Mária Lakatos

Taxation in General: Hungarian Tax System

Recognition of depreciation

The costs recognized for depreciation are one of the most important factors in establishing tax burdens for a given year and, as a consequence, in planning the cash-flow of companies. The depreciation rates defined in the Corporate Tax Act (tao) are permanent and they cannot be changed. However, within the limits allowed by the Act on Accounting (Szvt) [17] companies can use different rates when recognizing pre-tax profits. We speak of accelerated depreciation, if we write off an equipment during a period shorter than set in Szvt, and of slowed depreciation when we delay the write off of the value of an equipment slower than allowed.

The basis of the assessment of the corporate tax comes after the calculation of the pre-tax result. It is estimated by adding the write off for depreciation to the pre-tax results and deducting the write off for depreciation defined in the annex to the Corporate Tax Act (tao). In the Corporate Tax Act (tao) the basis of write off is the historical value of the assets which cannot be decreased by their residual value.

6. Table. Example for the calculation of the corporate tax

Example for the calculation of the corporate tax
Net sales	M 200
Depreciation calculated according to the Act on Accounting	M 40
Depreciation calculated according to the Corporate Tax Act:	M 50
Accounts:	M 200 + M 40 – M 50 = Th. 190

Source: by own calculation

The depreciation foreseen by the Act on Accounting (Szvt) [17] can be applied for equipment and machinery with individual historical costs below HUF 100,000 (their historical costs can be written-off in one sum).

Accelerated depreciation and the corresponding accelerated depreciation rates are used in the Corporate Tax Act (tao) in the following cases:

30 % for the assets leased out – except for immovable property,
5 % for immovable property,
3 % for structures that function as commercial accommodation throughout the year,
50 % for general purpose IT equipment, and for those, that according to the Corporate.

Tax Act are subject to depreciation rates of 33 or, respectively, 14.5 %.

A change since 2012 is that a depreciation rate different from what was established in the Corporate Tax Act (tao) can also be recognized but the depreciation rate used cannot be lower than the one used in accounting.

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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