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The International Journal
of Not-for-Profit Law

Volume 3, Issue 2, December 2000

A publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor


Church and State Relationships in German "Public Benefit" Law
By Dr. Christine R. Barker

Evaluating Tax Incentives for Donations to Public Benefit Organizations
By Paul Bater

Freedom of Association: Recent Developments Regarding the "Neglected Right"
By Leon E. Irish and Karla Simon

The Government of Israel's Control of NGOs: Legal Dilemmas and Structural Constraints
By Nitza Nachmias and Amiram Bogot


Introduction to the Non-Profit Sector in the Balkans
By Jenny Hyatt
Reviewed by Douglas Rutzen

The Third Force
By Ann M. Florini
Reviewed by Karla Simon

Weak Democracy and Civil Society
By Imco Brouwer
Reviewed by Sam Charron

Case Notes

Central and Eastern Europe:

Latin America and the Caribbean:

Middle East and North Africa:
Egypt | Tunisia

North America:
the United States

Newly Independent States:
| Russia

Country Reports

Asia Pacific:
| Australia | the Philippines

Central and Eastern Europe:

Latin America and the Caribbean:
Regional | Dominican Republic | Guatemala | Peru

Middle East and North Africa:
Bahrain | Israel | Palestine | Yemen

Newly Independent States:
Kazakhstan | Ukraine

North America:
the United States

South Asia:
India | Pakistan

Sub-Saharan Africa:
Ghana | South Africa

Western Europe:
Belgium | France | Germany | Ireland

International Grantmaking

Conducting Overseas Site Visits
By Victoria B. Bjorklund and Jennifer I. Goldberg  

- - - - - - - - - -

Editorial Board

Country Reports: Central and Eastern Europe


Overview on the fundamental provisions of Act CXXI of 2000 amending Act CXXVI of 1996 on the Use of a Specified Portion of Personal Income Tax According to the Designation of the Taxpayer

By Zsolt Aradszky, Lawyer

1. By making possible for those taxpayers, to whom upon their request before the day of maturity tax authorities have granted a postponement of payment, or a benefit of a maximum 12 months-deferred payment, and they have fully paid the tax and the late fee entirely in compliance with the resolution on permission, to designate 1% of their tax, paragraph (1) of § 1 of the Amendment widened the opportunity of supporting beneficiary organizations.

According to the previous regulation taxpayers could designate the 1% of their personal income tax only if they paid the tax through the deadline set for submitting the tax return, or did not receive a postponement of payment beyond September 30th in the year of the designation statement (namely more than for 6 months), and a benefit of deferred payment.

2. Paragraph (2) of § 1 of the Amendment has cancelled the limit of 100 HUF as a minimum amount for the 1%. That is, in the future even 10 HUF may be designated to beneficiary organizations.

3. Paragraph (2) of § 3 of the Amendment has amended paragraph (2) of § 4 of the Act and omitted the specific reference to public debts due registered by the Customs and Excise Guard and the social security administration. It generally prescribes for beneficiary organizations to declare that they have no public debts due (any kind).

With regard to paragraph (2) of § 8 as well it means, that the legal provision relating to the gathering and presentation of certificates issued by the local tax authorities proving the absence of public debts due is no longer in force. No more rush after these certificates 

4. By supplementing § 4 of the Act with a new paragraph (4), paragraph (4) of § 3 of the Amendment has created the possibility that tax amounts offered to beneficiaries terminated by a legal successor can concern the legal successor of the beneficiary in case of fulfilling the requirements prescribed by the law. That is, if the beneficiary ceased to exist after filing and submitting the designation statement, its legal successor may receive the amount addressed to the legal predecessor.

5. According to paragraph (2) of § 5 of the Amendment – which may be founded in paragraph (6) of § 5 of the modified Act – on the basis of the designation statements attached to the tax returns of private individuals or the employer’s accounts made in lieu of a tax return, through September 1st of every year tax authorities instruct the beneficiaries to fulfill the requirements determined in paragraphs (2)-(3) of § 4 within 30 days. In case of neglect this deadline, the provisions of § 40 of Act IV of 1957 on the General Rules of Administrative Procedure shall be applied. This latter rule is an important and useful new regulation, because according to the previous regulation the neglect of this deadline resulted in the loss of the designated funds, and the delay could not be excused. According to the provisions currently entered into force, § 40 of Act IV of 1957 is applicable. On the basis of this regulation, a petition for justification may be lodged. That is, if beneficiaries have excusable reason for the delay and it is justified, they can still receive 1%, not losing this right.

In order to better understand it, I quote the relevant provision of Act IV of 1957 below:


40 (1) If someone has not appeared on a day appointed, or has failed to meet a time limit, he/she can lodge a petition for justification at the proceeding organ. The petition for justification is decided by the administrative organ, in the course of procedure of which the omission took place.

(2) The petition for justification may be filed within eight days following the day omitted, or the last day of the time limit missed. If the party obtained knowledge of the omission only later, or the obstacle was removed later, the time limit starts by the obtaining of knowledge, or by the cessation of the obstacle.

(3) No petition for justification can be filed after six months following the day omitted, or the last day of the time limit missed.

(4) In case of failure to meet a time limit, the omitted act must be carried out as well together with filing the petition for justification.

(5) If the administrative organ accepts the petition for justification, it continues its procedure, and - depending on the result of the procedure - it maintains, modifies, or withdraws its previous resolution.

(6) An appeal may be filed against the resolution dismissing the petition for justification only if the petition aimes at the justification of omission of a time limit for appeal.

6. According to the new paragraph (1) of § 6 the Office for Taxation and Financial Control (OTFC) transfers the 1% to the beneficiaries within 30 days after filing the statements prescribed in paragraph (2) of § 4 – namely, registered office in Hungary, operating for the interests of the domestic population, or of ethnic Hungarians living outside the country, political independence, and pursuing public benefit activity at least for a year -

but through November 30th of the year of the designation statement at latest – with regard as well to the provisions pertaining to completing the deficiencies through a petition for justification -, and in the case of paragraph (3) of § 4 – namely, if the 1% must be used for paying the public debts in accordance with the consent of the organization - after deducting public debts.

The new deadline (November 30th) has practically extended the previous deadline for the transfer (October 31st) with one month for OTFC.

7. In contrast with the previous regulation, paragraph (3) of § 6 of the Amendment has created the legal possibility for beneficiaries to reserve the designated 1% and to inform the public about the fact and amount of the reserved funds in a press release, if they do not intend to use this amount for their targeted purposes (yet).

8. On the basis of the Amendment, in accordance with the new paragraph (3) of § 7, if the application included in the designation statement qualifies as invalid according to this Act, because of circumstances arising in the sphere of interests of the beneficiary, tax authorities inform the tax payer making the designation statement without passing a formal resolution and indicating the reason. The deadline for this information is 30 days following the refusal of the beneficiary. The previous deadline for the information had to be calculated from September 30th.

9. According to the new paragraph (7) of § 7 if the supporting purpose formulated by the designation statement of the private individual is not realized for some reason – the beneficiary does not comply with the requirements of § 4, or the beneficiary does not demand the support -, the designated amount must be used in order to support civil society organizations, as determined by the advanced budgetary purpose determined in the budgetary chapter of the Parliament.

10. The Amendment of the Act has entered into force on January 1st 2001, and it has to be applied for the first time in case of the designation statements attached to the income tax returns, or the employer's accounts of the year 2000.  

See also:  The Chart on Hungarian donations under the Hungarian 1% Provision


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