In practice we usually see, that many of our clients account costs related to passenger cars rented abroad, but many times companies are not aware of the related tax consequences.
We would like to call your kind attention, that if costs are accounted regarding passenger cars rented abroad, taxpayers are obliged to pay company car tax in Hungary, even after a couple of days car rental!
Why is car tax applicable for foreign cars?
The act about company car tax does not restrict the tax obligation on passenger cars with Hungarian license plate, it is extended also to passenger cars that are not in the Hungarian official registry, therefore even foreign cars.
According to section 17/B. § (5) of the act on vehicle tax in case of a passenger car that is not in the official registry, the taxpayer is the person, or organization, who accounts cost on the actual passenger car.
So in case of a passenger car, not shown in the official registry, only the cost accounting creates the tax liability, thus the tax obligation extends to even passenger cars having foreign license plate, if anybody accounts cost, expense, depreciation according to the act on accounting, or as per the act on personal income tax.
When is the car tax payable?
According to section 17/C. § (4) of the act on vehicles in case of a passenger car not registered in official registry the tax liability begins on the 1st day of the month forthcoming the accounting date.
According to the same section the taxpayer’s liability ceases on the last day of the month, in which cost was accounted regarding the passenger car not registered in official registry, and the user of the passenger car declares, that he does not intend to account cost any more on that vehicle.
Therefore if the employer rents a passenger car with a foreign license plate abroad for an employee being on assignment, and the related costs are accounted as costs by invoices issued to the name of the employer company, then as per the act on vehicle tax, the company shall be liable to pay company car tax in the month forthcoming the rental.
Based on the standpoint of the tax authority if the rental of the passenger car, that is not listed in the official registry lasts for only couple of days (or even only one day) within a month the tax liability is valid for the whole next month. The reason of that is- as they say- that the date of ceasing the tax liability cannot be before the starting date of the tax liability.
About the company car tax the taxpayer shall file quarterly tax return, the deadline is 20th of the month forthcoming the quarter.
Sample:
If a company sends on assignment one employee from 21st May until 24th May to Germany for example, and for this period rents there a passenger car for the employee, and the cost of the rental is accounted in the company books based on invoice issued to the company name, the company shall bear company car tax related to the month of June after the rental in Germany between May 21-24.
How much tax shall be paid?
The monthly amount of the car tax shall be calculated based on the performance of the car in kW, the environmental class of the car, according to section 17/E. § of the act on vehicle tax as below -:
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Environmental class code
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performance of the drive motor (kW)
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code „0”-„4”
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code „6”-„10”
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code „5”; „14-15”
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0-50
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16 500 HUF
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8 800 HUF
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7 700 HUF
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|
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51-90
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22 000 HUF
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11 000 HUF
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8 800 HUF
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|
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91-120
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33 000 HUF
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22 000 HUF
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11 000 HUF
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above 120
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44 000 HUF
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33 000 HUF
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22 000 HUF
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As the logbook of the car shall be in possession of the driver, the data necessary are available in this document to determine the taxes.
If the information to determine the taxes some of these data (expectedly about the environmental class codes) is not available – despite of the due diligence (for example because there is no such document delivered to the taxpayer, in which the above information were presented), then as per standpoint of the tax office – referring to the basic rule of fairness in taxation – the third column shall be then used to determine the tax amount with the lowest rates .
If the necessary data can be available, by all means we advise to always show the above data on the documents related to foreign passenger car rental and fulfill the tax liability accordingly!
Please kindly consider the above when deciding whether to account such costs related to foreign car rental!
We hope that our summary is useful for you, in case of any questions, please do not hesitate to contact us any time with trust!
Act no. LXXXII. of 1991. about vehicle tax