With the signing of an agreement regarding the automatic transfer of Country-by-Country Reports (CBCRs), the administrative burden of submitting CBCRs to tax authorities is significantly eased for firms in Hungary with parent companies in the U.S. However, some challenges still remain, according to a press release sent to the Budapest Business Journal.
For the affected Hungarian companies, the tasks of reporting and providing data remain in connection with the CBCRs, according to Hungarian laws.
Within the framework of reporting duties, the tax authority must be notified with the submission of the relevant paperwork about which company within the company group will submit the CBCR to the local authorities. The data duty is completed by the submission of the CBCR, with the e-version of the appropriate paperwork.
"Hungarian companies of affected multinational company groups may be obliged to hand over data even if the groupʼs main company completes and submits the CBCR in the appropriate state," says Ferenc Póczak, partner of Deloitte Hungaryʼs tax and legal branch. "This situation could arise if there is no valid information transfer agreement between the relevant state and Hungary in the period. Countless Hungarian companies became obliged to submit data due to the lack of agreement with the U.S.; however, with the signing, these burdens seem to be lifted."
The tax authority is obliged to publish a list of valid information transfer agreements between Hungary and countries outside the EU, as well as a potential list of systemic errors that might hinder the transfer of information. In the latter case, Hungarian subsidiaries may be obliged to provide data.
"Currently Hungary has information transfer agreements with 28 states outside the EU, according to the public notice by the tax authority, with the U.S. soon joining the list," says Judit Helybély, head of Deloitte Hungaryʼs tax and legal branch. "The list of affected countries, however, is still missing large countries such as China, which may also result in several Hungarian companies being obliged to provide data."
With the U.S.-Hungary agreement, it might still be necessary to check and modify reports submitted earlier to correspond with the changes, submitting the modified report once again. Reports about the years 2016 and 2017 were due to be submitted at the end of 2017 business year; however, the agreement was not in place during that time, hence the need for resubmission.
According to Hungarian laws, the tax authority must be notified within 30 days of the modification of submitted data. It is important to look out for such obligations, as the fines can be as high as HUF 20 million in cases of not completing data submission and reporting duties, and even for late, erroneous or incomplete submissions.