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Briefing notes

Another Hungarian tax success in Brussels

The government successfully represented Hungarian interests in Brussels.

The European Union has accepted the government’s tax arguments in two cases, allowing half of the VAT to be recovered on rented cars and ensuring fair business and budget protection against insolvent companies, MTI reported.

Norbert Izer, Secretary of State for Taxation at the Ministry of Finance, said that around 100,000 company cars could be affected by the favorable ruling by the Council of the European Union in Brussels.

In Hungary, a serious administrative simplification came into force in 2019, which allowed lessees to automatically deduct 50 percent of the VAT of their monthly rental cost if they proved they used the car for business purposes. No further administration is required. The application of the rule was extended until December 31, 2024, by the Council of the European Union.

Another decision by the Council also plays an important role in further whitening the economy. Online tools such as cash registers and online invoices have greatly helped Hungary reduce tax evasion, but these have not been enough for insolvent companies. 

Therefore, the Council additionally extended the VAT accounting rules for insolvent taxpayers until December 31, 2024, Izer added. Instead of insolvent companies, the buyer pays the VAT in the case of a product or service that costs more than HUF 100,000. This will ensure that the VAT payable reaches the government, Izer explained.

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