VAT and Direct Taxes

Our direct tax and VAT professionals are part of the multidisciplinary Financial Sector team of PricewaterhouseCoopers and Reti, Antall & Madl LANDWELL.

VAT

VAT paid by financial sector companies is often not recoverable, or only partly so. VAT is an “invisible” tax, as it is not usually recorded as a separate item in the accounts of financial sector entities, and is not reported at a corporate level. EU-based players in the financial sector often pay more VAT than any other taxes. Day-to-day awareness of VAT matters can help reduce VAT as cost element.

How PwC can help you

PwC has global network of specialists dedicated to Financial Services which can assist you with the following topics, for example:

  • implementation of VAT groups: Financial institutions are able to achieve significant VAT savings through the implementation of a VAT group. A VAT group enables, for example, the outsourcing of taxable back-office functions to a service company without the burden of VAT. PricewaterhouseCoopers has advised on the implementation of numerous VAT groups in Hungary. PricewaterhouseCoopers provides guidance through the whole process of the implementation of a VAT group, starting with a feasibility study, the proper interpretation and application of the VAT law, up to the final implementation;
  • VAT reviews: In Financial Services the application of VAT exemptions is very important. The jurisdiction and law is continuously changing. PricewaterhouseCoopers pays special intention to these developments on a national, European and global level. Based on this knowledge PricewaterhouseCoopers offers a full-scope VAT review of your operations and products;
  • maximising refunds of paid VAT, especially optimizing the recovery on overheads (pro rata calculation): To minimise the VAT burden, one essential point is to increase the deductible input VAT. PricewaterhouseCoopers develops a reliable, operational and accurate method for the calculation of the deductible input VAT part. For this purpose PricewaterhouseCoopers has developed special software “PwC Data Analyser™” for carrying out an in depth analysis of a financial institution's accounting system;
  • VAT-effective outsourcing and relocation of back-office services;
  • structuring financial sector products and distribution channels from a VAT perspective;
  • VAT compliance;
  • assistance with optimizing accounting from a VAT perspective;
  • opportunities resulting from the jurisdiction of the European Court of Justice (ECJ) over the interpretation of EU VAT law;
  • advice on forthcoming changes in European VAT law as the legal basis for Hungarian VAT law.

Direct taxes

PricewaterhouseCoopers Hungary’s financial services tax group offers a wide range of services to the sector, including:

 

  • Designing effective company and transaction structures tailored for the financial sector, and assistance with setting them up;
  • Transformation  of subsidiaries into branches, including its tax optimalisation;
  • Advising on the ”Special Tax for Credit Institutions”;
  • Advising on the requirements of the Savings Directive to ensure compliance with the European Union and Hungarian Rules;
  • Assistance with the preparation of Transfer Pricing documentations, review of existing documentations from a Hungarian tax perspective, furthermore comprehensive Transfer Pricing planning services;
  • Review of the tax treatment of various financial instruments, in particular cash-pooling structures, income from transactions in derivatives and transactions in securities registered outside and in an Exchange;
  • Local Business Tax savings;
  • Tax optimalisation on bank group level;
  • Advisory services related to development incentives and tax reliefs, including assistance with requesting them;
  • Advisory services, preparation of feasibility studies, and tax analysis regarding securitisation;
  • Due diligences for the financial sector.