Most taxpayers may have not anticipated the 2022 summer tax package, nor the two additional measures that have also resulted in changes. However, the most recent changes are not about introducing new taxes or restructuring of a current one, but to retain two preferential tax rules.
In the first place, the VAT reverse charge mechanism on the supply of certain agricultural and steel products (listed in Annex 6/A and 6/B of the Hungarian VAT Act) and on the trade of carbon-emission quotas will remain applicable at least until 31 December 2026. As for the legal background, the European Council has extended the deadline for the changeover to the so-called final VAT system until 31 December 2026, reserving the right for Member States to apply reverse charge on the supply of certain goods as per the VAT Directive, to prevent tax evasion.
In the second place, the Hungarian Government has prolonged the applicability of the preferential 5% VAT rate on the sales of new residential properties, built in a ‘non-rustbelt’ area with a maximum useful floor area of 150 square meters in the case of flats and 300 square meters in the case of detached houses [Government Decree no. 267/2022. (VII. 29.)]. So based on the Decree, if such sales will be performed until 31 December 2024, the reduced VAT rate should apply, irrespective of the validity date of the building permit (or that of the simplified declaration). However, if the property (flat or residential house) is sold between 1 January 2025 and 31 December 2026, the transitional rule applies, whereby the 5% VAT is conditional on the building permit having become final (or the simplified declaration having been made) by 31 December 2022. According to the latest announcement of the Ministry of Finance, the legislator is considering the prolongation of the transitional rule up till 31 December 2028.
In case of any questions related to the above, please do not hesitate to contact us.