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Options to prepare the Personal Income Tax Return for year 2015

21 January 2015

Until the 2nd of February 2015, employers, payers shall issue the annual certificate of the total income paid by the employer/employers.  This certificate is one of the most important basic documents for the preparation of the annual tax return for year 2014.

Private individuals can satisfy their tax liability concerning year 2014 by choosing self-assessment or by requesting the employer’s tax assessment. In case of self-assessment, employees can submit tax declaration statement (1453 Tax Declaration Statement), they can prepare their tax return by themselves (1453), or they can request the cooperation of the Hungarian Tax Authority (NAV) (1453Ny). The necessary documents can be found on the website of the tax authorities together with the associated explanatory notes: www.apeh.hu.

The explanatory note of ’1453’ declaration includes those cases, when the private individual is not obliged to submit any tax returns.

  • Tax Assessment by the Employer

If the employer of the private individual undertook the employer’s tax assessment, furthermore the private individual fulfils the conditions determined by the law, the employee could request the employer’s tax assessment by signing ’14Ny29’ declaration until the 2nd of February 2015.

Until the 30th of April 2015, the employer will determine the tax base and the tax – taking the certificates and declarations received until the 20th of March 2015 into consideration – and forward ’14M29’ certificate about this fact to the employee. Thereafter the tax assessment will be forwarded to the tax authority by the employer electronically until the 20th of May 2015. Therefore it is possible to modify any data until this deadline.

The difference (which  exceeds 100 HUF), between the annual Personal Income Tax and the deducted tax advance, shall be settled by the employer with the employed individuals at the first payment after the tax determination, or until the 20th of June 2015, at the latest. The tax difference, deducted from the salary, cannot exceed 15 per cent of the monthly salary reduced by the due health insurance contribution, pension contribution and tax advance. If the back taxes are not deductable fully in one month, the employer can continue to deduct the difference for two further months, by the rate of 15 per cent. If the amount of back taxes can be deducted in a lump sum, there is no possibility to pay in instalments.

In the case of employees, who changed employer after requesting the employer’s tax assessment, the only way is to transfer them the difference. The employer will notify the tax authority of the amount that cannot be deducted, and the authority shall take care of the repayment.

Employees can forward the envelopes (standard, small), containing 1+1% declarations, to the employer until the 11th of May 2015. The declaration is only valid, if the envelope is sealed with the tax identification number on it and the private individual has signed the sealed envelope on the back, reaching over the adhesive surface. It is also necessary to sign the accompanying list of the dispositions, which will be forwarded to the Hungarian Tax Authority by the employer, together with the envelopes containing the 1+1% declarations.

  • The Simplified Tax Return (1453Ny) prepared by the cooperation of the Hungarian Tax Authority

The taxpayer could choose this option, if ’1453Ny’ declaration was forwarded to the Hungarian Tax Authority until the preclusive deadline of the 16th of February 2015.

The taxpayer will receive his personalised simplified tax return (1453E) to the domestic address, which was indicated in ‘1453Ny’ declaration, until the 30th of April 2015, at the latest. If ’1453Ny’ declaration was forwarded via the Hungarian Customer Portal (Ügyfélkapu) electronically, the simplified tax return will be available electronically too.

The taxpayer shall revise the data, received from the Hungarian Tax Authority, based on the certificates of his income for the previous year. If the private individual approves the received tax return, there is nothing else to do, as the simplified tax return is considered to be his tax return, submitted by the taxpayer until the deadline. If the employee experiences any differences, the tax return shall be modified or amended, and the modified return shall be forwarded to the Hungarian Tax Authority until the 20th of May 2015, at the latest. Based on the modified tax return, the tax authority recalculates the tax and informs the taxpayer of it until the 22nd of June 2015, at the latest.

  • Tax Declaration Statement (1453 Tax Declaration Statement/ 1453 Adónyilatkozat)

The private individual can satisfy his tax liability in the easiest way by choosing the tax declaration statement, if he fulfils all conditions, necessary for this option, and is not obliged to fulfil his tax liability by choosing self-assessment or by requesting the employer’s tax assessment. On the tax declaration statement it is necessary to indicate the private individual’s personal data, the total amount of the taxable income for the tax year, the amount of the personal income tax payable after this income, and the amount of the personal income tax and personal income tax advance, deducted by the employer/payer.

This option can be chosen, if the private individual received his income only from employer/employers and the difference between the deducted tax and the payable tax on the income does not exceed the amount of 1000 HUF; furthermore if the private individual received his income from payer/payers and the tax was deducted fully by the payer/payers. If the difference exceeds 1 000 HUF, or if the payers deducted less tax, it is only possible to satisfy the tax liability by self-assessment (1453).

  • Tax return (1453) prepared without the cooperation of the Hungarian Tax Authority

If the private individual does not or cannot choose the options above, he is obliged to fulfil his tax liability by submitting ’1453’ tax return without the cooperation of the Hungarian Tax Authority.

If the taxpayer requested the employer, which determined the tax advance for 2014, to take the family benefit or the personal benefit because of serious disability into account without eligibility, and as a result of it tax difference arises, only this option can be chosen. In this case the employee is obliged to pay tax difference of 12 per cent after the amount of the benefit, which was unduly requested, if this amount exceeded 10 000 HUF.

 

The deadline of submitting tax declaration statement and ’1453’ tax return is the 20th of May 2015. They can be forwarded via post to the address of the Directorate of Taxes, which is competent according to the permanent address of the private individual at the date of submitting the tax return, or via the Hungarian Customer Portal (Ügyfélkapu) electronically, or they can be handed down personally at any customer services of the Hungarian Tax Authority. (Until the 20th of May 2015, for posting the tax return in the envelope, which was received from the Hungarian Tax Authority in a standard package, there is no postage to pay).

In the case of self-assessment, private individuals are obliged to keep the certificates and documents, which were the base of the tax return, until the 31st of December 2020, as the Hungarian Tax Authority is entitled to revise them within the period of limitation of five years.

In the case of simplified tax return, employees had the opportunity to dispose the 1+1% of the tax when submitting ‘1453Ny’ declaration, but they continue to have the opportunity to dispose on ’14EGYSZA’ form separately until the 20th of May 2015, at the latest.

 

In the case of choosing tax declaration statement or ’1453’ declaration, employees can dispose by fulfilling ’EGYSZA’ form with submitting the tax return at the same time, but they continue to have the opportunity to dispose on ’14EGYSZA’ form and submit it separately.

Taxpayers are not required to pay tax debt under 100 HUF, and the tax authority will not pay tax refunds under 100 HUF. Exception to this is, when the individual chose tax declaration statement, as in this case there is no liability to pay either tax debt or tax refund.

 

In the case of simplified tax return, the 30-day deadline of the transfer starts from the 20th of May 2015, or from receiving the modified tax return, if it was required. If the private individual is eligible for tax refund, it is worth submitting the tax return without the cooperation of the tax authority, as in the case of a correct tax return, the Hungarian Tax Authority starts to pay tax refunds in 30 days from receiving the tax returns, or from the 1st of March 2015, at the earliest.

 

The refunded amount can be received by post or by a transfer to the taxpayer’s bank account, depending on the choice of the allocation in the tax return. The refunded amount can be transferred only to the private individual, therefore other person or other person’s bank account cannot be indicated.

Tax debt over 100 HUF can be settled as follows:

  • by a credit card – available through POS terminal, at the designated customer services of the Hungarian Tax Authority
  • http://nav.gov.hu/data/cms277139/35_IF_A_bankkartyas_adofizetesrol_2013.01.14..pdf)
  • with cash payment order (yellow check): the cash payment order is available at any customer services of the Hungarian Tax Authority. To obtain it you need to fill out the form „Request to obtain cash payment order (check)”
  • private individuals, registered at the Hungarian Customer Portal (Ügyfélkapu), can obtain a cash payment order by filling out the ’CHECK’ form electronically
  • in the case of transferring from a private domestic bank account, the private individual must indicate his tax identification number in the reference column. The beneficiary: Personal Income Tax collection account of NAV - 10032000-06056353.

The taxpayer individual is allowed to pay the personal income tax liability – not exceeding 150 000 HUF – in equal instalments, within six months. For this the taxpayer shall indicate the chosen period in the declaration, which is included in the tax return. The deadline of paying the first instalment is the 20th of May 2015. The deadline of paying the last instalment depends on the chosen period (in case of choosing the 6-month period, the due date is the 20th of October 2015). If the taxpayer will not fulfil the condition of paying the due instalment until the deadline, the allowance becomes invalid and the debt will be due in a lump sum, furthermore the Hungarian Tax Authority will charge default penalty on the debt from the date on which the payment was originally due (the 20th of May 2015).

The deadline (the 20th of May 2015) for submitting the declaration, regarding the choice of instalment payments, is preclusive, if the taxpayer forwards his declaration for year 2014 late, he cannot use this option.

 

If the taxpayer is unable to pay the tax debt (back taxes) over the amount of 150 000 HUF in a lump sum, the taxpayer can request the authorization of paying in instalments or deferred payment, in writing from the tax authority.

The application must be posted in a separate envelope, not attached to the return. The request for paying in instalments and for deferred payment, are subject to duties, and for the payment period there is a default allowance.

 

Budapest, 21st January, 2015