Mária Lakatos

Taxation in General: Hungarian Tax System

Exemptions from VAT

Before 2009, the transactions for which no VAT had to be charged were called activities exempt from VAT by their subjects. The advantage offered by exemption, on the other side became a disadvantage, as the VAT charged on procurements required for the transaction could not be deducted, either.

As from 2009, the Act cites these exemptions as non-genuine exemptions, and distinguishes two groups:

activities that are exempt from taxation due to being ones in the public interest and
sales and services exempt from taxation due to the special nature of the underlying activities.

For the transactions not genuinely exempt from taxes the application of tax exemption is obligatory according to the main rule. The VAT Act (Áfa tv.), however, allows deviation from this with regard to certain real estate sales and the letting of immovable property where there is an option to select tax liability, i.e., taxation according to the general rules. Presuming that they issue some accounting document with respect to the transaction tax clients are not obliged to issue invoices for transactions that are not genuinely exempt from taxes. Tax clients who perform exclusively sales and services that are not genuinely exempt from taxation are not obliged to file VAT returns (using the form elaborated for this purpose tax clients shall notify the tax authorities of performing only activities not genuinely exempt from taxation). Those, however, who perform solely and exclusively activities that are not genuinely exempt from taxation may also conclude and implement transactions from which they incur return filing and tax payment obligations.

Activities falling within the scope of non-genuine exemptions (exemptions that are not tax-exempt by virtue of their natures) are as follows:

financial and insurance services and real estate transactions,
selling at face value postage stamps suitable for prepaying domestic postal services duty stamps and other stamps, tickets issued by the authorities as a tool of performing some kind of a payment obligation, at face value; the rendering or intermediation of gambling services falling under the effect of the Act on the Organization of Gambling Games,
sales of real estates,
teaching activities in the form of accredited training.

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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