Personal scope of application As per 02 December 2022

Are there any deviations from the Directive in defining the intermediary?

2021/06/17

There are no deviations from the Directive.

How is an intermediary defined? Is there a differentiation between a corporate entity and an individual person?

2021/06/17

There are no differences.

Can a corporate tax department (or its members) within a MNE or within a group of entities qualify as an intermediary?

2021/06/17

A company that has a corporate tax department or members of that corporate tax department may qualify as an intermediary, however, further guidance would be required from the Ministry of Finance in this regard.

How are the actions of designing, marketing, organizing, making available for implementation or managing the implementation of a tax arrangement defined?

2021/06/17

These actions are not defined.

Have the legal preconditions regarding the territorial nexus for an intermediary been implemented in accordance with the Directive?

2021/06/17

There are no deviations from the Directive.

Are there any other conditions apart from those of the Directive, such as the territorial nexus of a tax arrangement to a certain Member State, which trigger a reporting obligation of an intermediary (e.g. including intermediaries from outside the EU)?

2021/06/17

There are no deviations from the Directive.

In which cases is the relevant taxpayer obliged to report? Are there deviations from the Directive?

2021/06/17

The user is obliged to report in three cases:1. If no intermediary exists;2. If there is no intermediary, who has a territorial nexus to Hungary;3. If the intermediary is subject to legal professional privilege and the intermediary informed the taxpayer regarding its obligation.

Are there any other persons beside intermediaries or relevant taxpayers obliged to report?

2021/06/17

There are no deviations from the Directive.There are no other persons besides intermediaries (promoters and advisors) and users obliged to report.

Are there any deviations from the Directive in defining the relevant taxpayer?

2021/06/17

There are no deviations from the Directive.

Mechanism to avoid multiple reporting

Which measures have been taken to avoid multiple reporting obligations referring to an intermediary obliged to report in several countries? Are there deviations from the Directive?

2021/06/17

An intermediary should report in the Member State that comes first regarding the followingconditions:1. Where the intermediary has its tax residence;2. Where the intermediary has its permanent establishment;3. Where the intermediary registered at the corporate trade registry;4. Where the intermediary registered in the chamber of the profession.There are no deviations from the Directive.

Which measures have been taken to avoid multiple reporting obligations referring to more than one intermediary obliged to report? Are there deviations from the Directive?

2021/06/17

There are no deviations from the Directive.

Which measures have been taken to avoid multiple reporting obligations referring to a relevant taxpayer obliged to report several countries? Are there deviations from the Directive?

2021/06/17

There are no deviations from the Directive.

Which measures have been taken to avoid multiple reporting obligations referring to more than one relevant taxpayer obliged to report? Are there deviations from the Directive?

2021/06/17

There are no deviations from the Directive.

How does the National Tax Authority expect the conditions for exemption from filing a report to be met?

2021/06/17

The Tax Authority generates a unique ID number of the reportable transaction if an intermediary reports it in Hungary first. The intermediary should share with other intermediaries this ID number which prooves that DAC6 reporting has been fulfiled.

Material scope of application

Are national tax arrangements subject to reporting under the Directive?

2021/06/17

National tax arrangements are not subject to report.

Which taxes are affected? Are there deviations from the Directive?

2021/06/17

There are no deviations from the Directive.

Does the hallmark catalogue deviate from the Directive? If yes, to what extent?

2021/06/17

There are no deviations from the Directive.

Which hallmarks are linked with the main benefit test?

2021/06/17

There are no deviations from the Directive.

How is the main benefit test defined?

2021/06/17

There are no deviations from the Directive.According to the official guidelines of the Ministry of Finance, the main benefit test is met “if the parties would not have concluded the transaction in the absence of the anticipated tax advantage.”

How is a tax advantage defined?

2021/06/17

The DAC6 Guidelines of the Ministry clarifies the definition of tax advantage shall cover any situations which lead to the decrease of tax liability (e.g. tax exemption, deferral of tax payment etc.). However, from the DAC6 reporting liability's point of view a narrow interpretation is accepted, which means that if the aim of the beneficial tax rule is met and the transaction has a genuine economic purpose, the potential tax advantage should not be regarded as qualifying tax advantage.

Are there any deviations from the Directive in defining a cross-border arrangement?

2021/06/17

There are no deviations from the Directive.

Is there a white list defining arrangements explicitly excluded from a reporting obligation? If yes, please provide details.

2021/06/17

There is no white list in the local legislation.

Are there any deviations from the Directive in defining associated enterprises?

2021/06/17

There are no deviations from the Directive.

Reporting process

When is a cross border arrangement made available for implementation (e.g. handover of contract documents)?

2021/06/17

There is no specific guidance.

When is a cross-border arrangement ready for implementation?

2021/06/17

There is no specific guidance.

When has the first step in the implementation of a cross-border arrangement been made?

2021/06/17

There is no specific guidance.

Which information should be included in the report? Are there deviations from the Directive?

2021/06/17

There are no deviations from the Directive.

What does the reporting process look like? Are there deviations from the Directive?

2021/06/17

The first intermediary involved in the transaction must file the "so-called" 'KONSTR' form with the Hungarian Tax Authority in which the information specified by the DAC6 Directive should be included.The reporting process (e.g. which intermediary is obliged to submit the report) does not deviate from the Directive.

Is the entire report to be provided by the intermediary/relevant taxpayer? Who must provide the report?

2021/06/17

The intermediary or relevant taxpayer should provide the entire report.

What are the respective deadlines for the intermediary and the relevant taxpayer to file the report? Are there deviations from the Directive in terms of filing the information within 30 days?

2021/06/17

There are no deviations from the Directive. One exception: if the intermediary is not obliged to report the arrangement because of its LPP and he sends note on this to the user or to the other intermediaries. The other intermediaries or the user is obliged to report within 30 day after recipient of the note.

Which numbers are assigned by local tax authorities to the cross-border arrangements?

2021/06/17

There is no specific guidance.

What is the reporting deadline for arrangements the first step of which was implemented between 25 June 2018 and 30 June 2020?

2021/06/17

28.2.2021.

When is the reporting deadline for arrangements for which the event triggering the reporting obligation lies between 1 July 2020 and 31 December 2020?

2021/06/17

31.1.2021.

When is the reporting deadline for arrangements for which the event triggering the reporting obligation lies after 1 January 2021?

2021/06/17

The 30th day following that event (i.e. the first report was due on 31 January 2021).

Penalties

In which cases are penalties imposed?

2021/06/17

In the case of a failure to report or in the case of late, incorrect, false of incomplete reporting.

What are the penalties?

2021/06/17

In the case of a failure to report or in the case of late, incorrect, false of incomplete reporting the Hungarian Tax Authority might levy default penalties up to the amount of HUF 500,000.Nevertheless, if the intermediary or the user does not submit its report even after the Tax Authority's request, the penalty may be up to 5 million HUF (aprox. EUR 16,000).

Is a distinction made between penalties imposed on intermediaries/relevant taxpayers/other persons obliged to report?

2021/06/17

No distinction is made between intermediaries and relevant taxpayers.

What are the penalties in case of redundant reports? A redundant report is a report, which was filed, although there is no obligation to file one.

2021/06/17

There are no penalties for redundant reports.

Do the penalties differ with regard to incomplete, incorrect, missing or late reports? Are there any gradations?

2021/06/17

The Hungarian Tax Authority has the right to decide about the amount of penalty in itsdiscretion depending on the volume of the infringement up to the defined threshold.

Are arrangements the first step of which was implemented between 25 June 2018 and 30 June 2020 treated differently in the means of penalties?

2021/06/17

The penalties do not differ.

Other aspects

Do already other reporting regimes on cross-border arrangements exist?

2021/06/17

No other disclosure regimes exist.

Are there any other special deviations from the Directive? 

2021/06/17

There are no other deviations from the Directive.

What is the name of the national Tax Authority responsible for DAC6?

2021/06/17

National Tax and Customs Administration, in Hungarian "Nemzeti Adó- és Vámhivatal".

Do any other obligations apart from reporting a reportable cross-border arrangement exist under the national DAC6 legislation? (i.e. indication of the arrangement in the tax return)

2021/06/17

There are no other obligations.

Professional privilege/secrecy

Who is primarily obliged to report? Is there a primary reporting obligation of the intermediary or the relevant taxpayer? Is there legal privilege and in how far has it been considered for allocating the reporting obligation?

2021/06/17

The intermediary is primarily obliged to report. The taxpayer reports in cases as mentioned under question 7. Yes, there is a legal professional privilege. The taxpayer is obliged to report in case an intermediary uses legal privilege and the intermediary informed him regarding its privilege. In the case of lawyers, the entire activity is subject to LPP.

Does the reporting obligation breach a legal professional privilege under national law?

2021/06/17

Yes.

Does the national law make reference to professional privilege or professional secrecy?

2021/06/17

Professional secrecy.

What is the difference, as per the national law, between professional privilege and professional secrecy?

2021/06/17

There is no guidance.

To which categories of intermediaries does the professional privilege or professional secrecy apply?

2021/06/17

Attorneys.

In the context of the reporting obligation, under which conditions are the intermediaries entitled/obliged to make use of professional privilege or professional secrecy?

2021/06/17

Attorneys-at-law are obliged to keep any professional secret they learn in the course of their practice. Attorneys should warn their clients that they will be obliged to fulfil DAC6 reporting.

In cases in which professional privilege or secrecy applies, please describe the procedure for notification.

2021/06/17

Attorneys should note their clients and other intermediaries that they will be obliged to fulfil DAC6 reporting.

Does the national law provide specific conditions to waive professional privilege or professional secrecy?

2021/06/17

No.

Gabriella Nagy
Head of Transfer Pricing