November 27, 2024 Hungary publishes draft GloBE Registration forms
To help taxpayers to prepare to meet their global minimum tax obligations, the Hungarian Tax Authority has published the draft version of the Global anti-Base Erosion (GloBE) Registration forms (GLOBEA and GLOBEM) and a related guide. Background Hungary implemented the global minimum tax rules into its legal system in line with the Organisation for Economic Co-operation and Development (OECD) Model Rules and the European Union Directive: Qualifying Domestic Minimum Top-up Tax. The Income Inclusion Rules have been applicable since 31 December 2023 and the Undertaxed Profits Rule will be effective from 31 December 2024. Based on the Hungarian rules, Hungarian corporate taxpayers that are part of an MNE or a large domestic group with annual revenue exceeding €750m in at least two of the four tax years immediately preceding the tax year are required to submit GloBE Registration forms to the Hungarian Tax Authority to provide information about their top-up tax liability and their MNE or large domestic group. It is important to highlight that the reporting obligation will also apply to taxpayers who fall under the transitional safe harbor rules. Designated local entity Taxpayers within the same MNE group may opt to jointly designate one entity that is tax-resident in Hungary to fulfill the administrative requirements for global minimum tax purposes on behalf of the Hungarian operation of the MNE or large domestic group. If such an entity is designated to act for the group, that entity would file a consolidated form including the data on every Constituent Entity of the MNE located in Hungary. The method of the designation is still unclear; further clarification could be expected in this regard. Information requested The forms themselves are not material disclosures, but rather a statement to the Hungarian Tax Authority that provides some information from a global minimum tax perspective with respect to the local operation and the MNE or large domestic group. Taxpayers are required to provide information on their top-up tax liability to ensure a global minimum level of taxation and on the basic corporate details of the group, in addition to providing information to the Hungarian Tax Authority on the designated local entity reporting the corporate details of local Constituent Entities. Taxpayers will have to indicate which type of top-up tax liability they will be subject to, even if the transitional safe harbor rules are likely to be met. Also, corporate details of the ultimate parent entity will be required, such as its name, tax identification number, and the type of top-up tax to which it will be subject. Deadline and submission The GloBE forms must be submitted on an annual basis, within 12 months from the beginning of the tax year in which the MNE Group becomes subject to Pillar Two rules. For calendar-year taxpayers, the deadline for filing for the 2024 tax year is 31 December 2024. For taxpayers with a different financial year, the deadline for filing is the last day of the twelfth month following the start of the fiscal year, beginning in 2024. The GloBE forms will be available via the Hungarian Tax Authority's website and should be filled out and submitted to the Tax Authority electronically. Penalty If the taxpayer fails to comply with the reporting obligation or complies but does so in an incorrect or incomplete manner, the Hungarian Tax Authority may impose sanctions as provided by law. Accordingly, default penalty could be imposed in the amount of 5,000,000 Hungarian Forint (HUF 5m) (approximately US$13,000) for failure to comply with the reporting obligation or for late compliance. It is expected that the final version of the GloBE Registration forms, in editable format, will be released in the next few weeks (i.e., by mid-December).
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