If you are running a business in Hungary, you are also paying a local business tax to your local municipality. The next important deadline is 31 May, and if your registered address is in Budapest, you can pay the tax by card as well as by bank transfer.
Local business tax in Hungary
Businesses operating in Hungary must pay a local business tax (“helyi iparűzési adó”, or HIPA) to the municipality where the business is registered. If the business has several premises at various municipalities, the tax is split between them (unless you are paying the local business tax in the tier system, in which case you pay the full amount at each).
The tax is at most 2% of your revenue, but it can be reduced by various items. Some municipalities do not collect this tax at all, and at some municipalities your business will be exempt if its revenue is below a certain limit.
For example, in Budapest, the local business tax is 2% of the tax base. However, if your tax base is below HUF 1.5 million, you do not have to pay HIPA at all.
There are three deadlines relevant for paying the local business tax: two advance payments by 15 March and 15 September, and yearly reporting by 31 May. Whatever you paid last year by 15 September, must be adjusted after you submit your yearly report in May: if you paid less in advances, you must top it up; if you paid more, you can either reclaim it or leave it with the municipality and use it towards your next payment. Learn more about the deadlines here.
Pay HIPA by card in Budapest
Most taxes in Hungary can be paid online by card through EFER, the Electronic Payment and Settlement System of the Hungarian Tax Authority. Unfortunately, the local business tax is not one of them, since you are paying it directly to your local municipality. However, you can check if your local municipality has an option for easy payment.
The municipality of Budapest, for example, offers an option for payment by card. This is possible through their own system called EFR,which is not the same as EFER. Other municipalities might also have their own systems; make sure to check them online. Some municipalities use the central administrative portal, and can be found here.
To pay HIPA for your business based in Budapest, log in to the administrative website of Budapest at https://ssl.budapest.hu/web_hair/. You do not need a unique registration, just use your Ügyfélkapu access (the Client Gate). During the login process, you might get a popup warning that forbids unauthorized access; don’t worry about it, just click “Next”.
In the top menu, the first option is “E-Ügyintézés” (e-administration). click there, and then select the first option: “Adószámla lekérdezése” (information about your taxes). It will show you a summary of your taxes due, whether you are a freelancer or a company owner. The page pulls data from the Tax Authority, which uses the data automatically submitted to it through your invoicing software whenever you issue an invoice, so it is supposed to be correct. (Of course, the more complex your operation is, the more sense it makes to have an accountant of your own, and let them check the data for you.)
If you do not see your company, you might need to submit a request for representing your company in electronic administration. You can do that on the same interface, in the top menu under “Bejelentés” (“Registration”), choosing the option “E-ügyintézési igény / meghatalmazás bejelentése” (Registering an authorized representative). If it seems complicated, ask your accountant to help you with it.
Once you managed to display the information about your taxes, right next to the table you will see a button for an electronic payment option. Click “Elektronikus fizetés (EFR)”, and you will be redirected to a page where you can initiate payment of the tax by card. Just enter the relevant information, and the payment will be processed immediately.
If you prefer paying by wire transfer, you can find the relevant bank account numbers here. The first header is for HIPA, but you can make sure if you type search for “iparűzési adó” on the page. Just make sure to add the tax number of the legal person you are paying for in the comment section of the transfer order.
Payment and reporting are different procedures
Please note: the above description refers to paying the local business tax directly to the municipality where your business is registered. This should be done two or three times a year, by the above deadlines. At the same time, the local business tax must also be reported to the Tax Authority every year by 31 May, even if you are exempt from payment. If you have a Hungarian accountant, they can do this for you, and simply relay you the information about how and how much you must pay.
The Helpers Finance Team prides themselves in providing precise and timely accounting services to their clients, which naturally includes taking care of reporting obligations relevant to the local business tax. If you are working with us, you can rest assured that your accounting will be in good hands.
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