Public health product tax - tax consultancy to be published in the newsletter

02 August 2011

In our previous newsletter, we have already dealt with the proposed act on public health tax levied on certain products, popularly nicknamed “Hamburger Tax” or more recently “Chips Tax”. The act was approved by Parliament on 13 July 2011, and will take effect on 1 September 2011.

The public health product tax will be payable by the first resident seller based on the sugar and salt content of the product in view of their customs codes. This tax will affect the following five groups of food products: soft drinks - HUF 5 per litre; energy drinks - HUF 250 per litre, pre-packed sweetened products - HUF 100 per kilogramme, salty snacks - HUF 200 per kilogramme, stocks - HUF 200 per kilogramme.

Sellers of less than 50 l or 50 kg per year are exempt from the product tax. Sellers who sell or resell the product in the Community or outside the territory of the Community are also exempt from the tax. Furthermore, the Act allows reduction of the product tax by double the sum total of the exemption granted from the local business tax base (up to 50% of the tax), by tax subjects who have increased the number of their employees in the previous year.

The frequency of self-assessment and tax return is adjusted to the frequency of VAT returns. The Act also prescribes that records must be kept by the tax subjects in a breakdown of products.

Should you need assistance in the preparation of the required records or further advice on the public health product tax, do not hesitate to contact our tax consultants.

 Should you have any questions relating to the above, do not hesitate to contact our advisers. ([email protected]; 1/235-3010)


Tighter rules on cars with registered abroad


The amended Act on Public Road Transport will also take effect on 1 September 2011. Pursuant to the amendment, motor vehicles can participate in public road transport only and exclusively with Hungarian official permits and registration plates if the person responsible for its operation qualifies as a resident or its driver has a permanent residence in Hungary.


Exceptions include, among others, cases when the natural person operator performs his regular activity in the country of its registered office or site.

In the case of drivers with permanent residence in Hungary, such motor vehicles can be used in Hungary if they are used in the country no longer than for 30 days,, and

  • their regular place of stay is not in Hungary,
  • the motor vehicle is used for the performance of work, or
  • they are in possession of the operator’s written consent (indicating the date of giving into possession).

Violators of the above rules may be fined in the framework of public administration proceedings. Simultaneously, the controlling authority must forward the data of the owner and the operator to the state tax authority.


Registration for domestic transport may be subject to the payment of registration tax, motor vehicle tax and in the case of businesses, tax on company cars.


Should you have any questions relating to the above, do not hesitate to contact our advisers. ([email protected]; 1/235-3010)


Amnesty in registration tax

Amendment of Act CX of 2003 on the Registration Act was promulgated in No. 81 of the Official Journal. The amendments will take effect on 22 July 2011.

An especially high number of passenger cars is in the ownership of Hungarian private persons and companies in order to avoid the payment of registration taxes. If the motor vehicle is used in Hungary for a non-temporary basis or for purposes other than certified work abroad, it is only allowed to be on the road with a Hungarian permit and registration number.

In order to make vehicle operation legitimate, the rules governing cars with foreign registration numbers have been tightened, however, simultaneously significant amendments - more permissive than previously - have also taken effect in registration tax.

On the one hand, the period of becoming obsolete will be cut significantly: from 20 to 15 years.

On the other, 50% of the registration tax is remitted for motor vehicles with foreign registration numbers which had been in the taxpayer’s ownership on 15 June 2011, provided that the registration proceedings are started between 14 July and 31 December 2011.

The tax items have not been changed.

Should you have any questions relating to the above, do not hesitate to contact our advisers. ([email protected]; 1/235-3010)


Pursuant to the verdict of the European Court of Justice, prohibition on VAT refund related to unpaid purchases is non-compliant with the VAT Directive


Pursuant to the judgment adopted by the European Court of Justice on 28 July 2011, Hungary’s VAT regulatory regime is in conflict with the provisions of the VAT Directive.


Pursuant to the regulation found to be non-compliant, if the amount of refundable VAT related to purchases in the tax return period exceeds the amount of payable VAT, the taxpayer may not reclaim more than the VAT on purchases already paid. The amount of VAT on purchases not yet paid may be carried over to the next tax assessment period. Setting payment as a precondition of eligibility for tax refund is in conflict with the VAT Directive because it may result in the postponement of the tax refund right enforcement on several occasions, and thus prevent VAT refund within a reasonable deadline.


Subsequently to the ruling, amendment of the non-compliant regulation can be expected. According to the press release issued by the Ministry of National Economy, the Government has acknowledged the ruling of the European Court of Justice and the Ministry will take the required action in VAT regulation and file the alternative solutions to the Government within the shortest possible time.

It is a question, whether the regulation found to be non-compliant will be changed with retroactive effect, respectively, if it will be changed with retroactive effect, what will fall under its scope: only the penalties and other tax consequences levied based on the violation of the regulation challenged or late payment interest claim might also arise with respect to the financing of the state budget.