Hungary Tax: Changes to tax penalty rules in effect

Favorable changes to tax penalty provisions in Hungary's Act on the Rules of Taxation (ART) became effective as from 1 January 2010.

Under the revised rules, "qualified taxpayers" will pay a general tax penalty of 20% (previously 50%) for underpaid tax where there is no breach of obligations (such as concealment or falsification). The rate in the case of a breach of obligations remains 75% regardless of whether the taxpayer is qualified. A taxpayer is considered a qualified taxpayer under the ART if:

- The taxpayer carries out business activities and has been in operation for at least three years before requesting to be included on the list of qualified taxpayers;
- The tax authorities have not identified any delinquent taxes (and the statute of limitations has not expired) before the taxpayer's request is submitted and have not initiated any proceedings to collect tax due; and
- The taxpayer has not been subject to bankruptcy or liquidation proceedings and has not submitted a request for payment facilities or tax relief.

At the taxpayer's request, the tax authorities will include the taxpayer on the list/database of qualified taxpayers. If the taxpayer fails to meet any of the above criteria after being registered in the database, it will be removed. Taxpayers should request inclusion in the qualified taxpayer database, as this can reduce tax penalty exposure in an audit.