Small Business Tax („KIVA”)
Clarification of definition
The rules on the calculation of the average statistical headcount have been amended, which affects the calculation of the tax benefits that are available for employing eligible personnel. As of now (and it will remain so after the amendment, too), the annual amount of these discounts that can be claimed should not be included in the cost of personnel and, therefore, should not be part of the KIVA base. According to the current regulations, the average statistical headcount should be calculated by taking into account the Guidelines for labour statistics data provision issued by the Central Statistical Office effective on 1st January 2009. From 1st January 2023, the publication effective on the first day of the tax year will have to be followed when determining the average statistical headcount.
Minor clarification has been made to the rule for determining the tax benefit available for eligible personnel in the 4th and 5th years of their employment. The upper limit for the benefit remains 50% of the minimum wage, but if this amount is higher than the monthly gross wage, the latter amount is taken into account when determining the benefit.
Opting for KIVA taxpayer status
The rules for electing KIVA have been amended.
From 1st January 2023, when opting for the Small Business Tax scheme, it should be examined whether or not the taxpayer is expected to adjust its corporate income tax base according to the interest deduction limitation rules in the tax year preceding the potential decision to opt for KIVA. application of small company tax status. If the answer is yes, then the KIVA scheme cannot be opted for.
(Under the current rules, the KIVA can be opted for if the financing costs under the Corporate Income Tax Act are not expected to exceed the HUF 939,810,000 threshold (the equivalent of the EUR 3 million set out by the relevant EU Directive)).
Termination of the KIVA taxpayer status
The scope for the termination of the KIVA taxpayer status has been extended/modified, as after 1 January 2023, the KIVA taxpayer status should also cease if the taxpayer would have been expected to adjust its corporate income tax base (if it were a corporate income taxpayer) by applying the special provisions of the corporate income tax rules on exit tax or tax avoidance (hybrid instruments, structured transactions).
As of 1 January 2023, the KIVA taxpayer status should cease on the day before the first day of the tax year if the taxpayer would have to adjust its corporate income tax base by applying the interest deduction limitation rules.
(Under the current rules, the KIVA taxpayer status ceases if the financing costs under the Corporate Income Tax Act are expected to exceed HUF 939,810,000).
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