Business taxation 3.
Corporate Income Tax - Tax liability and taxpayer

Dear readers, in this blog about the Hungarian business taxation I provide you a general overview about the Hungarian tax regime. This blog does not provide tax or legal advisory. This blog deals with the Corporate Income Tax (Tax liability and taxpayer).

Corporate income tax is one of the most dominant central taxes in Hungary. A Hungarian corporate tax resident entity is taxed on its worldwide income. The resident corporate taxpayers are subject to unlimited tax liability, as long as nonresident corporate taxpayers are subject to limited tax liability in Hungary. If a nonresident entrepreneur or person performs business in Hungary through domestic premises, this activity triggers limited tax liability in Hungary and the person becomes corporate taxpayer in Hungary. The effective place of management in Hungary creates unlimited corporate income tax liability.

Subsidiaries of foreign companies registered in Hungary are corporate taxpayers; therefore, these are subject to corporate income tax under ordinary domestic rules. Foreign companies are deemed to be resident in Hungary, if their effective place of management is in Hungary. Registered branch offices and non-registered permanent establishments are taxed under the same regime applicable to Hungarian-registered corporate entities.

The shareholder of a company whose Hungarian real estate property exceeds 75 percent of the aggregate market value of assets shown in its financial statements is subject to Hungarian taxation when transferring the shares in the company, assuming a member of the company is resident in a country with which Hungary has not concluded a double tax treaty or if an applicable treaty allows the taxation of the capital gains in Hungary.