The Government is to submit the “spring-time” tax package to the parliament today. The Government continues to cut taxes, and amendments are seen to leave HUF 35bn more at families and enterprises. Besides the reduction of VAT, those who let out their homes and university students in the small taxpayer category may expect further significant easing of red tape and lower liabilities. The bill will make both the short- and long-term letting of residential properties easier. Provided the National Assembly approves the proposal, owners of rented homes will as of next year see substantially lower administrative burdens and higher tax savings, earning some HUF 3bn more.
As of 2018, owners of residential properties rented for short term may apply the most simple and cost-efficient, so-called flat-rate tax to three instead of the currently permitted one rented flat or holiday home. The payable tax is only HUF 38 400 per room, therefore it is not worth hiding income gained from providing accommodation services.
The owners who let out properties for long term are also better off next year: the 14 percent healthcare contribution tax levied on rental income exceeding HUF 1 million per year is not to be paid any more. The only levy to be paid for renting residential property is 15 percent personal income tax.
The rate of VAT on Internet services is to be reduced by another 13 percentage points, to 5 percent, as of next year, which step leaves HUF 22bn more at households and enterprises. VAT on fish is also set to be cut to 5 percent, aiming to save HUF 3.5bn for taxpayers and increase of the number of those who regularly consume fish.
The new tax package includes – besides lower taxes – measures designed to cut red tape and boost enterprise competitiveness. The number of taxpayers entitled to a preferential tax rate for craft breweries is to rise. As of 1 July 2017, enterprises where the quantity of beer produced does not exceed 200 thousand hectolitres per year may claim the 50 percent tax break on the excise tax. Currently, only breweries with annual production of up to 8 thousand hectolitres are granted this tax break.
Enterprises will no longer be obliged to get registered at local governments, only at the National Tax and Customs Administration (NAV). The NAV will then forward electronically not only registration data to the responsible local government, but also the tax return form on the advance tax supplement for local business tax.
The Government will further increase the number of incentives for employee mobility. As of 2018, employers may offer tax-free rent allowance equalling 60 percent – instead of the current 40 percent -- of the minimum wage in the first 24 months of employment, 40 percent – instead of the current 25 percent – in the following 24 months of employment and 20 percent – instead of the current 15 percent – in the 12 months after that.
As of 2018, the tax payable by full-time students working as small taxpayers will be halved. These students will fall under the category “small taxpayer without a full-time job”, therefore they are to pay only a flat monthly tax of HUF 25 000, instead of the current amount of HUF 50 000.
(Ministry for National Economy)
