Under the newly published decree, Hungarian taxpayers can expect even stricter audits and penalties as of 1 August.
Default penalty has doubled!
From August 2024 in Hungary:
- if a taxpayer fails to properly fulfil its tax obligations or fails to comply with the deadline set in the call for supplementing the missing documents, they may be subject to a default penalty of HUF 400,000 instead of HUF 200,000 for private persons and HUF 1,000,000 instead of HUF 500,000 for companies.
- if you employ workers who were not reported or you do not comply (or not fully comply) with the obligations to issue invoices, receipts and keep documents, the tax inspectors can immediately impose a default penalty of HUF 2,000,000 instead of the previous HUF 1,000,000.
Risky taxpayers – up to tripled default penalty!
Please note that the amendment is a serious tightening as, while it appears that the current 50% penalty for tax shortage and 200% for concealment of income have not been increased, if a large default penalty is assessed by the tax authority, or unreported workers are found to be employed, the taxpayer classification immediately becomes risky, which entails a tax penalty that is 130% of the otherwise applicable rate.
And to make things worse, in case of risky taxpayers, the tax authority may impose 150% of the upper limit of the default penalty that may be levied under the general rules.
This means that failing to issue an invoice or report temporary employment for a worker may incur a default penalty of up to HUF 3,000,000.
For risky taxpayers, it is even more important to comply with their tax obligations on time, as the current decree may seem to have "only" doubled the default penalty, but due to the rules on taxpayer qualification, this could mean a triple increase in the original default penalty, or even an increase in the amount of the tax penalty.
