Local business tax: report HIPA for 2023 on the 23HIPAK form by 31 May

Are running a business in Hungary? Then you must pay a local business tax to the municipality where your business is registered. Even if you don’t need to pay, normally you must submit a report every year. Read on to learn how to report HIPA for 2023 – and why it makes sense to have an accountant take care of it.

Report HIPA for 2023 by 31 May 2024

The local business tax (or HIPA in Hungarian for “helyi iparűzési adó”) is at most 2% of your business revenue (reduced by various items), to be paid to the local municipality where your business is registered. If you have premises at various municipalities (e.g. your registered seat in one town and your shop in another), taxes are split between those.

Every year you must pay advances on HIPA twice a year, and then file a report and top up your payment as necessary after the year is closed. The only exception for this is if you have previously chosen the simplified, tier based calculation of HIPA. In this case, as long as you stay in that system, you have to pay HIPA once a year, until 31 May, and do not have to submit a report unless you are changing to another tier.

The report and the adjustment for 2023 is due by 31 May 2024. You can learn more about HIPA and the relevant deadlines here.

How to report HIPA for your business?

Most Hungarian businesses have an accountant. If you are one of them, you have nothing to do: your Hungarian accountant will report HIPA on behalf of your business, and you will only receive a report about how much you have to pay and how you can complete that payment.

If you do not have an accountant, for example, because you are a flat-rate taxpayer with a fairly simple business structure, you can submit the report on your own (or you can still decide to find an accountant). Reporting is possible through ÁNYK, the software developed by the Tax Authority to submit forms. (While there is also an online tool for form submission called ONYA, unfortunately it does not support the form 23HIPAK currently.)

As Hungarian companies should have an accountant, below we focus on submitting the local business tax report as a flat-rate taxpayer with one place of operation, as that is now the most popular tax regime and the most wide-spread structure for those self-employed in Hungary.

Download ÁNYK and form 23HIPAK

Both ÁNYK and form 23HIPAK can be downloaded from the website of the Hungarian Tax Authority (although the form can be downloaded from within the program too). Once you have downloaded and installed ÁNYK, you will be able to fill in the form within the program. When you are done with the form, you can connect to the database of the Tax Authority using your Ügyfélkapu access (the Client Gate), and submit the form directly there.

The form to report HIPA has two main sections, one for the main data and income of your business, and one for the data relevant to the municipalities where your business operates. You will see that some fields are marked in pink; these will be filled in automatically as you proceed, so you do not need to touch them.

Start at the beginning: load form 23HIPAK

Once you load ÁNYK, you will need to load form 23HIPAK from its database. For this, click the little form icon that is the first item in the top left menu. There you will be able to select 23HIPAK from the list. If you cannot find the form in the list, find the update option (there is a button for “frissítés” in the top menu ribbon), and on the second tab, find the form you need and add it to your local database. You may need to restart ÁNYK after this.

You will see that the form has several pages, displayed as various tabs in the program. You do not have to fill in all of them, only those relevant to you. As you go through the HIPA report form, relevant pages become active based on the data you add (the title on each tab will turn black from grey). If somewhere along the way you realize that you made a mistake before, delete all the data you added after the mistake before going back to fix it, otherwise you might not be able to complete the form properly.

The first section of the form is called 23HIPAKA: this will include the data of your business that are relevant regardless of the municipality you are paying taxes to. On the first tab, you must indicate the data of yourself and your business in Section A. Make sure to indicate both your personal tax number (“adóazonosító”) and your business tax number (“adószám”) as well as your other data.

In Section B, you must indicate the reporting period. If you started your flat-rate taxation business sometime last year, you need to indicate your exact starting date, and the end date will be 31 December. (If you were a paying taxes under a different tax regime before your switch to the current one, you need to submit a separate report for that period.) The rest of the section lists the other pages filled, and it will be populated automatically as you progress with the form.

Section C is where the form is “signed”. You only have to indicate the place and date of submitting the form; the rest of the section is relevant only if the form is submitted with an authorization instead of personally.

23HIPAK-A-NY-01

The next tab of the form concerns the tax regime under which you want to pay HIPA. You will see there is a difference here from last year: there is nowhere to indicate if you are paying taxes under flat-rate taxation. This is because as of 2023, there are only two main options left for HIPA calculation: regular and simplified (more on this below).

Section A is about some special circumstances, of which you can mark multiple.

• Mark Option 1 if you started your business in 2023. (If you had another, e.g. a KATA business before, leave this box empty.)
• Mark Option 9 if you wish to pay HIPA in 2024 in a simplified way, based on a tier system (more on that here). If your income is very low, you might want to leave the box empty and choose the regular HIPA calculation. (For example, in Budapest you do not pay HIPA if your yearly income is under HUF 1.5 million.)

Section C is about calculating your HIPA tax base in 2023. Mark Box 21 if you choose regular calculation, or Box 22 to choose a simplified method (including the tier system). This will open tab “EGY” for you (see below).

In Section I, you must indicate the number of municipalities relevant to your HIPA report. It might be just one if your operation takes place in the same municipality where your seat is registered. In the dropdown menu of Line 81, “1” stands for 1 location, and “2” for more.

Tab 23HIPAK_A-01-01 for regular calculation

If you chose the regular calculation, 23HIPAK_A-01-01 will become active, where you can indicate your revenue in Line 2. When you do that, Line 1 is filled automatically, and the next tab, 23HIPAK_A-03-01 will become active too, where you can indicate your costs. If you are a flat-rate taxpayer, you cannot indicate any costs, so write 0 in Lines 1 and 2.

Tab “EGY” for a simplified calculation

Calculating the HIPA tax base may be simplified for various reasons. One is if you have  KIVA business (to be marked in Section C), another is the tier system, to be indicated in Section E. Start with writing your revenue in Line 41, and your tax base will be automatically filled in line 42. If you are a flat-rate taxpayer whose only activity is retail, mark Box 43.

Whichever method you chose, filling the relevant form will open up the “ALAP” (“tax base”) tab, which displays a summary of your calculations; you do not have to write anything here.

The other sections are for other types of calculations, which you may ignore.

Phase two: report HIPA to your municipality

Now that you have added your basic data, it is time to do the calculations for your municipality. For that, you will need the second big section of the form. Find the field saying 23HIPAKA in the top left section of the screen, and switch it to 23HIPAKM. Then click the form icon next to it to start a new document. (If you have premises at several municipalities, repeat this process as many times as needed.)

On the first tab of this form, you will see your core data pulled in from the fields you have filled in previously.

In Section A, you must indicate the name of the relevant municipality. Start typing, and select your municipality from the dropdown menu. For Budapest, the name will be Budapest Főváros Önkormányzata. Once done, the next field with the tax number of the municipality will be filled automatically.

Section B will indicate the reporting period, which should fill in automatically, just like Sections D and E, which concern the tax to be paid to your municipality. Section D, Line 1 shows the share of this municipality of your tax; if you are paying to only this one municipality, it will be 1. Line 2 shows your tax base calculated before. Section E, Line 11 displays the tax rate, and Line 12 the tax calculated. Last year, due to a pandemic-related benefit provided to small businesses in 2022, the tax payable in Line 13 was actually only 1% of your tax base. Since that benefit was abolished, this is no longer the case.

Now, several municipalities offer tax exemption up to a certain income limit (at most HUF 2.5 million). In Budapest, you do not have to pay HIPA if your income is below HUF 1.5 million. If your income in 2023 was below that, indicate your income in Section D, Line 3, and the calculated tax in Section E will become 0.

Advance payments for 2024

Since normally you are supposed to make advance payments for HIPA throughout the year (just like for the personal income tax), you must report on the advance payments you will pay in the following year based on your 2023 income (learn more about that here). This can be done on the tab marked as “EL” for “előleg” (advance payment). The data here will depend on whether you have chosen the tier system back in Section A, Box 9 of 23HIPAK-A-NY-01.

The advance payment period should be 1 July 2024 – 30 June 2025.

• If you chose the tier system, you pay HIPA only once for 2024, by 31 May 2024, and its sum must be indicated according to the tier relevant to you. You can leave the second row empty.
• If you did not choose the tier system, both rows must be filled in. The two deadlines are 15 September 2024 and 15 March 2025, and the two sums are normally half of the previous year result. Click here to see how advances are calculated depending on how long you have been in business. The sum might even be zero if you are exempt; in any case, you will have the chance to top up your payment when you report HIPA for 2024 by 31 May 2025.

Finalize and submit the HIPA report for 2023

Now if you go back to the first page of the HIPAKA form by using the switch under 23HIPAKM in the top right section, you will see that Section B, listing the pages filled and the number of relevant municipalities will be propagated. If this is not the case, find the little icon with blue numbers in the top right section that will recalculate automatic fields.

You are done with filling in form 23HIPAK! Before you submit it, make sure to run a check to see if everything is alright by clicking the green checkmark with the label “Ellenőrzés” in the top right menu. If there is a problem, it will be indicated in a popup window. Clicking each issue you can easily locate and fix them.

To submit the form, go to the top menu, and select “Kapcsolat az ügyfélkapuval” (“Connect to the Client Gate”), and select “Nyomtatvány megjelölése elektronikus beküldésre” (“Select form for e-submission”). That done, select “Nyomtatvány közvetlen beküldése az ügyfélkapun keresztül” (“Submit form directly through the Client Gate”), after which a popup window will appear where you can log in to the Client Gate and submit the form to report HIPA for 2023. Even though you have filled in two or more forms, this function handles them together, so you have to do this only once.

If submission is successful, you should get a notification of this in your Client Gate Inbox, of which you should receive an email. Before you log out, make sure to save a PDF version of the form on your own computer too for future reference. To do that, select the first option in the top menu, and then select “Űrlap nyomtatása” (“Print document”). A popup window will open, and you will be able to select the pages you want to save. Then you should press the icon for generating a PDF. Since you have just filled in at least two forms, you will need to repeat this for each.

If the form has calculated taxes payable for you for 2023, make sure to pay them by 31 May 2024 to the relevant municipalities (as well as the advance payment for 2024 if you chose the tier system). Information can normally be found on the website of each municipality; there is a chance you will be redirected to the central e-administration page of municipalities. You can use your Client Gate access to log in. Find your municipality in the list (if you are looking for Budapest, find “Budapest Főváros”), then select “E-fizetés” for payment options, and chose the first option for “Adók, díjak, illetékek befizetése” to see where taxes and contributions can be paid).

Does reporting HIPA sound difficult?

As you can see from above, filling in and submitting the form for the local business tax is not necessarily too difficult, but it is still a bit complicated, as the form has several intertwining sections (not all of which are listed here), and you should know what you are doing. The simpler your operation, the simpler the procedure becomes, but you still need at least some relevant Hungarian, since the program is not available in English.

Of course, you can save yourself all the hassle if you are working with an English-speaking accountant, who is your best ally in remaining compliant with Hungarian regulations. Helpers Finance offers just that, specializing in working with foreign business owners in Hungary. Should you need precise accountancy and bookkeeping for your Hungarian company or freelancing business, feel free to browse our blog or contact us for more information.

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