The 2025 tax laws are final

Just as we tried to prepare you for the year-end tasks in our previous newsletter, now we are also reporting you about the most important amendments of Hungarian tax- and accounting laws promulgated on November 28, 2024, so that you can better be prepared for the new year. Most of the changes will take effect on January 1, 2025, some already the day after publication, and some on a different date, which will be indicated in our summary. We will now focus solely on the main amendments and will not go into details about the transitional provisions. If you would like to know more about certain elements, read our more detailed articles (HU) on the topic, listen to our podcasts (HU),  contact our colleagues!

1. Personal income tax

Tax base benefits
The family tax allowance will increase in two stages.

Fringe benefits
The annual budget of the SZÉP card benefit will increase from yearly HUF 450,000 (approx. EUR 1,100) to yearly HUF 570,000(approx. EUR 1,400), and from January 1, 2025, the „Active Hungarians“ pocket will be established to be available for leisure activities up to HUF 10,000 per month. Benefits will also be used for home development purposes in 2025 under certain conditions. From January 1, 2025, a housing allowance up to HUF 1.8 million (approx. EUR 4,400) may be provided as fringe benefit to employees under the age of 35, to be available for financing rent or repayment of housing loans.

Tax-free benefits, revenues
The adopted tax package broadens the scope of tax-free income:

• student loan debt forgiven and early repayment of loans in connection with having children
• utilization of voluntary mutual pension savings for housing in 2025
• ensuring the use of sport facilities and equipment maintained by the paying agent
• tickets to major sport and national events as representation or business gifts
• allowances from sport bodies for the preparation or competition
• zoo tickets and passes per tax year up to the minimum wage
• from the sale of a listed historical building with conditions beyond 3 years after acquisition
• income from energy savings retroactive to 1 January 2024
• amounts received as compensation, damages, grievance fees, pecuniary satisfaction, except income replacement and out-of-court settlement.

Interest income
If a Hungarian person obtains special interest type income from a non-treaty state, the tax paid abroad may be credited, and if a citizen of a non-treaty state receives similar income from a Hungarian paying agent, this may be taxed in Hungary.
From 2025, private individuals will be tax-free to contribute intellectual property to their business.

Family catering | Changes to the Airbnb market
From January 1, 2025, the advantageous itemised flat-rate taxation may only be opted for a maximum of 3 properties. The annual rate of itemized flat-rate tax will also be increased and will amount to HUF 150,000 per residential room in settlements where the number of guest nights exceeded 2 million in the second year preceding the reference year.

2. Social contribution tax

Deposits in long-term investment accounts (so-called: “TBSZ” in Hungarian)
In the event of early hacking of an investment placed in a long-term investment account, an uncapped social contribution tax is payable on the commitment yield if the commitment period is less than 5 years. 13% within 3 years, 8% between 3-5 years.

Allowance for labour market entrants
In the case of legal relations established in 2025, the social contribution tax base may only be reduced up to the minimum wage for 1 year instead of the former 2 years. Latter only by 50% of the previous discount in the next 6 months.

Vocational education and dual training
For trainings starting after December 31, 2024, the employer may claim the discount for participants in vocational education or dual training for up to 1 year per person, if the student studies there and successfully takes a vocational exam within the next 2 examination periods after the completion of the training.

3. Corporate income tax

Tax base adjustments

• According to the amendment, which already entered into force on November 29, 2024, double cost and expense deductions may only be recognised as a reduction item on the basis of the same facts if revenue has also been double-recognised.
• Depreciation of land used for the storage of hazardous waste will also be available in corporate tax with a retroactive effect already for 2024.
• From January 1, 2025, supports to a professional sports organisation operating in spectator team sport and earning at least 75% of its turnover from such sports activities will become eligible as recognised costs and expenses, subject to certain conditions. By this, support to sport organizations may generate tax advantages to the grantor in 3 different ways.

Changes affecting tax benefits from November 29, 2024

• Spectator team sports may also be supported under a new title by paying the operating costs of properties connected to sport activities – under conditions.
• R&D tax credit that were recently introduced as a form compliant with the global minimum tax may first be applied to research and development projects started on or after January 1, 2024.

Small Business Tax (KIVA)
If a KIVA company is transformed by merger or division, as from November 29, 2024 the legal successors may retain their small business tax status if the asset revaluation took place during the transformation. The KIVA taxpayer status is established on the day of the merger or division if their conditions continue to exist and the option is exercised by its reporting to the Hungarian Tax Authority within 15 days.

4. Value added tax 

Change of itemized reporting rules
Although from 2025 the amount rounded to one thousand forints will still have to be indicated on the main lines of the so-called M report, the exact amount in HUF for each item need to be reported on the itemized parts.

VAT deduction right
From 2025, domestic taxpayers will also be able to use the right to deduct VAT on goods and services supplied abroad if the transaction would give rise to a right of deduction in the case of domestic supply.

Individual tax exemption
The personal tax exemption became available for international transactions and distance sales. For the activation of the scheme, a separate declaration must be submitted to the Hungarian Tax Authority. It is conditioned among other things, that the taxpayer’s sales must not exceed the EU threshold (EUR 100,000) and the domestic threshold valid for the given country (varying per country, HUF 12 million (approx. EUR 29,300) in Hungary).

Right to deduct VAT in respect of goods imported through an indirect customs representative
Rules for VAT deduction through customs representative will be strengthened. If the importer is not qualified as being risky taxpayer by the Hungarian Tax Authority and is subject to a monthly declaration, the right to deduct input VAT may be exercised by its indirect customs representative on the imported goods (if the importer is not a reliable taxpayer, only after partner verification). If the importer holds a licence for delayed import VAT assessment and the customs agent is a reliable taxpayer, this procedure may be applied irrespective of the former conditions. The indirect customs representative shall declare the details of the goods per import.

Value added tax on real estate
The reduced VAT rate of 5% for the sale of new residential properties is extended with additional 2 years until December 31, 2026. Moreover, the transitional rules also grant such advantage until December 31, 2030 for construction projects, if the building permit will become final no later than December 31, 2026, on constructions that has been notified by September 30, 2024 on the basis of a simple notification, or it has been acknowledged under the Architecture Act by December 31, 2026.

Further changes
From 2025, the supply of gas by a taxable trader through the natural gas system connected in the territory of the EU will also be subject to reverse charge, i.e. including domestic sellers. From July 1, 2025, rebates granted after completion (e.g. discount, rebate, etc.) may be applied even if only a receipt has been issued for the transaction. Tax base reduction requires an amendment to the receipt. The taxable person shall also have the right to reduce the taxable amount where the refund is not made directly to the final consumer of the goods but to an intermediary. The introduction of the eReceipt system has been postponed by half year to 1 July 2025.

5. Global minimum tax

Further details had been announced regarding the reporting obligations of domestic group members on tax subject status for the global minimum tax. The reporting is due already by December 31, 2024. In addition to the structure of the group, the details and qualifications of the group members, including the proportion of top up tax for the GloBE assigned to them must also be indicated. The designated representative shall act on behalf of all domestic group members.

Group members must declare and pay a recognised domestic advance tax for the global minimum top-up tax (QDMTT advance) by the 20th day of the eleventh month from the last day of the tax year to which the recognised domestic additional tax relates. Meaning the first advance payment obligation for Globe in Hungary respective to FY2024 already by November 20, 2025 for calendar tax years. The amount of the tax advance shall be equal to the total amount of the recognised national top-up tax. The designated local organization may submit one return on behalf of all the Hungarian group members. For the time being, there will be no sanctions due to miscalculation.

6. Special sectoral taxes-extra profit taxes

From 2025 certain type of extra-profit taxes will ceased to be exist, especially the special tax on producers of petroleum products, energy producers, balancing service providers and pharmaceutical manufacturers, as well as the extra profit tax on pharmaceutical manufacturers, the obligation of distributors of pharmaceuticals and medical aids, the obligation of manufacturers to pay income tax on energy suppliers, the telecommunications surcharge, the surcharge payable by mining contractors in the absence of a contract and contributions of airlines.

Retail tax on platform operators
From January 1, 2025, domestic and foreign organizations operating online marketplaces and platforms that provide sales platforms to sellers engaged in retail activities will also become subject to retail tax. Thus, the platform operator becomes the taxpayer and will be liable to pay tax on the aggregate amount of net turnover from the sale of goods sold through the platform. There are several detailed rules for calculating the tax base.

Financial transaction duty
The increased additional financial transaction duty for exchange transactions between different currencies has been enacted into law amounting to 0.45%, up to a maximum of HUF 20,000 (approx. EUR 50), which must be paid in addition to the normal transaction levy. The additional duty shall apply to transfers between accounts of domestic customers and to payment transactions by financial and investment firms, but not to bank card transactions. For bank transfers 0.45% per transaction, but not more than HUF 20,000 (approx. EUR 50) per transaction, while 0.9% for cash withdrawals is payable without an upper ceiling.

7. Local taxes

• From January 1, 2025, properties classified as monuments will be exempt from building tax in the year of acquisition and in the following three years. The discount shall not exceed the HUF amount equivalent to EUR 100 million per real estate, which limit does not apply to private individuals.
• Storage structures related to livestock and crop production will be exempt from the tax.
• A foreign air passenger transport operator whose state of residence is a party to the Chicago Convention on International Civil Aviation deemed not to have an establishment and thus a local business tax liability. The exemption can already be applied for 2024.
• Scope of data required by municipalities for tax purposes, is determined, and will by electronic means automatically provided by the state tax authority to the municipalities on a daily basis.
• Special economic zones are abolished: Göd, Iváncsa, Mosonmagyaróvár and Paks.

8. Other taxes and duties

New rules for motor vehicles
As of January 1, 2025, the zero tax rate for  hybrid and plug-in hybrid vehicles and hybrid motors, as well as the tax relief for hybrid and plug-in hybrid vehicles, will end.
An annual automatic increase of certain taxes is introduced for registration and vehicle tases. From January 1, 2026, registration tax rates payable on the first entry into service of vehicles will increase annually by the rate of inflation valid in July of the previous year. While the vehicle tax rate will already increase annually by the rate of inflation in July of the previous year from January 1, 2025. The effective tax rates for 2025 will officially be published by the tax authority before December 15, 2024.
Hybrid and plug-in hybrid vehicles with environmental classes 5P and 5N registered until December 31 , 2024 will be exempt from vehicle tax and company car tax until December 31, 2026.
From January 1, 2025, the company car tax rate will increase of about 20%, and from 1 January 2026 it will also be adjusted annually with inflation in July of the previous year.

Duties
From 2025, inheritance of listed residential buildings classified as a national monument and an apartment in such a building will be exempt from inheritance tax. From 2025, the rate of transfer duty for pecuniary interest related to the acquisition of ownership of motor vehicles and trailers may also be increased annually by the rate of inflation. The revalued rate for 2025 will be published by the tax authority by December 15, 2024. The level of fees payable in civil proceedings at first instance is amended. Litigation with a lower value and lawsuits relating to home ownership or related property rights will have lower fees. The regulation provides an opportunity to make court proceedings more accessible to citizens living in less favourable financial circumstances.

9. Changes in tax procedures

• The tax authority will introduce a new data reconciliation procedure from 2025, which will take place if the taxpayer and its business partner provide different data, for example in the field of online invoice data reporting or community sales. The taxpayer is obliged to carry out the data reconciliation within 15 days of receiving the notice, otherwise it may be subject to a default fine of HUF 300,000 (approx. EUR 730).
• The scope for compliance audits will be extended to transfer prices and authorizes the Hungarian Tax Authority to investigate related party transactions and their transfer pricing even before the end of the reporting period. The deadline for such audits will be 60 days.
• The time limit of APA (Advance Pricing Agreements in transfer pricing cases) procedures is extended to potentially cover 90-days extension 2-times.
• From 2025, a person summoned for a personal interview in tax administration proceedings may also be interviewed via an electronic communications network.
• From 2025, the rate of late payment surcharge will be adjusted to the rate already valid in tax proceedings during the enforcement of claims transferred under the General Administrative Code.
• It was enacted that the maximum default penalty for natural person taxpayers is HUF 400,000 (approx. EUR 975), while for non-natural persons it may reach HUF 1 million (approx. EUR 2,450). The maximum default penalty for a deficiency of reporting employees, issuing invoices and receipts and keeping documents is HUF 2 million (approx. EUR 4,900). The sanction of store closure may be eliminated by the payment of a fine, subject to conditions.
• The tax authority will delete the tax number of a company which, despite the warning, fails to comply with its obligation to submit a VAT summary declaration, monthly tax and contribution return or VAT return within 90 days.
• From January 1, 2025, an exemption application may be submitted in the tax registration procedure if the terminated taxpayer settles its tax debt. Members or shareholders will now be able to do the same.
• From January 1, 2025, the authority will verify whether the registered office service provider is included in the register. If not, they will call the taxpayer to withdraw the application or find another provider.
• If a foreign employee according to the rules on the entry and residence of third-country nationals does not have a tax identification number, the employer may also request the Hungarian Tax Authority to establish it.
• From 2025, the final tax return on the dissolution of group corporate taxpayers must be filed within 90 days of termination.
• From January 1, 2025, it will be mandatory for Hungarian branches of foreign companies to open a cash bank account.

10. Changes to accounting

• Audit thresholds are increasing: the current turnover threshold will increase from HUF 300 million (approx. EUR 730,000) to HUF 600 million (approx. EUR 1,460,000).
• The thresholds for simplified annual accounts (balance sheet total from HUF 1.2 billion (approx. EUR 2.9 million) to HUF 2 billion (approx. EUR 4.9 million), net sales from HUF 2.4 billion (approx. EUR 5.8 million) to HUF 4 billion (approx. EUR 9.8 million)) will increase, as will the threshold for consolidated annual financial statements from HUF 6 billion (approx. EUR 14.6 million) to HUF 10 billion (approx. EUR 24.4 million) for balance sheet total and from HUF 12 billion (approx. EUR 29.3 million) to HUF 20 billion (approx. EUR 48.8 million) for net sales.
• Companies required to prepare sustainability reporting should choose a sustainability-certified auditor.