Tax credit - legislative change (for Hungarian residents only)
Prior to the amendment of the Taxation Act - effective as of 1 January 2004 -
holders of fund units were entitled to a tax credit for the increase of the
annual average balance of the fund units placed on tax capital account.
Pursuant to the amended law, deductions from the consolidated tax base under the
title of investment tax credit were last allowed for 2003. The tax credit
reported in the tax return concerning 2003 must be repaid by 20 April 2007 at
Based on the tax returns submitted concerning 2003, the Hungarian Tax
Administration (APEH) will send a notification on the tax liability established
by APEH and recorded on a separate tax account, by 30 June 2004. This tax
liability assessed normally will equal to the amount of tax credit indicated in
the tax return concerning 2003. The Taxation Act offers allowances for the
repayment of the tax credit assessed before the expiry date (20 April 2007):
- until 31 October 2004: 81.82 % of the repaid amount
- between 1
November 2004 and 30 June 2005: 25 % of the repaid amount
- between 1 July
2005 and 30 June 2006: 5.26 % of the repaid amount
will be forgiven,
i.e. credited as a surplus amount!
- no allowances will be offered for
amounts repaid between 30 June 2006 and 20 April 2007.
The allowances mentioned above may be claimed only if the taxpayer has not
applied for any tax credit concerning 2003. Taxpayers who continue to utilise
tax credits concerning 2003, are only entitled to a 25% allowance on the amounts
repaid by 31 October 2004.
The allowances are administered by APEH as offsets.
The highest allowance is available to taxpayers not applying for tax credit
concerning 2003 and repaying the tax credit established by APEH by 31 October
2004. Let us show an example to illustrate this case:
established by APEH: HUF 100,000
-tax credit paid in by 31 October 2004: HUF
- tax credit offset (81.82% of HUF 55 T): HUF 45,000
It is not compulsory to repay the total amount of the tax credit utilised as a
lump-sum amount, instalments are also allowed.
After the elapse of a specified interim deadline, APEH will send an advice on
any tax credits paid in to date and the associated offsetting entries within 30
days after the interim deadline.