Mazars Hungary Tax Newsletter No. 05/2009

As a necessity of Hungary’s accession to the European Union, the country’s act on value added tax needs to be fully harmonized with the EU Directive (2006/112/EC) regulating value added tax in the Community. The vast majority of economic entities were aware of this rule, yet the legislative amendment effective as of 1 May 2004 caused temporary difficulties of varying depth in the tax practices of numerous enterprises. An amending directive has been enacted in the meantime – on 12 January 2008 – which fundamentally modifies the provisions of the Directive relating to the place of performance of services.

The member states are required to adopt the new / modified rules in several steps (first on 1 January 2010) – Hungary is no exception. As a means of assisting in the preparations, this newsletter highlights the legislative changes which are similar in relevance to the modifications necessitated by EU accession.