Hungary introduced a 9% flat corporate tax rate in 2017, which is the lowest rate in the EU. Its introduction is another furlong in the so-called 'race to the bottom' of corporate tax rates in Europe and globally.
The corporate tax rate was introduced in an attempt to persuade large foreign companies to set up business in the country. The previous rate was 10% for companies with revenue of up to $1.8 million and 19% for those above this threshold.
Zoltán Lipták, a partner at EY, said that the rate "sends a clear message to multinationals that Hungary is a significant place". He added: "It is easy to build on, even in a BEPS environment."
The Hungarian system is consistently undergoing legal changes, and tax professionals expect this to continue in the upcoming years.
Anti-avoidance rules were amended in 2017, preventing taxpayers from utilising tax benefits and deducting costs and expenditures on transactions if said transactions are mainly tax-orientated.
"With new laws entering into force within the next year, the role of the tax lawyers will become more important," said, Tamás Gyányi, partner at WTS Klient Advisory in Budapest.
Gyányi highlighted four impending laws related to court proceedings that he believes are of key importance. The first three, to be implemented from January 2018, are the general court procedure act, the specialised court procedure act for administrative procedures and the general act for administrative procedures. The fourth is an act related to tax procedures, which was not in the public eye at the time of discussion.
"These court procedures will restrict new arguments [within court proceedings]," said Gyányi. "To win a case, the taxpayer should involve lawyers already at the tax authority stage, and ensure their work is prepared well by lawyers. These developments will bring more cases to lawyers."
Ernst & Young Tanacsado Korlatoit Felelossegu Tarsasag
Váci út 20
Tel: +36 1 451 8100
Country Tax Leader
Regional Tax Leader
Business Tax Services
International Tax Services
People Advisory Services Leader
Global Compliance and Reporting Leader
WTS Klient Hungary
Stefánia út 101-103.
H – 1143 Budapest
Phone: +36 188 737 36
Main areas of focus:
Corporate Tax, Mergers & Acquisitions, Transfer Pricing, International Tax & Permanent Establishments, Indirect Tax, Customs, Private Clients, Global Mobility, Tax Controversy, Tax Technology
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|Royalties from, for example, patents, know-how||0%|
A) The 19% rate is the standard rate of corporate income tax. The 10% rate applies to the first Ft500 million ($1.85 million) of taxable income. All taxpayers must pay tax on the alternative minimum tax base if this base is more than taxable income calculated under the general rules.
B) Permanent establishments of foreign companies are subject to special rules for the computation of the tax base.
C) Losses incurred before the 2015 tax year can be carried forward until 2025. Losses incurred in the 2015 tax year or subsequent years can be carried forward for five years.
BDO Hungary's tax department offers clients a full range of tax services within the areas of compliance, including services for corporate income tax, personal income tax, VAT, tax returns, tax audits, representation with tax authorities and tax returns. Transfer pricing services include assistance in documentation preparation, transfer pricing policy assistance, benchmarking studies and advance pricing agreement support. The team provides due diligence assistance within the areas of M&A, restructuring, inspection and risk evaluation.
Attila Kövesdy is the partner-in-charge of the tax department at Deloitte's office in Budapest. Kövesdy joined the firm in 1995. The firm provides services in indirect tax, corporate, international, and management consulting, among other things.
Clients benefit from Deloitte's international network and insight in cross-border tax practices.
DLA Piper Horváth & Partners is co-managed by of counsel Ákos Becher and partner Levente Torma. The tax team comprises 10 professionals, offering indirect tax, corporate tax and tax disputes services. Andor Boros and Gáspár Bagaméry joined the team in the past year.
Torma and senior associate Balázs Sőth advised a client on a $250 million project in December 2016. The team prepared and submitted a binding ruling request to the Hungarian Ministry of National Economy, including the application of the EU Merger Directive. The project involved major inter-company restructuring of the client's Hungarian operations.
Torma, Becher and senior associate Imre Béres are assisting in a $65 million cross-border tax litigation of a Silicon Valley software firm, between the US and Hungary.
A client said: "They have highly-educated tax professionals [and] specialists with wide, very valuable international experience. I can imagine that we can cooperate with them in the future on different tax topics."
Partner Botond Rencz leads EY's tax team in Hungary. Rencz is also country managing partner of EY Hungary and EY's tax leader for Central and Southern Europe. Rencz joined the firm in 1993 and, after working for another firm between 1998 and 2001, returned to EY in 2002.
The team comprises eight partners and 134 other professionals who work in indirect tax, corporate tax, tax disputes and tax compliance.
Grant Thornton collaborated with American Appraisal to create IB Grant Thornton in 2016. Director Laszlo Soos became the head of tax in 2017, he has a Big 4 background and nearly 20 years of tax experience.
The practice consists of 10 experts who work within the tax areas of indirect, corporate, compliance and accounting. Six professionals joined the practice in the past year.
The firm's clients consist of local and international small and medium-sized enterprises, as well as multinational companies and groups.
The practice assists clients in audits, tax advisory, accounting, payroll, corporate finance and valuation.
Owner Pál Jalsovszky is also the managing partner of Jalsovszky Law Firm. The team comprises two partners and five other experts working in indirect tax, corporate and disputes. Ádám Fischer joined the team in July 2016, having previously worked at Kajtár Takács Hegymegi-Barakonyi Baker McKenzie.
Partner Istvan Csovari advised Gawker Media on the sale of its Hungarian activities in January 2017. The $120 million transaction was a business line transfer under US bankruptcy law involving the Hungarian activity of the group.
A month later, Csovari assisted Michelin with a compensation lawsuit. The team disputed with the Hungarian tax authorities the failure to refund VAT to the client. The team based their winning argument on the 'Parat' case which was taken to the European Court of Justice. The justification was based on compensation for damages on the basis of the state liability doctrine of EU and Hungarian law.
"They are extremely bright, experienced and responsive, communicate well and present problems and solutions in a user-friendly manner. In terms of specialisation, their most notable strength is tax litigation," said a client.
Katjár Takács Hegymegi-Barakonyi Baker McKenzie's tax department is managed by partner Gergely Riszter. The team comprises three professionals. Viktor Hajdú joined as a junior associate in August 2016.
Riszter and senior tax associate Tímea Bodrogi-Szabó advised a Swiss-based investment fund in autumn 2016. The team conducted due diligence in relation to the acquisition of a Hungarian office building and the subsequent tax structuring of the deal, which was conducted in cooperation with Baker McKenzie's practice in Luxembourg.
Riszter, Bodrogi-Szabó and junior associate Viktor Hajdú assisted a client on the VAT consequences of the set-up of a new loyalty programme in May 2017. The team scrutinised the soon-to-be implemented voucher directive.
A client said: "I was happy with the service received and I would definitely recommend them. They are quick and flexible in terms of pricing and deadline as well as in terms of the contents of their opinion letter. We usually require a narrow focus on a well-defined issue. An assignment can be set up in minutes. The draft letter is always well prepared by the deadline. We do not need to go back to them asking for amendments more than once."
Kinstellar – an anagram of Linklaters – in Budapest was established in 2000. Csilla Andrékó has been the managing partner of the office since 2008. Andrékó is also in charge of Kinstellar's banking, finance and capital markets; and restructuring and insolvency practices and has more than 20 years of experience.
Clients are international and domestic investors active across a range of sectors, including automotive, banking and financial services, energy and utilities, food and beverages, manufacturing, mining, real estate and telecommunications.
The tax department of KPMG in Budapest is led by partner-in-charge Gábor Beer. Beer joined as a partner in 2001.
The firm offers the following tax and legal services: corporate tax, deal advisory, M&A, indirect tax, compliance, international tax, transfer pricing, global mobility and financial services.
Iván Sólyom is a key contact at Lakatos Köves & Partners, he was promoted to the position of partner in July 2016, having been with the firm since 2000.
Karoly Radnai is the managing partner of OrienTax Consulting. Radnai joined the firm in 2009. Previously he worked at EY and has been active in tax for 20 years.
Partner and economist György Székely is another key contact who joined the firm in 2012. He also worked at EY beforehand.
The practice advises clients in indirect tax, corporate tax and personal income tax.
A key contact at PwC is tax and legal partner Tamás Lőcsei. He is recognised for his expertise in international tax and tax advisory and he is also proficient in management consulting, due diligence, corporate tax and M&A.
The firm's office in Budapest offers clients a full range of tax services, including tax dispute assistance and representation, payroll assistance, corporate income tax assistance, VAT refund help, state aid and incentive services, indirect tax, transfer pricing and corporate compliance.
Partners Tamás Knébel and Orsolya Bárdosi co-manage the tax team at Tandax Advisory. Knébel and Bárdosi both have Big 4 backgrounds.
Knébel founded Tandax in 2012. He focuses on international tax structuring, transfer pricing corporate tax, VAT and indirect tax. His practice benefits from the insight gained in years spent working as the European transfer pricing director of a large multinational company.
Bárdosi joined the firm in 2015 and she has more than 15 years of experience in tax law and accounting. She concentrates on transaction tax advisory, tax structuring of M&A and reorganisations.
Knébel and Bárdosi advised a private equity buyer on the acquisition of a majority stake in a leading family-owned European business in December 2016. The client had a presence in several CEE countries. The team provided the client with tax structuring and related advice on a private equity fund.
In August 2016, Knébel and Bárdosi assisted a private owner and operative business in an indirect tax matter. The team acted as a lead tax counsel to an innovative artificial intelligence self-driver vehicle business in restructuring and related tax matters. The project involved restructuring several operating entities across several regions.
Partners Zoltán Lambert and Támas Gyányi are co-managers of WTS Klient Tax Legal Advisory in Hungary. The team comprises six partners and 25 additional tax professionals. Seven professionals joined the team in the past year.
Five concentrate on disputes, 20 work in indirect tax, and the entire team works in indirect tax, compliance and accounting. Within compliance and accounting there are 40 people, including experts from other departments.
The team specialises in consulting clients on VAT matters related to transactions (advisory and compliance, VAT registration), expat services, TP analysis and documentation, procurement of binding and non-binding ruling and representation in litigation proceedings and appeal preparation.
"We are satisfied and I would recommend them to other companies too," said a client. "Our contacts are very competent and respond quickly. The relationship is friendly, the fee of the consultancy is correct."
|Tier 1 - Hungary|
|Tier 2 - Hungary|
|DLA Piper Horváth & Partners Law Firm|
|Jalsovszky Law Firm|
|Katjár Takács Hegymegi-Barakonyi Baker & McKenzie|
|Lakatos Köves & Partners|
|WTS Klient Tax Legal Advisory|
|Tier 3 - Hungary|
|IB Grant Thornton|