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A common solution to the chronic workforce shortage seen in the entire region nowadays is that one company provides labour to another. However, one should be careful with these agreements: depending on the circumstances, the tax authority (NAV) may reclassify these contracts, which could result in major tax expenses.

During a posting, the employee is bitten by a tick. He throws his back out while loading. He gets sunburnt while working outside. A common feature of these cases is that they are all accidents at work. Yet, if the employer does not pay attention to these, he can find himself at a serious disadvantage.

The Hungarian legislation introduced the asset management foundation as a new type of asset management in March 2019, which is very similar to the well-known trust. According to the bill on amending certain tax laws submitted by the Hungarian Government in June 2019, the foundation performing asset management will be considered as a taxable person for corporate income tax purposes. The foundation must fulfil its tax liability in the same way as the assets managed by a trust. However, if the foundation established by a natural person in favour of a natural person beneficiary has income only from financial instruments or from the exercise its rights of disposition of such instruments, the income from such activities are not taxable for corporate income tax purposes.

A recently released NAV guidance gives a list of those signs that could indicate that a security firm is involved in VAT fraud. The list will certainly help companies that accept invoices from such security firms, but it’s still a pity that the guidance wasn’t issued ten years earlier.

In The Corner Office we ask Managing Partners across CEE about their unique roles and responsibilities. The question this time around: How do you do performance reviews, and how important are they to the planning and management of the firm?”

A trendy investment product of recent years has been solar energy projects: under the feed-in tariff (FIT) scheme, the government guarantees what looks like a cash cow for all those who choose to seek their fortune in this sector. But as is usually the case, this money won’t just fall into your lap. Without the necessary professional expertise or the proper legal groundwork, solar power projects can easily run out of steam too.

The deductibility of the VAT content of incoming invoices has long been a source of consternation both for equity investors and for the holding companies heading up corporate groups. In a relaxation of the general ban on VAT deduction in these cases, the European Court of Justice (“ECJ”) has given ‘active’ holding companies a way around the restrictions. Meanwhile, other recent judgments by the Court have further expanded the opportunities for VAT deduction. Nevertheless, the ECJ’s decisions also show that it’s better to err on the side of caution.

On 29 May 2019 the EU Commission published a guidance on the interaction between the Regulation on the free flow of non-personal data (FFD Regulation) and the General Data Protection Regulation (GDPR). In particular, private businesses, notably small and medium-sized enterprises and other entities which process data in the course of their professional activities, will benefit from the guidance.

The personal income tax exemption for mothers with four or more children will come into effect as of January 2020. In connection with the seven-step family protection action plan starting on 1 July 2019, this is another significant benefit for mothers. The tax exemption does not affect the family tax advantage, which can still be claimed by both parents.

Hungary Knowledge Partner

Established in 1957, Wolf Theiss is one of the leading European law firms in Central, Eastern and South-Eastern Europe with a focus on international business law. With 300 lawyers in 13 offices located in Albania, Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia and Ukraine, Wolf Theiss represents local and international industrial, trade and service companies, as well as banks and insurance companies. Combining law and business, Wolf Theiss develops comprehensive and constructive solutions on the basis of legal, fiscal and business know-how.

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