Transfer cost questions remain around Hungarian tax group status (CSOPTA) as the regulations may affect transactional spending, the local unit of advisory firm Deloitte has warned.
The formation of tax groups has been on the rise as they provide financial benefits for members in terms of taxes. New regulations introduced on January 1 provide the opportunity for companies with a 75% direct or indirect majority influence, which has resulted in the unexpected appearance of more than 200 tax groups, according to the Big Four consultancy firm.
“Although CSOPTA members are exempt from regular transactional regulations, their costs during transactions between themselves and non-tax group members will remain. In these cases, both sides must apply the amendments and rules,” explains Balázs Prágay-Szabó, tax manager at Deloitte.
Prágay-Szabó outlines how special regulations apply to transactions that started before a tax group was formed; he advises financial analysis of these cases as some may yield a one-sided tax increase between the parties.
Moreover, if tax group members carry out transactions which deviate from standard market prices, they will be required to pay business tax as well as innovation contributions, he adds.