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The Threshold of Tax Exemption for Low Tax-Bracket Enterprises may be Increased in Hungary

The Threshold of Tax Exemption for Low Tax-Bracket Enterprises may be Increased in Hungary

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From 2019 the turnover threshold of tax exemption may continue to rise which would allow more micro and small business to issue VAT-exempt invoices in the framework of the low tax-bracket scheme. Tax-payer companies under the low tax-bracket will benefit most of the change, even though the regulation does not directly affect the legislation applicable on them.

The benefit of tax exemption is that a taxpayer can issue a VAT exempt invoice. The threshold of tax exemption was first increased in 2017 from HUF 6 million (2017) to HUF 8 million (2018). If the Hungarian Government’s deregulation proposal is upheld by the European Union, businesses could benefit a tax exemption up to HUF 12 million from 1 January 2019. 

Although the threshold was increased to HUF 12 million by the Hungarian legislation in 2017, for companies with private individual clients, the HUF 8 million threshold is applicable. In case of exceeding this limit, the companies’ service fee is still subject to 27% VAT. However, with the proposed change, the thresholds of tax exemption under the low tax-bracket scheme will coincide from 2019. 

It seems that those micro and small companies will benefit from this modification who are subject to the low tax-bracket scheme and who have private individual customers.

By Gabriella Galik, Partner, KCG Partners Law Firm

KCG Partners at a Glance

KCG Partners is a Hungarian business law firm providing a comprehensive range of legal services to international and local clients seeking local knowledge and global perspective. The firm comprises business-minded lawyers with sector-specific expertise, creating value for clients by applying a problem-solving approach and delivering innovative solutions.

The firm has a wealth of knowledge in corporate law, M&A, projects and construction, energy, real estate, tax, employment, litigation, privacy and forensics, securitization, estate planning and capital markets.

To address clients’ regional and international concerns, the firm maintains active working relationships with other outstanding independent law firms in Central and Eastern Europe, whilst senior counsel Mr. Blaise Pásztory brings over 40 years’ of US capital market and fund management experience.

KCG Partners Law Firm is the result of the teamwork of passionate and talented lawyers guided by the same principles and sharing the same values: 

  • Our most valuable asset is our people. They are the engine of our business and the key to our success.
  • We push boundaries by looking for innovative solutions that can empower our clients to achieve greater results.
  • We place our experience, commitment and professionalism to your service.
  • We are driven by our vision to shape and lead the Hungarian legal market and become a first choice law firm in our practice areas.

Firm's website: http://www.kcgpartners.com