Changes in the local tax top-up liability

In this information letter we would like to draw your kind attention to the abolition of the local business tax supplement liability.

The draft act submitted by the Minister of Finance (No T/10856) was adopted by the Parliament, in which the relevant provisions of the Act on Local Taxes (section 41 (9) of Act C. of 1990) were abolished. 

According to the previous legislation, taxpayers subject to corporate income tax whose annual net turnover of the preceding tax year exceeded HUF 100 million had to supplement their already paid local business tax advances to the amount of the expected local business tax of the tax year, commonly referred to as “top-up liability”. The related tax payment and return deadline was the 20th day of the last month of the financial year, generally 20th December.

The top-up liability of corporate income tax and innovation contribution has already been abolished last year, in 2019, but the possibility of the voluntary tax supplement was granted. In 2020 this is not an option anymore.

Due to the elimination of the local business tax top up obligation, the reduction of administrative burdens has now been fully reduced in this taxation area.

Thus, in the future taxpayers wouldn’t be obliged to deal with estimates and calculations in the last month of the tax year in order to comply with tax payment and return obligations.

It is also important to mention that the repeal is effective from 15 July 2020, consequently, companies are not required to deal with the top-up liability after this date (including non-calendar year taxpayers).


This document can be downloaded in PDF format by clicking on this link: Changes in the local tax top-up liability

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