Reliable taxpayers can escape 50 percent of increased NAV penalties
The government has significantly increased the fines that the National Tax and Customs Administration (NAV) can impose for the three most common types of non-compliance. Gábor Csongár, a certified sales tax expert, said that the majority of companies are puzzled by the decision, but he believes there is no reason to panic, because a reliable taxpayer can waive up to half of the fine and automatically request an instalment payment and/or deferral of up to four million forints. But this requires good taxpayer behaviour, which a tax adviser can easily help with.
In mid-summer, a government decree doubling the amount of NAV fines was published in the Hungarian Gazette. The new penalties are effective from 1 August and, importantly, cannot be applied retroactively.
Gábor Csongár, managing owner of First Hungarian Accountants and Tender Writers Ltd, pointed out that they have taken measures to increase the amount of fines for three defaults.
"The first is the general default fine, the maximum amount of which for natural persons has jumped from HUF 200,000 to HUF 400,000, while for non-natural persons, such as partnerships, it has risen from HUF 500,000 to HUF 1 million. It is important to note that we are talking about a conditional mode here, so the penalty is not mandatory in case of non-compliance, the tax authority has discretion", he explained.
The other change concerns the failure to declare employees, which has been sanctioned very severely. From now on, anyone who employs an employee in the black can be fined two million forints instead of one million. In addition, the fine will be imposed in any case if the NAV identifies the employee's failure to declare.
Last but not least, the third relevant omission is the failure to submit invoices or receipts, or to comply with the obligation to keep records. For each of these, the fines have also increased from one million to two million.
Preference is given to reliable taxpayers
In response to a question, the expert said that this government regulation will increase the importance of the value of qualifying as a reliable taxpayer.
"If you are considered a reliable taxpayer, you can get up to 50 percent of the penalty imposed waived, so you can stay at the rate before the increase, he said.
He also pointed out that, although few people know it, a reliable taxpayer can apply for 12 monthly instalments or deferred payments on his tax arrears once a year up to three million forints (
. In addition, under the law, non-natural persons can also apply for a one-off six-month instalment rebate for tax debts of up to HUF 1 million. This means a total of four million forints over a year.
According to Gábor Csongár, the most cost-effective way to avoid these fines is of course to avoid them altogether. All this can be achieved through thorough, well thought-out tax planning and good taxpayer behaviour, which can be helped by a competent, knowledgeable professional with many years of experience. Accountants only deal with economic events after the fact, so they cannot be expected to help with tax planning, for this we need to consult a qualified tax adviser, which will certainly pay off when we see the penalty items, the tax expert concluded.