Although we have a one-rate taxation system ( 15% from 01.01.2016 ) in Hungary. The base of taxation is the earning which is the difference between the income and the items to be deduced.

The earning deriving from the letting of a property is to be taxed in Hungary ( not everywhere int he EU )

The base of the tax is the income minus the total expense ratio according to the tax advance declaration, therefore the EARNING ( please note that int he absence of this it will be the total amount of your income ). The tax payer can choose 1 from 2 forms of taxation. The first option is the flat-rate cost accounting, i.e. 90 % income rate or the item-based cost accounting.

The SZJA is not to be calculated from the gross letting fee ( income) but it is the 15 % of the sum calculated according to the chosen method as your earning.

if you choose this method, 10 % of your income can be considered as expense, therefore deduced from your tax base without any certification or invoice.

EARNING= 90 % of your INCOMEE.g. in case of a monthly 100.000 ft letting fee : 100.000 Ft- 10% = 90.000 Ft is your earning.)

SZJA= 15 % of your earning ( 90.000 Ft x 0,15=14.400 Ft )

- the invoice certified *expenses* of refurbishment,maintenance, reparing, etc.

- the *utility fees* if the 2 parties fix as a condition in the contract that the lessee is going to pay the condominium fee and the utility bills as part of the monthly rental fee. In this case these fees can be deduced as expenses

- In this case you have to calculate like this:

EARNING= INCOME minus the ratio of the item based cost accounting, the 15 % of which is the SZJA.

Whichever way we choose for cost accounting logically we always have to count with a calendar year and multiply the monthly

WARNING! The invoice or financial document must be always issued based on the **GROSS ( increased with tax ) sum**.

- if the lessee is a private person it is the lessor’s duty to pay the tax advance fixed according to the rules previously described to the appropriate tax account quarterly int he following 12 days after each quarter. The sums paid like this must be considered as tax advance at the end of year tax declaration

- An invoice containing VAT can be issued by the lessor only if he / she has the activity of letting properties of his ownership ( e.g. office buildings ) in the list of his activities and he is registered int he VAT circle as the letting otherwise is not subject to VAT not even if a VAT subject does it.