Autumn tax package 2024 – Key changes for companies

Proposed amendments concerning value added tax

5% VAT on residential property in force until the end of 2026

According to the bill, the 5% VAT rate applicable to the sale of new residential property would remain in force until 31 December 2026. In cases where construction is delayed, the temporary rules allow the preferential tax rate to be applied until as late as 31 December 2030, provided that certain conditions are met.

Changes concerning indirect customs representatives' right to deduct tax

In order to combat the grey economy (to reduce tax evasion through the use of an indirect customs representative),there will be fewer cases where an indirect customs representative will be entitled to exercise the right to deduct tax in relation to the import of goods instead of the principal.

This is because, starting from 2025, indirect customs representatives will be allowed to deduct import VAT only if the importer has full right to deduct tax (and declares this to the representative),qualifies as a reliable taxpayer and files monthly VAT returns or holds a licence for import VAT self-assessment himself.

Given that a minimum of three years of operation is required to qualify for the reliable taxpayer status, startup businesses (VAT-registered startups) are likely to suffer a competitive disadvantage compared to businesses that have been in operation for at least three years if they import goods in Hungary through an indirect customs representative.

Rules for SME scheme 

Starting from 2 January 2025, in line with the harmonisation requirement within the EU, the choice of exemption for SME’s (also known as individual tax exemption) will apply not only to domestic transactions, but also to transactions carried out abroad. Taxpayers will need to opt for international individual tax exemption separately on the basis of a declaration submitted to the tax authority.

To be eligible for international individual tax exemption, the value of a taxpayer's supplies must not exceed the threshold under the national rules of the Member State concerned (a different threshold applies in each Member State) and the so-called "pan-European threshold", which is currently at EUR 100,000 per year. The domestic threshold for individual tax exemption will remain at HUF 12 million. According to the changes, taxpayers will now be subject to individual tax exemption in the case of distance selling and transactions carried out abroad as well. This also means that taxpayers opting for individual tax exemption will no longer be able to use the one-stop shop system for imports.

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Changes concerning domestic itemized transaction report (also known as M-forms)

Starting from 2025, the requirements for tax returns will also apply to the invoice reporting of buyers, except that the data reported will need to be rounded to forints instead of thousand forints. The figures in the tax return will still be in thousand forints, and only the breakdown of the reported data will need to be provided in forints.

It is important to note that if the taxpayer submits his VAT return via the eÁFA system, he will continue to be exempt from the obligation to submit M-forms.

Implementation of the e-receipt system delayed until 1 July 2025

The introduction of the e-receipt system has been delayed until 1 July 2025.

Cashback promotions

In the future, the option of subsequently reducing the tax base will also be available to VAT-registered taxpayers in connection with cashbacks given in accordance with the statutory regulations.

Subsequent rebates as items deductible from the tax base on the basis of a receipt

Starting from 1 July 2025, subsequent discounts (such as cash discounts, rebates or other promotional discounts) given without the modification or termination of the contract will be eligible for a subsequent reduction of the tax base even if a receipt is issued in connection with the transaction instead of an invoice. The tax base reduction is conditional on modifying the data content of the receipt.

The reverse charge mechanism will also apply between domestic taxpayers when supplying natural gas through the natural gas system

The supply of natural gas by a domestic supplier to a domestic dealer and taxpayer through a natural gas system located in the Community or any other network connected to such a system will now be included in the list of cases where the reverse charge mechanism applies. This means that, in addition to foreign sellers, domestic sellers will also issue invoices under the reverse charge mechanism from 1 January 2025.

Changes concerning corporate income tax (CIT)

CIT base modification regarding hybrid mismatches

Under the provisions of the CIT Act aimed at preventing tax avoidance, companies are required to adjust their CIT base in cases when both a Hungarian and a foreign entity may reduce their CIT liability or other tax equivalent to CIT due to hybrid mismatches. However, on the basis of the draft legislative changes, in order to ensure that double taxation is avoided, the double deduction may still be offset against any income earned during the tax year or in subsequent tax years that has been considered twice.

New opportunity: depreciation of property used for the storage of hazardous waste

The law change would expand the list of assets upon which ordinary and/or lump-sum accounting depreciation may be recognised under the CIT Act as well, since accounting depreciation on lands and plots used for the storage of hazardous waste would also be considered for CIT purposes. This favourable rule may, at the discretion of the company, even be applied for 2024 as well.

The list of business-related costs and expenses is expanding

A favourable change from 1 January 2025 is that a new type of business-related cost, expense is expected to be introduced. According to the draft legislation, the book value of, amongst others, grants, benefits provided without consideration, non-repayable transfers of funds, and assets granted without consideration will qualify as business-related costs (i.e. it will not be necessary to increase the CIT base by the amount of the corresponding cost, expense) if the following conditions are met:

• the recipient qualifies as a professional sports organisation in the field of popular team sports on a condition that at least 75% of its economic/business revenue in the tax year is deriving from sports activities;
• the amount of grant provided does not exceed 1% of the revenue of the company providing the grant for the tax year;
• the grant is not provided as part of the already existing corporate income tax base decreasing item and tax credit scheme;
• the company providing the grant possesses a certificate issued by the sports organisation which contains all of the elements required by law.

R&D tax credit: further clarification

The draft legislation would clarify the provision on claiming the R&D tax credit newly introduced as of 2024. Accordingly, this tax credit would first be available for the eligible costs of R&D projects launched on or after 1 January 2024. This change does not constitute a substantive amendment to the previous wording of the legislation.

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Changes concerning small business tax (SBT)

As a general rule, the small business taxpayer status ceased to exist on the day before the merger or demerger of a company, and the company is not allowed to opt for this tax type once again within 24 months calculated from the date when the tax liability ceases to exist.

This restriction was relaxed by a law amendment that came into force on 1 December 2023; accordingly, if the merger or demerger is carried out at book value, i.e. no asset revaluation is carried out, the company under transformation may, within 15 days from the date of the merger or demerger, opt for small business tax again, in which case the company will be considered as a small business taxpayer as of the day following the day of merger or demerger.

Until now, however, this opportunity has not been applicable in the case of preferential transformations under the CIT Act, and the current draft legislation would cease this restriction rule, allowing companies to opt for small business tax again in all cases where the tax liability ceases to exist as a result of merger or demerger that does not involve asset revaluation.

Global minimum tax

The Act on Global Minimum Tax, which entered into force on 1 January 2024, has already required Hungarian members of company groups to notify the Hungarian Tax Authority about their global tax liability. The notification deadline in respect of 2024 is 31 December 2024.

The draft legislation contains the details of data to be provided in such notification:

• the company identification data of the group members,
• information on the general corporate structure of the group, including the shares of each group member in other group members, and
• the qualification of each group member, for which it is necessary to know the status of all group members in the fulfilment of the top-up tax liability.

Another significant change is that entities subject to the global minimum tax will have to declare and pay tax advances in respect of the qualified domestic minimum top-up tax (QDMTT) by the 20th day of the 11th month following the relevant tax year, the first deadline is 20th November 2025 for companies having a tax year identical to the calendar year.

The requirement to pay tax advances will not apply to the additional taxes (IIR) payable by ultimate companies or intermediary Hungarian parent companies upon their subsidiaries. The amount of the tax advance is equal to the amount of the annual tax, which means that the deadline for filing the return (18 months for 2024 and 15 months for subsequent years) is, in practice, would be reduced to less than 11 months. However, as a general rule, no default penalty, tax penalty or late payment fee may be imposed in the event of an incorrect calculation of the tax advance.

LBT – Local business tax

Abolition of special economic zones

The proposed amendment contains the detailed rules applicable to the planned abolition of special economic zones (Göd, Paks, etc.).

Permanent establishments of foreign passenger air transport service companies for local business tax purposes

The amended definition of permanent establishment entered into force on 1 January 2024, which, in certain cases, creates permanent establishments for LBT purposes for foreign airlines as well. The detailed rules set out in the proposed legislation clarify the fact that the extended LBT liability applies to foreign businesses whose country of residency is not part of the Chicago Convention. Under the transitional provisions, the new definition of permanent establishment may apply in respect of the 2024 LBT liability as well.

Definition of permanent resident

The definition of permanent resident under the LBT Act will be clarified.

Amendments to the Personal Income Tax Act

SZÉP card

Up to 50% of employer's allowances recorded on SZÉP card balances as of 1 January 2025 or received during 2025 can be used for home renovation purposes in 2025.

Extension of the tax exempt benefits 

Under the proposal, - amongst others - the following income will become tax exempt:

• Income from the sale of a property classified as a historical monument that takes place more than 36 months after its acquisition will be exempt from tax. Accordingly, for buildings classified as a historical monument, the current requirement of five years for tax exemption will now be reduced to three, provided that the individual has renovated and restored the listed property in accordance with the monument protection requirements after acquisition and has a certificate to this effect issued by the heritage protection authority.
• According to the bill, services provided by employers through the provision of free or discounted use of sports facilities and equipment maintained by them will be exempted from tax. This means that, for example, the free use of a company gym will not give rise to any tax liability.
• Income earned by an individual in connection with construction, modernisation or renovation work resulting in energy savings that is carried out by such individual end-user will also be exempted from tax. This includes, in particular, certified energy savings registered in favour of the individual (constituting a right of pecuniary value),discounts on services or products purchased in order to achieve energy savings, and the income earned by such individual in exchange for the transfer of certified energy savings as a right of pecuniary value. According to the proposal, the exemption will be applicable to income earned as of 1 January 2024.
• Income generated when products subject to a redemption fee that are purchased by the payer are transferred to an individual by any means will be exempted from tax.
• The amount of student loan debt waived in connection with having children will also be tax exempt.
• The provisions of Government Decree No. 451/2023 regulating the tax exemption of the provision of wine products as business gifts or gifts of small value have also been transposed into the Personal Income Tax Act.

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Family allowance 

According to the published bill, the amount of the family allowance, which reduces the tax base, will be doubled in two stages, i.e. on 1 July 2025 and 1 January 2026. The amounts of the tax base allowance are as follows:

Per eligible dependant and eligible month from 1 July 2025:

• HUF 100,000 for one dependant,
• HUF 200,000 for two dependants,
• HUF 330,000 for three or more dependants.

Per eligible dependant and eligible month from 1 July 2026:

• HUF 133,340 for one dependant,
• HUF 266,660 for two dependants,
• HUF 440,000 for three or more dependants.

In practice, this means that, from the summer of 2025, tax savings of HUF 15,000 per month will be available for a dependant child instead of HUF 10,000 per month, and this amount will increase to HUF 20,000 in 2026.

The allowance for families with two and three children would also increase proportionally, which means that, starting from 2026, families raising three children could save HUF 198,000 instead of HUF 99,000 per month.

For each permanently ill or severely disabled dependent, the tax base allowance will increase by an additional HUF 100,000 from 1 July 2025 and by HUF 133,340 from 1 January 2026.

Interest income

According to the Personal Income Tax Act, interest income is a much broader category than interest in a conventional sense. For instance, income from the sale or repurchase of publicly issued and traded bonds and income from the OTC sale, repurchase or redemption of collective investment securities are considered interest income.

The currently effective Personal Income Tax Act defines what qualifies as the place of source of income in relation to interest, but contains no such provision for interest income that does not qualify as interest. The amendment proposed by the bill would have the following consequences as of 1 January 2025:

•  if an individual who is a Hungarian tax resident earns income that is not interest but qualifies as interest income (i.e. separately taxed income) from a non-treaty state, this income will qualify as income from a foreign source for the purposes of the Personal Income Tax Act and any tax paid abroad in respect of such income will be deductible in Hungary under the general rules;
•  if a Hungarian payer (e.g. credit institution or insurance company) distributes interest income under the Personal Income Tax Act (which does not qualify as interest) to an individual who is a tax resident of a foreign state with which Hungary does not have a tax treaty, the place of source of such income will be Hungary, and so Hungary will be able to tax such income.

Tax exemption of the in-kind contribution of intellectual property

The fact that, in the case of in-kind contributions of intellectual property, the individual who created the intellectual property (the original beneficiary) would not be liable to pay tax on the value of the intellectual property as defined in the articles of association is intended to encourage the creation of businesses with innovative and marketable intellectual property.

Date of receipt of revenue for services used

As of 1 January 2025, the rules pertaining to the date of receipt of revenue for services used will change once again:

• For own services, the date of receipt of revenue is the date at which the service provider becomes or would become liable to pay tax as of the date of supply in accordance with the provisions of the VAT Act (regardless of whether or not the supplier is liable to pay VAT).
• For purchased services (where the supplier of the service is not the same as the service provider ),the date of receipt of revenue is the date at which the receipt for the service is made available to the payer.

Changes concerning the taxation of individuals pursuing short-term rentals (Airbnb)

On 24 June 2024, the definition of private accommodation in the Act on Trade was amended to also include commercial buildings suitable for human habitation, in addition to dwellings and holiday homes. In order to ensure consistency between this act and the Personal Income Tax Act, starting from 1 January 2025, an individual pursuing short-term rentals may opt for flat-rate taxation for the entirety of a given tax year only if such activity is carried on in no more than three properties which are owned or used by the individual and qualify as private accommodation under the Act on Trade.

According to the bill, the annual flat-rate tax amount payable on private accommodation would, in certain cases, change from HUF 38,400 to HUF 150,000 per guest room as of 1 January 2025. This translates into a significant (3.9-fold) increase in the tax amount.

The annual flat-rate tax amount would be HUF 150,000 in municipalities where the number of guest nights exceeded 2 million in the second year preceding the given year, while the amount would remain at HUF 38,400 in municipalities where the number of guest nights did not exceed 2 million in the second year preceding the given year.

A list of municipalities where, based on data published by the Hungarian Central Statistical Office, the number of guest nights exceeded 2 million in 2023 will first be published by the National Tax and Customs Administration on its website until 15 January 2025.

ÖVTJ to replace TESZOR for sole entrepreneurs opting for flat-rate taxation

Under the bill, starting from 1 January 2025, the activities eligible for the application of the 80 per cent cost ratio for sole entrepreneurs opting for flat-rate taxation would be defined on the basis of ÖVTJ codes instead of TESZOR codes.

Social contribution tax

Social contribution tax – benefit for new labour market entrants

According to the bill, the provisions of Government Decree No. 184/2024 in force since August 2024, which limit the benefit for labour market entrants, would be transposed into the Act on Social Contribution Tax. The benefit is only available with respect to new employees who have worked no more than 3 months for a different employer within the past 12 months. Employers may reduce their social contribution tax base by the amount of the minimum wage for up to one year and by 50% of the minimum wage for an additional six-month period.

Vocational education and dual training

The bill would introduce stricter rules regarding the tax benefit for vocational education and dual training, so that the tax benefit could be claimed for up to 12 months for the same employee of the same employer in respect of a trainee who completes vocational education with his or her own employer and passes a vocational exam no later than the second exam period following the end of the vocational education. This rule would apply to training courses beginning after 31 December 2024.

Social contribution tax liability on certain defined benefits and fringe benefits 

The law amendment would clarify the legislator's intention that the payer is required to comply with the obligation to declare and pay social contribution tax on fringe benefits and certain defined benefits on a quarterly basis, in line with the deadline for declaring and paying personal income tax.

Employee Stock Ownership Programs

For new ESOP programs launched after 1 January 2024, where the remuneration policy sets out a condition linked to the future improvement of the economic performance of the legal entity issuing the security that is the subject of the award or underlying the award, the fact whether such condition has been satisfied may be assessed only after 24 months have passed since the date of launch of the ESOP program.

Changes concerning other tax types 

Retail tax 

Taxpayers subject to retail tax will now include so-called platform operators, who will be subject to special provisions. Platform means a digital environment (including websites and mobile applications) that connects various users (sellers and buyers),thus facilitating the sale of goods and the collection of payment for the goods. Platform operators (considered as new taxpayers) are organisations which operate these platforms and have a contractual relationship with the sellers, i.e. individuals or organisations who are registered on the platform and conduct sales of goods or services there.

The changes will primarily affect taxpayers that qualify as platform operator as well as those with a dual role (carrying out both retail activities and qualifying as a platform operator at the same time).

• The reason for this is that platform operators would be liable to pay tax on the total net revenue from the sale of goods through the platform (which, until now, was payable by the retailers selling on the platform).
• As for taxpayers in a dual role, the tax base would also include the revenue from goods sold by third parties on the platform (in contrast to the current practice where the tax base only includes the revenue from their own retail activity). This means that the tax base will be calculated as follows: the taxpayer's total retail revenue (online and offline) + total revenue from goods sold through the platform – the taxpayer's (online) retail revenue on the platform.

The tax would continue be determined using progressive tax rates in the future (it is important to note that, starting from 2025, the tax rates under the Retail Tax Act will apply instead of the higher tax rates under the Government Decree on Excess Profits Taxes). 

The changes all together may result in a significantly higher tax burden for taxpayers in a dual role, as the inclusion of third-party sales in the tax base could cause a larger portion of the tax base to fall into the higher tax rate bracket.

The tax rates applicable from 2025 are as follows:

Nevertheless, the proposed modifications would allow taxpayers to reduce the amount of tax in certain cases under different conditions.

Financial transaction duty

An additional duty on transactions involving currency conversion, payable on top of the financial transaction tax, was introduced in the Government Decree on Excess Profits Taxes on 10 October. Such transactions are subject to a higher transaction duty rate of 0.45%, up to a maximum of HUF 20,000. The additional duty is levied on transfers between the accounts of domestic clients and the payment transactions of financial and investment firms, but does not apply to credit card transactions. The proposed tax package would incorporate the rules on the additional transaction tax into Act CXVI of 2012 on Financial Transaction Duties.

The increased rate of the transaction duty on bank transfers and cash withdrawals, introduced on 1 August, would also be transferred from the Government Decree. These include a 0.45% rate up to HUF 20,000 per transaction for bank transfers, and a higher rate of transaction duty applicable to cash withdrawals at 0.9% without an upper limit.

Vehicle registration tax to be adjusted for inflation

According to the proposals, after 2024, the vehicle registration tax rate would be adjusted to the previous year's registration tax, taking into account the rate of inflation compared to July of the previous year, as determined by the Hungarian Central Statistical Office. The adjusted tax rate would be published by the Hungarian Tax Authority on its website by 31 October of the year preceding the relevant year (the first deadline being 15 December 2024).

Vehicle tax and company car tax to be adjusted for inflation

After 2024 for vehicle tax and 2025 for company car tax, the tax rates will be adjusted annually by the consumer price index published by the Hungarian Central Statistical Office for July of the year preceding the relevant year compared to the same period of the previous year. This means that the tax rates will follow inflation. The adjusted tax rates would be published by the Hungarian Tax Authority on its website by 31 October of the year preceding the relevant year (the first deadline being 15 December 2024).

For vehicles in environmental classes 5P and 5N, the exemption from vehicle tax and company car tax may be claimed until 31 December 2026, provided that the taxable status was already established before 2025.

The proposed changes also affect the company car tax rates. Under the new tax schedule, the lowest fixed tax amount will increase from HUF 14,000 to HUF 17,000, while highest tax amount will rise from HUF 81,000 to HUF 97,000. 

Advertising tax

Based on the proposed tax package, advertising tax would be suspended for an additional year, meaning that the tax rate would remain 0% of the tax base in 2025.

Building tax

According to the bill, two new legal titles will be added to the list of exemptions from building tax as of 1 January 2025:

•  for properties classified as a historical monument (in the year of acquisition and for three years thereafter),
• for buildings used for animal husbandry or crop production and related storage buildings (e.g. stables, greenhouses, crop storage, granaries, fertiliser storage),up to the HUF equivalent of EUR 100 million per property, provided that they are used for their intended purpose in connection with the activity. The cap is not applicable to individuals.

Inheritance and gift tax

According to the proposed changes, as of 1 January 2025, an exemption from inheritance tax would apply to the inheritance of a listed residential building classified as a national monument and to the inheritance of an apartment in a listed building classified as a national monument.

Property transfer tax

Under the proposal, starting from 1 January 2025, the rate of tax applicable to the acquisition of motor vehicles and trailers would be adjusted annually by the rate of inflation published by the Hungarian Central Statistical Office (the amount of the building tax would be based on the tax amount for the year preceding the relevant year, adjusted by the consumer price index published by the Hungarian Central Statistical Office for July of the year preceding the relevant year compared to the same period of the previous year). The applicable tax rate will be published by the tax authority on its website before 31 October of the year preceding the relevant year (the first deadline would be 15 December 2024).

The proposal also clarifies the conditions of building tax exemption for acquisitions of agricultural land by family agricultural enterprises.

Changes concerning the District Heating Act

The provisions pertaining to the Crisis Communication would be abolished in connection with the income tax of energy suppliers (so-called Robin Hood tax) as well. This could result in changes to subsidy schemes for construction projects involving EV charging stations. The proposed changes to the Mining Act may also indirectly affect the rate of income tax for energy suppliers.

Changes concerning the airlines’ contribution

The airlines’ contribution would be ceased as of 1 January 2025, companies subject to such contribution would fulfil their obligations under the provisions that are already in force for December 2024 for the last time.

Changes concerning procedural rules

Introduction of data reconciliation procedures

As a new tax administration procedure, the tax authority may, in the future, launch data a reconciliation procedure to deal with minor discrepancies identified during the risk analysis of reported data.

Until now, these have been addressed as part of a compliance review.

A data reconciliation procedure is triggered when a taxpayer and its business partner report conflicting data (typically for online real-time invoice reporting or intra-Community supplies). In such cases, when requested by the tax authority, companies have 15 days to resolve these discrepancies or to notify the tax authority that it was the partner that committed the error. Failure to perform the data reconciliation carries a default penalty of HUF 300,000. 

Transfer pricing audits as part of compliance reviews

Another change affecting tax authority procedures is that, in the course of a compliance review, the tax authority may also assess compliance with transfer pricing obligations, regardless of whether the reporting period has ended or not. In this case, the 30-day time limit for a compliance review will also be doubled to 60 days.

Stricter tax number cancellation rules 

The rule on the cancellation of tax numbers will become stricter in cases where the obligation to file a recapitulative statement on VAT or the obligation to file monthly tax and contribution returns and VAT returns is not complied with if the taxpayer fails to file the return despite a notice from the tax authority. Until now, 365 days were available for subsequent filing, but this deadline will now be reduced to 90 days.

Changes to the so-called Dutch letter

The information on the circumvention of tax obligations (Dutch letter) will be amended once again. In the future, a final decision will no longer be required, as was the case under the previous rules; instead, having reasonable grounds to suspect that a partner of a taxpayer deducting VAT has committed an infringement is enough for the tax authority to inform the taxpayer. Although such information does not include any binding action in respect of the taxpayer, if the tax authority subsequently questions the legitimacy of the deduction of VAT, e.g. because of the partner's infringement, the taxpayer can no longer claim that he acted in good faith in deducting VAT as the tax authority had previously informed him of the existence of a possible infringement.

Penalties

A new category of default penalties will be introduced. In procedures aimed at clarifying the insured status, employers will have 15 days to correct errors or omissions, subject to a conditional default penalty of HUF 100,000. Employers that fail to clarify the status can expect to receive a severe default penalty, because if the failure concerns more than one employee, the amount of the penalty will be the amount of the fine multiplied by the number of employees concerned.

With the transposition of the government decrees adopted during the state of emergency into law, Government Decree No. 181/2024 regulating the increased fines would be abolished and its provisions would be carried over to the Act on the Rules of Taxation.

Abolition of the prohibition on novation 

As a result of an EU decision, the prohibition on novation (restriction on submitting new evidence) will be abolished in the VAT refund process for foreign entities, which means that such entities will be able to submit new evidence throughout the entire procedure conducted by the tax authority, even at the same time as the appeal.

By 31 January 2025, the Hungarian branches of foreign entities will also be required to open a payment account in Hungary.

In the future, it will be possible for the tax authority to hear individuals summoned to give a personal testimony through online means as well. 

In preparation for the tax authority's plans regarding e-receipts, the rules on e-cash registers will enter into force. 

Changes concerning customs

• The provision on the exemption of goods imported in passengers' personal luggage from VAT and excise tax has been clarified. In the future, the exemption will explicitly cover imports of a non-commercial nature for occasional personal use or as a gift. The main reason behind the change is to prevent an abuse of the exemption by persons who leave the country several times a day.
• In customs administration matters, from now on, proof of the existence of a permanent authorisation or mandate can be provided by using a standardised form, which must be submitted either on paper or by electronic means prior to the initiation of the procedure before the customs authority.
• This change will enable the customs authority to grant, upon request, an exemption from providing a guarantee for VAT in the customs administration procedure to a taxpayer acting in his own name who, at the time of assessment of the request, meets the requirements set out by law.
• The rules on indirect customs representation will become stricter in that, based on the amendments to the VAT Act, only those indirect customs representatives who qualify as reliable taxpayers under the provisions of the Act on the Rules of Taxation will be allowed to deduct input VAT in connection with the import of goods.

Changes concerning excise taxes

• As of 1 January 2025, the taxes on certain energy products will increase, partly to reach the minimum tax level in the EU and partly to valorise taxes to reflect the rate of inflation starting from 2025. The state tax and customs authority regularly publishes the applicable tax rates on its website.
• In addition to energy products, the tax rates for tobacco and alcohol products will also be adjusted by the rate of inflation after the year 2024. The tax rate is the rate adjusted by the consumer price index published by the Hungarian Central Statistical Office for July of the year preceding the relevant year compared to the same period of the previous year.

Changes concerning the environmental product charge

Based on proposal package no. T/9720 on the amendment of certain energy-related laws, submitted to the Parliament on 29 October, the Government would also amend Act LXXXV of 2011 on Environmental Product Charge.

Abolition of the double obligation

• As of 1 January 2025, the amendment to the Act on Environmental Product Charge will remove the redundancy in the case of products subject to the environmental product charge and extended producer responsibility. In the future, the product charge will only need to be declared for products for which the product charge is payable.
• Under the amendment to the Act on Environmental Product Charge, batteries, packaging materials, electronic and electric appliances, tyres, advertisement paper and office paper will no longer qualify as products subject to the environmental product charge.
• However, the product charge will be payable on the petroleum products, plastic products and chemical products explicitly listed in the Schedule to the Act.
• According to the amendment, the only exception is that plastic carrier bags (as a packaging product) will remain subject to the product charge, as these products have been reclassified from packaging materials to plastic products.
• Due to the above, it has become necessary to amend the provisions of the Act on Environmental Product Charge pertaining to product categories that are no longer subject to the environmental product charge.
• Based on the amendment, the state tax authority will, as of 31 December 2024, officially close its records on the product charge liability of taxpayers registered for products which will no longer be subject to the product charge after 1 January 2025, as well as on the transfer agreements reported for products in these product categories.
• The amendment does not affect the cooperation between the state tax authority and the waste management authority as data for goods that qualify as products subject to the product charge will be made available by the tax authority to the waste management authority even after 1 January 2025.

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Accounting changes

The proposed laws also amend the Accounting Act (Act C of 2000) in several aspects, the expected amendments are summarised below.

Failure to comply with filing and disclosure obligations 

According to the proposed changes, if an entity fails to comply with its filing and disclosure obligations under the Accounting Act (in connection with the financial statements, the sustainability report, the report containing corporate income tax information, the report on amounts paid to governments and the auditor's report),any third party may initiate a legitimacy supervision procedure before the company court.

Selecting a pre-determined auditor

Any contractual provision or legal declaration requiring an entity to engage a particular auditor or audit firm is deemed null and void.

Changes to reduce administrative burdens 

The thresholds for opting for simplified financial statements will increase as follows:

• the balance sheet total criteria would increase from HUF 1,200 million to HUF 2,000 million, and
• the annual net revenue criteria would increase from HUF 2,400 million to HUF 4,000 million.

The critera for the average number of employees in a financial year remains unchanged. In addition, the increase in the threshold for opting simplified financial statements implies that the thresholds for the preparation of a prime cost calculation policy will also increase since entities preparing simplified financial statements are not required to have such policy.

The criteria for the obligation to prepare consolidated financial statements would also change as follows:

• the balance sheet total criteria would increase from HUF 6,000 million to HUF 10,000 million, and
• the annual net revenue criteria would also increase from HUF 12,000 million to HUF 20,000 million.

The criteria for the average number of employees in a financial year remains unchanged in this case as well.

According to the proposed changes, the net revenue-based exemption criteria for mandatory audits will be doubled from HUF 300 million, which means that, in the future, the exemption will apply in cases where net revenue is below HUF 600 million and the employment criteria is satisfied at the same time.

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Companies subject to mandatory audit change

The category of businesses subject to mandatory audit will become narrower as the wording "HUF 300 million" in Section 155 (3) a) would be replaced by "HUF 600 million".

According to the law changes, there would be no mandatory audit if both of the following conditions are met:

• the (annualised) average annual net revenue of the entity for the two financial years preceding the financial year did not exceed HUF 600 million, and
• the average headcount of the entity for the two financial years preceding the financial year did not exceed 50 employees.

Other clarifications

The proposed changes contain further additions and clarifications regarding the audit of sustainability reports, among others regulating the details of the selection process.

Following the introduction of deferred tax, the scheme of the P&L will also change in a way that deferred tax would need to be taken into account when calculating the after-tax profit.