Horizon Solutions

Horizon Solutions Horizon Solutions Ltd. offers tax consulting services in Budapest.

Impact of U.S. Policy Shifts on Global TradeThe future importance of customs and indirect taxes is increasingly evident ...
28/03/2025

Impact of U.S. Policy Shifts on Global Trade

The future importance of customs and indirect taxes is increasingly evident due to recent shifts in U.S. policy. The return of Donald Trump to the White House has marked a significant pivot in trade policy, emphasizing tariffs and trade protectionism. These changes are poised to reshape global trade dynamics, making customs and indirect taxes more critical for businesses and economies worldwide.

Role of Customs Duties in U.S. Domestic and Foreign Policy

Customs duties, a form of indirect tax levied on imported goods, are set to play a central role in U.S. domestic and foreign policy. The Trump administration's proposed tariffs include substantial increases on imports from various countries, with specific emphasis on China, Mexico, and Canada. For instance, tariffs on Chinese goods could rise to between 60% and 100%, while those on Mexican imports might see a 25% increase.

The future importance of customs and indirect taxes is increasingly evident due to recent shifts in U.S. policy.

Hungary’s New Superweapon Against Inflation: Retailers Face Harsh Price Controls and VAT refund program is introduced fo...
12/03/2025

Hungary’s New Superweapon Against Inflation: Retailers Face Harsh Price Controls and VAT refund program is introduced for seniors.

Hungary’s Prime Minister Viktor Orbán has announced a radical new measure to curb food inflation: retailers will be forced to cap their profit margins at 10% on 30 essential food items. This game-changing policy, set to take effect in mid-March, aims to put an end to excessive price hikes and ease the burden on consumers.

To support pensioners, the government is also rolling out a VAT refund program for seniors.

Why the Drastic Move?

Hungary's food inflation hit 7.1% in February, with staple items experiencing shocking price increases. In response, the government gave retailers a chance to propose voluntary price reductions. However, according to Orbán, these offers fell far short of expectations, prompting the administration to step in with regulatory measures.

What’s Changing?

Hungary’s New Superweapons Against Inflation: Retailers Face Harsh Price Controls and VAT refund program is introduced for seniors.

In today's interconnected global economy, public finance reform projects have taken centre stage, with digitalization pl...
25/02/2025

In today's interconnected global economy, public finance reform projects have taken centre stage, with digitalization playing a crucial role in streamlining tax administration and enhancing tax compliance. These reforms aim not only to improve efficiency and transparency but also to contribute to sustainable development. This article delves into the significance of public finance reform initiatives and the digital transformation of tax systems, particularly focusing on consumption taxes such as Value Added Tax (VAT).

The Need for Public Finance Reform

Public finance reform projects are essential for countries to efficiently mobilize revenue, ensure fiscal sustainability, and promote economic growth. These reforms aim to modernize tax administrations, improve taxpayer compliance, and reduce the administrative burden on businesses.

The significance of public finance reform initiatives and the digital transformation of tax systems, focusing on consumption taxes such as VAT.

The Approved Employee Share Plan (AESP), as defined under Section 77/C of the Hungarian Personal Income Tax Act, is a se...
24/02/2025

The Approved Employee Share Plan (AESP), as defined under Section 77/C of the Hungarian Personal Income Tax Act, is a securities-based incentive program designed to provide companies with a flexible and tax-efficient way to motivate employees and executives. Under this scheme, businesses can grant shares or share-related rights (such as purchase or subscription rights) to employees and executive officers under significantly more favorable tax conditions compared to traditional salary payments.

However, a crucial aspect of this Employee Share program is that participation cannot be linked to employee performance, meaning it cannot serve as a replacement for traditional bonuses. Additionally, companies can grant shares issued by themselves or affiliated entities tax-free, up to a market value of HUF 1 million per employee per year. Supervisory board members, however, are not eligible to participate in this program.

The Employee Share Plan in Hungary is a securities-based incentive program designed to motivate employees and executives in a tax-efficient way.

Decoding the VAT Gap: Its Significance and RamificationsThe VAT Gap, which illustrates the variance between expected and...
19/02/2025

Decoding the VAT Gap: Its Significance and Ramifications

The VAT Gap, which illustrates the variance between expected and actual VAT revenues, serves as a barometer for measuring the effectiveness of VAT enforcement and compliance. It highlights crucial areas for potential improvement in tax administration. It is a critical metric for understanding how much revenue is lost due to various factors such as tax fraud, evasion, avoidance, and administrative errors.

Reducing the VAT Gap also aligns with broader sustainability goals. By improving tax compliance and increasing revenue collection, governments can allocate more funds towards sustainable development projects, public services, and infrastructure. This ensures that economic growth is balanced with environmental and social well-being, contributing to a more sustainable future.

Broadly, VAT Gaps are categorized into Compliance Gaps and Policy Gaps, both crucial for understanding the leakage in VAT collections.

Hungary's proactive and technologically advanced approach to tackling VAT fraud has yielded impressive outcomes with lowering the VAT Gap.

Value Added Tax (VAT) is a consumption tax levied on the sale of goods and services within the European Union (EU). Whil...
18/02/2025

Value Added Tax (VAT) is a consumption tax levied on the sale of goods and services within the European Union (EU). While the EU has established a harmonized framework for VAT, businesses operating across multiple member states often face complexities in determining which VAT number to use for specific transactions. In this article, we will explore the intricacies of VAT rules in the EU and focus on the issues related to the use of VAT numbers in various transactions.

Harmonized VAT Framework

The EU has developed a harmonized VAT system through directives that establish common principles and rules. Each member state implements these directives into its national legislation, resulting in a consistent VAT framework across the EU. Key aspects of this harmonized system include common VAT rates, uniform invoicing requirements, and specific rules for cross-border transactions.

Navigating EU VAT numbers requires a thorough understanding of the EU VAT framework and the specific requirements for using VAT numbers.

Trump's Unilateral Tax Retaliation: Hungary has recently found itself in a precarious position within the global tax lan...
05/02/2025

Trump's Unilateral Tax Retaliation: Hungary has recently found itself in a precarious position within the global tax landscape. Some years ago, the country lost its tax treaty with the U.S., leaving its businesses unprotected against potential unilateral tax increases under Section 891 of the U.S. Internal Revenue Code. This development places Hungary among the jurisdictions most vulnerable to the U.S.'s retaliatory tax measures, particularly in the context of the OECD's Global Minimum Tax initiative. As a result, Hungary's role in the international tax arena is now more critical than ever, as it navigates the challenges posed by the absence of formal protections against discriminatory taxation.

The Scope of Section 891

The latest executive actions by U.S. President Donald Trump have sent shockwaves through the international tax landscape.

The latest executive actions by U.S. President Donald Trump to activate Section 891 have sent shockwaves through the international tax landscape.

Taxation of Digital Nomads in Hungary: As the trend of remote work continues to rise, many professionals are choosing to...
05/02/2025

Taxation of Digital Nomads in Hungary: As the trend of remote work continues to rise, many professionals are choosing to live a more flexible lifestyle as digital nomads. Hungary has emerged as a popular destination for these individuals due to its rich culture, vibrant cities, relatively low cost of living and its favourable tax system. Taxation is an important consideration for anyone planning to live and work remotely in Hungary. This article provides an overview of the key aspects of taxation for digital nomads in Hungary.

Personal Income Tax in Hungary

Hungary has a flat personal income tax rate of 15% for individuals. This rate applies to all income types, including salaries, freelance income, and investment returns. However, entrepreneuers should pay 9% tax on their profit.

Remote work continues to rise, thus, many professionals choose to live as digital nomads. Hungary offers rich culture, vibrant cities, low taxes.

The global minimum tax is no longer a distant concept for multinational enterprises (MNEs) and large domestic corporate ...
05/02/2025

The global minimum tax is no longer a distant concept for multinational enterprises (MNEs) and large domestic corporate groups in Hungary. With the recent release of the required filing form, businesses must act swiftly to ensure compliance with the 15% effective tax rate of the global minimum tax. Here's what you need to know to stay ahead.

Hungary’s Compliance Mechanism

Hungary achieves the global minimum tax rate through a “top-up tax” system, supplementing its existing taxes, such as corporate tax, local business tax, and the innovation contribution. This approach ensures that the total tax burden meets the minimum threshold, with the top-up tax covering any shortfall.

Key Filing Deadlines: December 31, 2024

The GLOBE (global minimum tax) filing form must be submitted by December 31, 2024. The obligation applies to:

- Domestic group members of multinational enterprises or large domestic corporate groups with tax residence in Hungary.

With the recent release of the required filing form, businesses must act swiftly to ensure compliance with the 15% Global Minimum Tax in Hungary.

In intra-EU supplies of goods, transactions often involve participants acting as both sellers and purchasers in the same...
05/02/2025

In intra-EU supplies of goods, transactions often involve participants acting as both sellers and purchasers in the same transaction, while the product concerned is delivered only once, directly from the first seller to the last buyer; for VAT purposes, these transactions should be analysed carefully.

These are known as chain transactions, whereas triangular transactions are actually three-party chain transactions, since it is true that more than one sale takes place between the parties in such a way that the product goes directly from the first seller to the final purchaser.

In the case of these transactions, it is particularly important to examine the tax obligations of each participant, since typically the participants are interested in exempt sales, whereas only one sale can be exempt in the case of such transactions.

In intra-EU supplies of goods, VAT transactions often involve participants acting as both sellers and purchasers while product is delivered only once.

Unlock Thousands of Euros in Family Tax Benefits for Foreign Workers in Hungary – Even Retroactively Through Self-Revisi...
05/02/2025

Unlock Thousands of Euros in Family Tax Benefits for Foreign Workers in Hungary – Even Retroactively Through Self-Revisions

There are various tax benefits available in Hungary, like family tax benefit, that foreign workers may not be fully aware of, yet these advantages can offer substantial financial relief to expatriate families over the years. For instance, you could save in tax through family tax benefit approximately EUR 308 per year with one child, EUR 615 with two children, or up to EUR 3,046 annually with three children. On top of this, the 2021 tax rebate can provide an additional maximum benefit of EUR 2,074, creating a significant total.

The best part? These benefits (family tax benefit) aren’t lost if missed initially; they can still be claimed retroactively through a self-revision process, as long as the statute of limitations allows. Time is running, so don’t miss out on these valuable tax advantages. Contact our experts today to make the most of these opportunities!

There are various tax benefits (like family tax benefits) available in Hungary that foreign workers may not be fully aware of, yet these advantages can offer substantial financial relief to expatriate families over the years.

Cím

Gizella út 42-44. , MOHA Ház, (MOHA Office Center)
Budapest
1143

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