Hungary: CbC reporting requirements adopted

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Hungary released a draft law on country-by-country (CbC) reporting on 10 March 2017 which became effective 15 May 2017. As a result, Hungary fulfilled the harmonisation requirement set by Council Directive (EU) 2016/88) and implemented the country-by-country reporting (“CbC report”) requirements into Hungarian legislation. According to law, all Hungarian tax resident entities that are part of a multinational group that derives annual consolidated income of at least EUR 750 million will need to comply with the CbC reporting requirements.

A Hungarian resident ultimate parent entity must file a country-by-country report with the Hungarian tax authority within 12 months of the last day of its reporting fiscal year. If the ultimate parent is tax not resident in Hungary, Hungarian resident constituent entities may become reporting entities and may be appointed by their groups to file the CbC report. Any changes in the reported data should be reported to the Hungarian tax authority within 30 days by the Hungarian group member.

The CBCR must include information on the main data of the MNE per each tax jurisdiction involved with its operation i.e. revenue, pre-tax profit / loss, paid corporate income tax, capital etc. The average number of employees in each entity must be reported. CbC reports must contain tangible assets other than cash or cash equivalents and main business activity.

The first CbC reports and notifications must be filed for the fiscal year commencing on or after 1 January 2016, within 12 months of the last day of that fiscal year. In future fiscal years notifications must be made no later than the last day of the reporting fiscal year. Any change must be reported within 30 days of such change occurring.

Failing to submit reports or notifications, late submission, or providing incorrect, false or incomplete information may be subject to a default penalty of up to HUF 20 million.

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