14
Fri, May
76 New Articles

In December 2020, KELER Kozponti Ertektar Zrt. (KELER Central Securities Depository Ltd.) (KELER), the central depository of Hungary, was granted an authorisation under the Central Securities Depositories Regulation (CSDR Regulation) and can now offer its clients services supporting an efficient and secure securities market as a central securities depository operating under unified European regulations.

At the end of December 2020, several new regulations have been accepted to facilitate constructions due to the state of emergency. As one of the most important news, the Hungarian Government has extended the application of simple notification to the construction activities of a residential building including maximum six flats, but having a total net floor space of maximum 1,000 sqm.

According to the changes of the act of the local business tax adopted on 26 November 2020, taxpayers have to submit their tax return to the tax authority, which means that what was an option until the end of the 2020 year, has become an obligation. As of 1 January 2021, the tax authority supervises and verifies the tax returns and also indicates immediately the calculation errors to the taxpayers, which can be corrected by correction or self-audit.

On 12 November 2020 the European Commission published the new standard contractual clauses (SCCs) on data transfer (model clauses), which would replace clauses C2C and C2P under Commission decisions issued under the European Data Protection Directive. The bill subjects international transfers to significantly stricter administrative conditions in the light of the Schrems II decision. The draft act is open for feedback for 4 weeks. Feedback will be taken into account for finalising the initiative.

On 1 December 2020 the Hungarian Parliament decided that as of 1 January 2021, one of the most effective bodies in the fight against discrimination, the Equal Treatment Authority (ETA) will be abolished. Its duties, including the legal protection against racial, gender and other discrimination, will be taken over by the Commissioner for Fundamental Rights. The proceedings ongoing on 1 January 2021 will be suspended until 31 January 2021. Likewise, ongoing administrative lawsuits appealing against decisions of ETA on 1 January 2021 will be suspended until 31 January 2021.

In 2014 Hungary introduced the advertisement tax as a direct business tax that must be paid by media content and service providers and publishers of advertisements. The tax base is the net sales revenue originating from the taxable activities in the tax year, i.e. the turnover and not the profit, and a progressive tax rate was established originally with six tax rates between 0% and 40%. After several amendments, since 1 July 2017 the tax rates were 0% up to HUF 100 million and 7.5% for the portion exceeding this amount. From 1 July 2019 the advertisement has been temporarily suspended and the tax rate was decreased to 0%.

The economic situation caused by the coronavirus pandemic has highlighted the need for regulations that protect jobs and can respond effectively to the challenges of the economic environment and the labor market of this unprecedented time. It is essential for labor market actors to maintain and promote jobs that provide legal employment and to create such jobs as widely as possible, therefore, the Hungarian Government issued a bill about employment services, subsidies and employment supervision to the Parliament for legislation.

Varga Mihály, Minister of Finance submitted the autumn tax changes package to the Hungarian Parliament, including the proposed changes for VAT in 2021. The draft contains detailed implementing rules for the EU e-commerce package and related administrative requirements, as well as several additional changes to the Hungarian VAT Act, as follows:

Handover of pubic investment – creating access roads, utilities, etc. – to the local municipality or to the state for free is required in many cases by law in Hungary. According to the current interpretation of the tax authority and courts in Hungary, such handover triggers VAT payment obligation for the real estate investor (given that VAT was previously deducted in this regard). Since – in most cases – the real estate investor is unable to charge the VAT to the municipality or the state respectively, VAT was practically its loss in such cases.

Due to the extended economic effects of the coronavirus epidemic, the October tax package announced by the Hungarian Government was aimed to stimulate the investing climate. According to the Hungarian ‘economic protection operational body’, there are three different ways to revive the economy (i.e.: tax reduction, simplification of the administration, boosting investments).

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