2025-11-25
The National Assembly has adopted two tax and administrative reduction packages. The bill On the Amendment of Certain Tax Laws to Reduce Administration and for the Purpose of Legal Harmonization was published in the Hungarian Gazette on 19 November 2025, and the bill On Measures to Reduce the Tax Burdens of Businesses was published on 21 November 2025.
In our newsletter, we summarize the main changes contained in the two tax packages, hereinafter collectively referred to as “the Act”.
Personal income tax
Under the Act, the scope of tax equalization for income from crypto-asset transactions is expanded. Whereas the previous rules allowed losses from only the two years preceding the tax year to be applied, the new provision permits the use of any previously reported loss that has not yet been utilized for tax equalization, regardless of when it was incurred. Individuals must keep a clear record of their remaining, unused tax-equalization balance.
Under the Act, a woman qualifies as a “mother under 30” if, on the first day of the year in which she becomes entitled to the family allowance under the Personal Income Tax Act for her fetus or for her biological or adopted child, she has not yet reached the age of 30.
According to the new rules, the tax advance declaration for the relief available to mothers with two, three or four children is treated by the employer as continuous and remains in force until it is replaced by a new declaration.
Social Security
The Act amends the list of insured persons. Individuals working under a long-term mandate arrangement, provided they are not classified as pursuing supplementary activity, are now covered. A mandate is considered “long-term” if the employer has registered it as such with the State Tax and Customs Authority.
Corporate Income Tax
The Act clarifies the rules for selecting R&D tax incentives. After opting for the new type of R&D tax allowance, taxpayers may now reconsider their choice after five years rather than six. They may decide either to continue with the new incentive or revert to the previous one, which is not recognized for global minimum tax purposes. This adjustment reflects the existing rule that the election is valid for five years.
The maximum R&D tax allowance available for collaborations with research institutes or universities varies depending on the type of activity, as follows: for basic research, 100% of eligible costs; for industrial research, 50% of eligible costs; and for experimental development, 25% of eligible costs can be claimed. The overall cap on the tax allowance remains unchanged at 500 million forints.
As of 1 January 2026, two new tax incentives will be introduced. One will allow investments that secure manufacturing capacity for clean technologies to qualify as a development tax allowance. The other will provide a new tax benefit for projects focused on eliminating environmental damage and achieving other defined environmental objectives, including both investments and renovations.
For investments aimed at ensuring clean technology manufacturing capacity, the tax allowance may cover a portion of the investment costs (up to 15% in Budapest and up to 35% in other regions). However, eligibility is subject to strict environmental and technological requirements, such as the use of state-of-the-art production technology, compliance with emission limits, and the submission of a prior notification to claim the allowance. Taxpayers who have already filed a notification for a development tax allowance may opt to switch to this new allowance category.
The new tax allowance for investments or renovations aimed at eliminating environmental damage or achieving specified environmental objectives applies only to projects that begin after 31 December 2025 and has a present value of at least 100 million forints. The allowance may be claimed either in the tax year following commissioning or, at the taxpayer’s choice, in the year of commissioning and the five tax years that follow. The maximum available amount depends on the type of investment, but it cannot exceed the forint equivalent of 30 million euros.
Since the EU’s Temporary Crisis and Transition Framework will cease to apply from 2026, the related corporate income tax provisions will be repealed. As of 1 January 2026, the allowance for strategic investments supporting the transition to a net-zero-emission economy will also be abolished.
Effective 1 January 2026, the quarterly corporate tax advance threshold will increase from 5 million to 20 million forints. Taxpayers can first apply this more favorable rule to advances declared in 2026, and for calendar-year taxpayers, starting in July 2026.
Global Minimum Tax
In line with OECD guidelines, the Act defines the concepts related to the simplified effective tax rate. However, the detailed rules for the calculation will be set out in a ministerial decree, of which only the draft version—submitted for public consultation—is available.
Additionally, the Annex concerning transitional relief for the substance-based income exclusion will be amended to align with the percentages set out in the original OECD Model Rules. Under the Act, substance-based income exclusion may be calculated using slightly lower rates than those currently in force for recognized payroll costs of eligible employees and for the book value of eligible tangible assets. For example, for 2024 the rates will be 9.8% and 7.8%, instead of the present 10% and 8%.
Value Added Tax
The Act also amends the provisions on VAT group representation. This allows the tax authority to appoint the group representative in certain circumstances.
The Act further specifies the rules on the joint and several liability of VAT group members. Members shall be liable for the legal consequences applicable under the Act on the Rules of Taxation for any breach of obligations under the VAT Act. In addition, the Act regulates the application process for joining a VAT group in cases where a non-member entity is terminated with legal succession.
Pursuant to the Act, starting from the VAT reporting period that includes 1 July 2026, the Domestic Purchases Listing (page ‘M’ of the VAT return) must be submitted with more detailed data, including the amount of tax deducted.
As of 1 January 2026, the sale of beef and related offal will be subject to the reduced 5% VAT rate.
The threshold for individual tax exemption will rise in stages: from the current 18 million forints to 20 million forints as of 1 January 2026; to 22 million from 1 January 2027; and to 24 million from 1 January 2028.
Excise tax
The 2026 valorization of the excise tax rate on fuels will be postponed by six months.
Tax Procedural Rules
The Act provides that when a VAT obligation is fulfilled through retrospective registration (change notification), returns must be filed for all periods previously not covered by the return, using monthly tax assessment periods.
The Act also introduces a change to the statute of limitations. Previously, a taxpayer could submit a self-audit for an expired tax assessment period in order to settle a tax liability, provided that the court issues a final decision on the matter beyond the statute of limitations for the right to a tax assessment. The Act now specifies that a self-audit may not be submitted for an expired period if doing so would affect another taxpayer’s VAT obligations.
Currently, taxpayers may amend or withdraw their taxpayer’s application before a decision becomes final. Under the Act, taxpayers may only amend or withdraw their application until the tax authority initiates action to communicate its decision.
According to the Act, the option to submit a self-audit under Section 195 of the Act on the Rules of Taxation, previously permissible on grounds of illegality of legislation, is abolished. In its place, taxpayers can submit an application to reduce their tax liability. The deadline for assessing the application is fifteen days, identical to that for self-audits.
Small business tax
From 1 December 2025, the entry conditions for opting into the small business tax (KIVA) will change significantly: the maximum headcount will rise to 100 employees, and the revenue and balance sheet limits will increase to 6 billion forints. In addition, from 1 January 2026, the conditions for terminating KIVA status will change. The revenue threshold will increase from 6 billion to 12 billion forints, and the average statistical headcount limit will rise from 100 to 200 employees. Exceeding these limits will result in the termination of KIVA status.
Income tax of energy suppliers
From 1 January 2026, distribution license holders under the Act on Electric Energy will be eligible for tax allowance on energy development investments commissioned during the tax year. The allowance may be claimed in the tax year the investment is commissioned, as well as the five following tax years. The tax allowance reduces the income tax liability of energy suppliers, but may be claimed only up to 80% of the tax payable after deducting other tax allowances claimed by the distribution license holder.
Insurance tax
The basis for calculating the advance payment of the supplementary insurance premium tax has been revised. Premiums from life insurance policies must be taken into account when calculating the supplementary tax base.
Retail tax
A favorable amendment has taken effect regarding retail tax, increasing the thresholds for each tax bracket. The applicable retail tax is now 0% on the portion of the tax base not exceeding 1 billion forints; 0.15% on the portion not exceeding 50 billion forints; 1% on the portion not exceeding 150 billion forints; and 4.5% for the portion exceeding 150 billion forints. The tax rates themselves remain unchanged.
It is important to note that the increased thresholds must already be applied to the 2025 tax year when calculating the return. In case the taxpayer has an overpayment due to the tax advance payments, they are entitled to reclaim the overpaid amount.
As per the 2025 tax year, the special tax rates for motor vehicle fuel retail will remain in effect for the tax year beginning in 2026.
The Act clarifies that when motor vehicle fuel is sold together with other products, the tax liability must be determined separately, applying the special rates to the fuel sale and the general rates to the other products sold.
Advertisement tax
The suspension of advertisement tax obligations will end on 30 June 2026. From 1 July 2026, entities subject to the advertisement tax must comply with the obligations set out in the Act on Advertisement Tax.
Beginning 1 January 2026, taxpayers subject to advertisement tax who are not yet registered with the State Tax Authority for any tax type must register using the Authority’s official form within 30 days of commencing their taxable activity. Failure to do so will trigger a notice to comply. Continued non-compliance after the notice may result in the Tax Authority imposing a default penalty of up to 10 million forints. Each additional failure after further notices may attract an additional penalty of up to 10 million forints. If the taxpayer complies after a repeated notice, the Authority will waive the most recent penalty and may also reduce or waive earlier ones.
If, at the time of publishing the advertisement, the taxpayer has not registered with the tax authority; or has not declared in writing to the advertiser that the tax liability rests with them and that they will fulfill their tax return and payment obligations; or that, during the tax year following the publication of the advertisement there is no tax payment obligation, then the taxpayer may face a penalty of 500,000 forints for non-compliance. In case of repeated non-compliance, a penalty of up to 10 million forints may be imposed.
Transfer pricing
The Act clarifies that if the parties agree on a retrospective adjustment to fair market value by the balance sheet preparation date, and implement it through accounting measures (e.g., via a credit or correction invoice), the taxpayer may choose not to adjust the intercompany price to the median of the market range.
In such cases, the taxpayer may adjust to any value within the fair market value range. With this amendment, the legislation now clearly separates the tax base adjustments from accounting adjustments:
• For tax base adjustments (adjustments made only within the tax returns or by the tax audit), aligning to the median remains mandatory
• For accounting adjustments (recording the adjustments in the accounts), any value agreed by the parties within the fair market value range is acceptable.
The provision should be applied to financial statements for business years starting in 2026, with an option for taxpayers to adopt it already for 2025.
Act on Accounting
The eligibility thresholds for preparing simplified annual financial statements for micro-entities will increase. The balance sheet total will rise from 150 million forints to 180 million forints, and the annual net sales revenue from 300 million forints to 360 million forints.
KPMG experts are monitoring these legislative changes and are ready to assist you in interpreting them and assessing the impact on your business.
