Mária Lakatos

Taxation in General: Hungarian Tax System

The term “tax liability”

Payers perform only one part of the obligations associated with taxes. The other part is to be performed by the taxpayers. The tax obligations are, thus, as follows: reporting, making declarations, establishing the basis of assessment, preparing the tax returns, paying the tax advances and taxes, tax deduction, keeping records, issuing certificates, data supply, keeping the documents. Besides the Personal Income Tax cited severally above, the obligations of taxpayers are included also in the Act on the Procedural Rules of Taxation.

From the various elements of tax obligation certain ones depend on and relate to the type of the income subject to taxation (such as, for example, the tax liability), while others refer to specific types of income only (e.g., the reporting obligation).

The obligation to make general tax declaration is included in Art. (The Act on the Procedural Rules of Taxation). To establish the basis of assessment and the tax payable thereupon is an obligation of the natural person and the payer, alike, yet the Hungarian income taxation partly relies on self-assessment, which means that the natural persons register their tax liabilities, keep records of them and pays the necessary amounts. From 2017 the assessment of the tax liability by the tax authorities became general.

In the case, when the natural person, then, according to the principle of self-assessment, the natural person (taxpayer) shall calculate the tax payable for his/her income subject to consolidated tax treatment and also on that subject to special treatment, summarizes the two, prepares and submits the tax returns, pays the tax and keeps the relevant documents for a period of 5 years.

If it is the payer who is obliged to settle the tax advance, then it shall be withheld when paying the emolument of the employee and transferred to the tax authorities thereafter. The term whereby the employer shall transfer the tax advances deducted is the 12th day of the month following the one for which the accounts have been.

It is an important rule that whoever submits the tax returns, keeps records and the certificates and meets the recording the liability stays always with the natural person.

Incomes fall into two main groups in Hungary:

income included in consolidation and subject to consolidated assessment for which a tax rate of 15 %, applies, and
income subject to separate taxation, taxed by the same rate (i.e., by 15 %), with the costs accounted for differently. This is the so-called withholding tax (e.g., dividends, share price, interest, sales of chattels).

Taxation in General: Hungarian Tax System

Tartalomjegyzék

Kiadó: Akadémiai Kiadó

Online megjelenés éve: 2022

ISBN: 978 963 664 137 5

Taxation is a scheme for the state to provide revenue. The so collected money could then cover the public spending of the government. These are the so-called allocative and redistributive functions of the state budget. Although, taxation theory discusses the various tax types and analyses the various taxation tools very extensively, there is no absolute answer to the question, when and what type of taxation system would be optimal. Thus this introductory book on taxation deals with the three basic types of taxes - the income tax, the VAT and the corporation tax - in a very pragmatic way. There are legal texts and cases from both the international and also from the relevant Hungarian practice.

This book is recommended not only for students of economics but also for law students and practitioners beside anyone who is interested in the basic regulations of taxation.

Hivatkozás: https://mersz.hu/lakatos-taxation-in-general-hungarian-tax-system//

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