduction of VAT on rentals. This is a significant administrative relief, as the undertakings concerned may be exempted from the preparation of the documents supporting the deduction (e.g. itemized kilometer record).
 

Changes affecting local taxes

From 2019 the local governments will have the opportunity to adopt a regulation on investment tax allowances.  Within the meaning of the regulation, the taxpayers can reduce their tax base or amount of tax by the value of their investment (or a part thereof) put into operation in the area of competence of the local government in the tax year when the investment was put into operation.
 

2Changes in PIT and contributions in 2019

  • From January 1, 2019 family tax allowance available on 2 dependent children will increase.
  • From January 1, 2019 the range and rate of allowances available from social contribution tax will change 
  • From January 1, 2019 health contribution tax will cease, instead social contribution tax shall be paid on certain benefits..
  • From January 1, 2019 the employment of persons retired in their own right will be favorable if employed in accordance with the Labor Code, as only 15% personal income tax shall be deducted from private individuals and the payer shall not pay social contribution tax either.

According to the laws already adopted and promulgated and those not promulgated yet, the rules of cafeteria will considerably change in 2019.
Negotiations and consultations on the minimum wage in 2019 are ongoing, so the amount is not yet known.




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