In the first part of our article, we examined the concepts of tax deficiency, tax penalty, and default penalty under Hungarian tax law. In this second part, we continue with the rules on late payment interest, self-revision interest, procedural penalties, and the concept of tax performance, which are all important in understanding the full framework of Hungarian tax compliance.
Late Payment Interest
In the case of late payment of tax, from the day following the due date (as the starting day), late payment interest must be paid. The rate of the late payment interest for each calendar day shall be one three-hundred-and-sixty-fifth of the central bank base rate in effect at the time of the delay or the early utilization (settlement) before the due date, increased by 5 percentage points. Late payment interest does not bear further interest, and late payment interest not exceeding HUF 5,000 (appr. EUR 12,5) is not charged.
For example: if the corporate tax is not paid by the deadline (in Hungary, the deadline for submitting the corporate tax return and paying the tax based on it is May 31 of the following year), but only on September 30. In this case, the starting day is June 1, 2025. Let us assume that HUF 5,000,000 (appr. EUR 12,800) should have been paid as tax, which was not paid by the due date. It can be established that the amount of the late payment interest is HUF 189,100 (appr. EUR 480).
Self-Revision Interest
If the taxpayer corrects the tax or the budgetary support according to the provisions on self-revision, self-revision interest must be paid. The rate of the self-revision interest for each calendar day shall be one three-hundred-and-sixty-fifth of the central bank base rate in effect at the time of the delay or the early utilization (settlement) before the due date.
Procedural Penalty
If the taxpayer or a person not qualifying as a taxpayer obstructs the procedure, a procedural penalty may be imposed. The minimum amount of the procedural penalty per case is HUF 10,000 (appr. EUR 25), the maximum amount is HUF 500,000 (appr. EUR 1,250) for a natural person and HUF 1,000,000 (appr. EUR 2,500) for a non-natural person.
For example: obstruction of the procedure includes, in particular, failure to appear when summoned or unjustified refusal to testify or failure to make a statement or unjustified refusal to make a statement, as well as making a false statement, and finally, failure to fulfil the obligation to arrange or replace documents.
Tax Performance
Tax performance means the average annual amount of the taxpayer’s total tax liability within the limitation period, calculated on a gross basis (increased by budgetary support, tax allowance, and tax exemption). When calculating the elements of tax performance, only the data of tax returns submitted to the Tax Authority or the data recorded in the Tax Authority’s records may be taken into account.
The purpose of taxpayer classification (risky, reliable) is to ensure that taxpayers who voluntarily and on time fulfil their tax obligations gain advantages over non-compliant taxpayers. The Tax Authority examines quarterly whether taxpayers registered in the company register, VAT-registered taxpayers, and group taxpayers meet the conditions applicable to reliable taxpayers or risky taxpayers. As a result of the examination, taxpayers are classified as reliable or risky.
In the next article, we will take a closer look at risky and reliable taxpayers.
The information provided in this article is for informational purposes only and does not constitute tax or legal advice.
Sources:
- [1.] Act CL of 2017 on the Rules of Taxation
- [2.] Act CLI of 2017 on Tax Administration and the Regulation of Tax Administration