The Hungarian tax authority’s audit plan for 2022

The Hungarian tax authority has published its audit plan for 2022, which as usual focuses on activities and taxpayers with a risk to fiscal revenue and on promoting voluntary compliance. The thematic audits include transfer pricing audits in the automotive sector, audits of specific corporate tax reliefs, and audits of “KIVA” (Small Business Tax Scheme) subjects. A new feature is the pre-payment control of personal income tax returns including tax reimbursements and the control of individuals claiming the family credit for the social security contributions. In this newsletter, we briefly summarise the main audit priorities.

Activities with a risk to fiscal revenue

Among these activities, the HTA's audit plan includes, among others, the sale of online shops, the purchase and distribution of food and agricultural products, the sale of construction and building materials, the sale of (used) motor vehicles and parts, the repair of motor vehicles, tourism, catering, accommodation services and passenger transport.

Audits based on risk analysis

Based on the data provided by the Online Invoice System and the online cash registers, the HTA analyses invoicing chains and filters out fraudulent taxpayer behaviour.

Making use of data from the international exchange of information is a priority for the tax authority. Taxpayers linked to or profiting from countries on the EU blacklist will also be subject to risk-based controls (in particular with regard to their transfer pricing risk).

The detection of fraudulent taxpayer behaviour in the context of high labour-intensive employment will require swift intervention by the authorities, which may particularly affect companies engaged in the protection of property, temporary employment and cleaning services.

The tax authority is making a special effort to detect undervaluation of goods imported in e-commerce and VAT evasion in Community and domestic transactions. The latter is often achieved by means of disappearing importers "hiding" behind indirect customs representatives, so that procedures involving the intervention of a customs broker are a priority for the tax authorities.

Control of the biggest taxpayers

The risk analysis of data received from international information exchange (country-by-country reports (CbCR), cross-border tax arrangements) will be more focused on the control of cross-border transactions in 2022.

The verification of compliance with the conditions set out in the Advanced Pricing Agreements (APAs) is an ongoing task in the audit plan.

Voluntary compliance support, compliance audits

As part of continuous monitoring, the tax authority selects for compliance audits, on the basis of the risk analysis carried out, newly established businesses, businesses affected by a change of owners, businesses that do not submit VAT returns or have zero tax liability but are operating as indicated by other controls, businesses with VAT control deviations, businesses that "wake up from dormant status", etc.

As far as compliance audits are concerned, we highlight in particular the following:

Thematic audits:

• transfer pricing audits in the automotive sector;
• compulsory audits on the utilisation of corporate income tax reliefs (audits on the utilisation of development tax relief, audits on tax relief for energy efficiency investments and renovation);
• audits of KIVA (Small Business Tax Scheme) taxpayers;

Employment:

• Compliance audits taxpayers with a discrepancy between the employment notifications (Form yearT1041) and the personal income tax and social security contribution declarations (Form year08) based on the data for 2021, and verification of the obligation to notify the termination of employment for employees who are included in the employment notifications but not in the personal income tax and social security contribution declarations;
• ongoing review of KATA (Fixed-Rate Tax of Low Tax-Bracket Enterprises) contracts, to identify the true circumstances of the legal relationships;

Other taxes:

• audits of taxpayers who do not pay company car tax - prepared based on the data of the motor vehicle registry and the vehicle tax records;
• audits related to the environmental product tax (“green tax”) obligation, in particular control of the changed tax rates for plastic carrier bags from 1 July 2021, audits of taxpayers producing products subject to the public health product tax.

The tax experts of VGD Hungary have considerable experience in supporting and preparing for tax audits and are ready to assist their clients in this area as well.

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Should you have any questions regarding this newsletter, the tax experts of VGD Hungary will be pleased to assist you.

This newsletter provides general information and does not constitute tax advice.

26. April 2022.