Act CXXVI on the Use of a Specified Amount of Personal Income Tax in accordance with the Taxpayer's Instruction of Hungary (1996, as amended 1997) (English)
Act CXXVI of 1996
as amended by Act CXXIX of 1997
On the Use of a Specified Amount of Personal Income Tax in Accordance with the Taxpayer's Instruction
Act CXVII of 1995 on Personal Income Tax (hereinafter referred to as the "Income Tax Act") granted private individuals the right to instruct in a statement to have a specific portion, as determined by another law, of the tax paid be transferred in the year following the tax year (the year of the instruction statement) to a designated beneficiary or beneficiaries as instructed. The Parliament hereby passes the following Act on the procedural rules enabling private individuals to exercise this right, the extent of the portion of the tax which is the subject of said instruction and on the sphere of beneficiaries:
Section 1.
(1) With due consideration of the provisions of Section 45 of the Income Tax Act, for the purpose of this Act, the tax amount which remains after deductions have been made from the tax amount due on the consolidated tax base, as stated in the individual's tax return or in the employer's statement in lieu of a tax return shall be regarded as paid tax, under the condition that the individual has paid such tax before the filing deadline and has not received a deferment or installment of payment extending past the 30th of September of the year of the instruction statement.
(2) Private individuals may file separate statements of instruction to donate
a) one per cent of the paid tax to a beneficiary selected from among those described in Section 4,
b) and another one per cent to a beneficiary selected from among those described in Section 4/A,
under the condition that the amounts described in Paragraphs a) and b) are at least HUF 100 each.
(3) Each one per cent donation may only be donated in its entirety to one selected beneficiary each from Section 4 and/or from Section 4/A.
Section 2.
(1) If, in accordance with the provisions of this Act, a private individual has given instruction for the transfer of a portion, as determined in Section 1, of the tax paid and such instructions have been carried out, then the amount transferred cannot be modified retroactively, neither as a result of a revision by the tax authorities nor as the result of a self-revision by the individual.
(2) If a self-revision or a tax authority revision of the tax return containing the individual's statement of instruction determines that the tax amount for the consolidated tax base is lower than the amount stated in the return, then the portion of the difference, as described in Paragraphs a)-b) of Subsection (2) of Section 1, if such difference is at least HUF 1000 and if the instructions have been carried out, shall be paid by the private individual on the basis of a resolution by the tax authorities.
Section 3.
On the basis of the individual's statement of instruction and the relevant information in the tax return (or employer's statement in lieu of tax return), the Hungarian Tax and Financial Control Administration (hereinafter referred to as "APEH") shall transfer the amount determined as per the provisions of Section 1 to the beneficiary or beneficiaries.
Section 4.
(1) For the purpose of this Act, a beneficiary is:
a)
b) a social organization (with the exception of political parties and organizations representing the interests of management and labor), pursuant to Act II of 1989 on the Right of Assembly, or a foundation, which has been registered by the courts at least three years prior to the first day of the year in which the individual statement of instruction takes place, and according to whose statutes or founding document is in fact involved in the activities specified in Paragraph c) of Section 26 of the Act on Non-Profit Organizations, with due consideration of the provisions of Subsection (2) as well;
c) a public foundation, under the condition that, according to its deed of foundation, such institution is involved in the activities listed under paragraph b);
d) the following national collections and other cultural institutions:
e) the Hungarian Academy of Sciences;
f) the Central Fund for Technological Development;
g) the Hungarian Scientific Research Fund;
h) the Child and Youth Basic Program;
i) the Higher Education Development Program;
j) the separate state financial fund;
k) a theater, public collection, cultural and educational institution which has received a subsidy from the local government body or from the central budget in any of the three years prior to the first day of the year in which the statement of instruction takes place;
l) the construction program for the New National Theater.
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1. the War History Museum,
2. the Museum of Applied Art,
3. the Hungarian Museum of Commerce and Catering,
4. the Museum of Contemporary Art,
5. the Transport Museum,
6. the Hungarian State Opera,
7. the Hungarian National Museum,
8. the Hungarian National Gallery,
9. the Hungarian Museum of Natural Science,
10. the Hungarian Agricultural Museum,
11. the National Theater,
12. the Museum of Ethnography,
13. the Hungarian Museum for Science and Technology,
14. the National Széchenyi Library,
15. the National Archives,
16. the National Technical Information Center and Library,
17. the Petőfi Sándor Museum of Literature,
18. the Semmelweis Medical Historical Museum, Library and Archives,
19. the Hungarian Open Air Museum,
20. the Museum of Fine Arts,
21. the Museum of Physical Education and Sports;
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(2) Among the candidates listed under Paragraphs b) and c) of Subsection (1), only those organizations may be beneficiaries which:
a) are registered in Hungary, and
b) operate in the interests of the domestic population, or ethnic Hungarians living outside the country, and
c) make a statement that the institution fulfills the conditions pursuant to Paragraph d) of Subsection (1) of Section 4 of the Act on Non-Profit Organizations, and in this respect to Paragraph d) of Section 26, and have amended their statutes or founding document accordingly, and
d) have filed a statement as to having no outstanding public debts registered by the customs and excise authority, by the social security office or by the state tax authorities, and
e) have a certificate issued by the local government tax authorities within the previous 30 days as to having no overdue public debts toward the issuing authority, and
f) have filed a statement in confirmation that the organization has in fact been carrying out the activity specified in Paragraph b) of Subsection (1) of Section 4, in accordance with its statutes or deed of foundation, uninterruptedly for a period of no less than one year prior to the year in which the statement(s) of instruction take(s) place, in compliance with all legal provisions relating thereunto.
(3) Without prejudice to the provisions of Paragraphs d) and e) of Subsection (2), an organization which instructs the tax authority, if otherwise conforming to the provisions of Subsection (2), to apply the amounts stipulated in the statements of instruction to settle its public debts by precisely indicating the name(s) of the addressee(s) and the order of payments, may also be a beneficiary.
Section 4/A.
(1) For the purpose of this Act, a beneficiary is:
a) a church, religious sect or religious congregation described in Act IV of 1990 on the Freedom of Belief and Religion and on the Church (hereinafter referred to as "church"), if such church has been registered by the court before the first day of the year in which the statement of instruction takes place; organizational units or institutions of the church may not named as beneficiaries;
b) the special objective specified by the Parliament in its own budget, in the Act on the Central Budget pertaining to the year in which the statement of instruction takes place.
(2) Upon request of a church aiming to be the beneficiary of the statement of instruction of private individuals, on the basis of providing proof of being registered as described in Paragraph a) of Subsection (1), the Hungarian Tax and Financial Control Administration (APEH) shall issue a technical number. If the beneficiary is unable to prove registration in accordance with Paragraph a) of Subsection (1), APEH shall refuse to issue such a technical number. Upon request of the beneficiary, the court where the beneficiary has been registered shall overturn the resolution in non-contentious proceedings within 15 days, if it establishes satisfaction of the conditions.
(3) The President of APEH shall issue a technical number ex officio to the beneficiaries described in Paragraph b) of Subsection (1).
(4) A church aiming to be a beneficiary of the statement of instruction of private individuals shall report its bank account number to the President of APEH by the thirtieth of June of the year in which the statement of instruction takes place.
Section 5.
(1) Private individuals shall execute the statement of instruction (statements of instruction) by filling out a standard APEH form (or a sheet of the size and content) for each statement to include the individual's name, address and tax identification code, and place the forms in one envelope conforming to postal standards and seal the envelope. The statement(s) of instruction shall include the beneficiary's tax number (and the technical number for those described in Section 4/A) while the beneficiary's name may also be indicated. The envelope containing the statement(s) of instruction shall be included in the individual's tax return package, or, in the event that the employer makes a statement in lieu of a tax return, should be presented directly to the employer no later than March 25th of the year following the tax year.
(2) In respect of employers' tax settlement, the private individual shall sign the envelope containing the statement(s) of instruction across the adhesive section of the envelope. The employer shall prepare a data statement form which is to include the names, tax identification codes and signature, in verification of handing over the envelope, of persons issuing the statements of instruction. The employer shall issue a receipt when receiving the envelope. The employer may not gain knowledge of the statement of instruction. Noting the statement of instruction on the data statement form of the employer statement in lieu of a tax return, the employer shall send this together with the unopened envelope in a sealed package to the competent tax authorities in accordance with the provisions on the disclosure of data.
(3) The information on the envelope and on the statement of instruction shall be considered confidential tax information and consequently subject to the rules of data protection, with the exception that the tax authorities may only
a) allow inspection by authorized persons acting in such legal proceedings as specified in Subsection (4);
b) provide the private individual with information regarding his own data and the contents of his own statement of instruction;
c) provide information to the beneficiary on the funds transferred to it.
(4) Upon opening the envelope, the tax authorities shall mark the envelope and the statement of instruction contained therein with identical identification numbers and process, inspect and store these documents separately from each other, in such a manner that no person(s) shall simultaneously have access to both documents. The tax authorities may only allow for the separated documents to be linked to each other on the basis of the identification number, in the event of legal proceedings regarding the fulfillment of the statements of instruction, for the use of authorized persons acting in the course of such proceedings up until such time as the proceedings are concluded by a final legal judgment.
(5) The obligation of the tax authorities to store the data, as noted in Subsection (4), shall remain in effect until the end of the fifth year following the year in which the statement of instruction was filed, or beyond such date until all legal proceedings, as described in Subsection (4), which have been initiated up to the above date, have been concluded by a final legal judgment. After this point in time the envelopes and statements of instruction shall be destroyed in accordance with the procedures established by the President of APEH.
(6) On the basis of the statements of instruction attached to the tax returns of private individuals and employer statements in lieu of tax returns, the tax authorities shall notify the beneficiaries described in Section 4 by the 1st of September every year to provide proof, also including any overdue public debts owed to the local government issuing such verification in the case of Paragraph e) of Subsection (2) of Section 4, of fulfillment of the conditions established in Subsections (2)-(3) of Section 4 within a period of 30 days. Failure to meet this 30-day deadline shall result in a forfeiture of rights.
Section 6.
(1) APEH shall transfer the amounts specified in Section 3 to the beneficiary described in Section 4 within 30 days of the presentation of the statements and certifications in accordance with the provisions of Section 4, by the 31st of October of the year in question at the latest, or, in the cases described in Subsection (3) of Section 4, after the public debts are deducted.
(2) APEH shall transfer the public debts described in Subsection (1) to the addressees and in the sequence indicated by the beneficiary.
(3) The beneficiary described in Section 4 shall be required to publish the information pertaining to the use of the amount, as specified, transferred on the basis of this Act before the 31st of October of the year following the year of transfer in a press announcement. In order to provide proof of publication, the provisions on retaining tax documents shall be applied to one original copy of the press announcement.
(4) APEH shall transfer the amount specified in Section 3 to the beneficiary described in Section 4/A no later than the 10th of January of the year in which the statement of instruction was filed.
(5) The President of APEH shall inform the Ministry of National Cultural Heritage and the Ministry of Finance by the 31st of August of the year regarding the statements of instruction on the amounts payable to the beneficiaries described in Section 4/A on the basis of the statements of instruction filed in accordance with the provisions of Paragraph b) of Subsection (2) of Section 1, along with the grand total of such amounts and on the number of statements of instruction pertaining to the beneficiaries described in Paragraph a) of Subsection (1) of Section 4/A. The Minister of Finance shall publish the number of statements of instruction and the amount donated to a beneficiary described in Section 4/A before the 15th of September of the year regarding the statements of instruction.
(6) If a tax return or an employer's statement in lieu of a tax return is deficient, on the basis of the conclusion of an inspection conducted in consideration of Subsection (4) of Section 5 as well, for data processing necessary for the transfer, the transfer shall be carried out when rendered possible based on the correction of said documents within one year of the last day of the year in which the statement of instruction was filed. The tax authority shall carry out transfers beyond that date solely on the basis of a final judgment in conclusion of the legal dispute described in Subsection (4) of Section 5.
Section 7.
(1) The instruction of the statement shall be invalid if any of the following is substantiated:
a) either of the conditions prescribed in Section 1 are not satisfied;
b) if two statements of instruction are submitted, both beneficiaries are included in the list of Section 4 or Section 4/A;
c) no tax number or technical number is indicated in the statement of instruction, or such number is incorrect or illegible, unless the beneficiaries listed in Section 4/A may be identified without it;
d) the statement of instruction or the envelope, or the forwarding of the envelope is not in compliance with the provisions described in Subsections (1)-(2) of Section 5;
e) the beneficiary, being the subject of such obligation, fails to provide proof of fulfilling the conditions specified in Section 4 during the proceedings described in Subsection (6) of Section 5, or fails to discharge its statement and information disclosure obligations described in Subsections (2)-(3) of Section 4.
(2) In the event that the tax authority fails to notify the taxpayer by the 31st of October of the tax year in connection with the instruction set forth in the statement or to request additional information, such instruction shall be considered to have been fulfilled.
(3) If the instruction in the statement is considered invalid in accordance with this Act, due to any circumstance representing an interest of the beneficiary, the tax authority shall notify the taxpayer filing the statement of instruction without a formal resolution and without indicating the reason thereof. The time limit available for such notification shall be 30 days from the 30th of September of the tax year.
(4) Funds transferred to the beneficiaries described in Section 4 shall be considered budgetary aid of such a nature that the tax authority, applying the relevant regulations of the Act on the Rules of Taxation (hereinafter referred to as "RTA"), is entitled to check the appropriate use of such funds for public purpose activities in accordance with this Act. Should it be found that such funds were not used for public purposes, the tax authorities shall draw up a resolution, on the basis of which the funds shall be repaid within the statute of limitations established under Section 95 of the RTA.
(5) In the event that a beneficiary fails to establish fulfillment of the conditions stipulated under Section 4 in accordance with the procedure outlined in Section 5, or fails to discharge its statement and information disclosure obligations described in Subsections (2)-(3) of Section 4, the tax authority shall draw up a resolution to this effect, which, upon request by the beneficiary, may be altered by the court in which registration of the beneficiary took place, or, in the event that no such court exists, by the court with jurisdiction according to the beneficiary's address, in non-contentious proceedings within 15 days, if it is found that the conditions are fulfilled.
(6) In respect of matters related to the statement of instruction, the provisions of Act XCI of 1990 on the Rules of Taxation shall be applied, with due consideration of the exceptions provided for in this Act.
Section 8.
(1) This Act shall enter into force on the fifth day following its promulgation, in such a manner that a statement of instruction may be made for the first time with regard to the income tax for 1996, as established in Section 1.
(2) In the application of Section 5, statements of instruction related to income tax for 1996 shall use the personal identification number instead of the tax identification code.