Tax changes 2025

VAT (value added tax)

International tax exemption

From 1 January 2025, the VAT Act will allow the option of tax exemption not only for domestic transactions but also for transactions carried out abroad. The requirement for choosing the exemption in the other country is that the total value of the taxpayer's EU sales does not exceed the EU threshold of EUR 100,000 or the domestic threshold (in Hungary HUF 12 million), either in the previous year or in the current year, and that the taxpayer declares this choice to the Hungarian tax authority, indicating the country in which he wishes to benefit from the exemption.

The taxpayer must submit a quarterly return on community tax-exempt transactions.

If the taxable person makes use of the VAT exemption, he cannot use the OSS system to declare his distance sales and pay VAT on them but must submit a quarterly return and pay VAT in the country of supply.

Input tax shall not be deductible where the taxable person uses the goods or services supplied for the purposes of a sale of goods or services supplied in a country where the person has chosen to be tax exempt.

M-sheet

From 2025, the summary report on invoices received (VAT return Form M) must be in HUF instead of THUF. The main lines of the return must continue to be rounded to THUF.

Sales of residential property - 5% VAT

The reduced rate of 5% VAT applicable to the supply of new residential property, as defined in a previous government decree, will remain applicable until 31 December 2026. As a temporary rule, the 5% VAT rate may be applied until 31 December 2030 for construction work in progress for properties for which the building permit has become final on 31 December 2026 at the latest, the construction has been notified by 30 September 2024 based on a simple declaration or has been acknowledged by 31 December 2026 based on the Architecture Act.

Subsequent discount based on receipt

As of 1 July 2025, in the case of price reductions (discounts, reductions for other business policy purposes) granted after the transaction has been completed, the subsequent tax base reduction can be applied even if only a receipt (not an invoice) was issued for the transaction. The tax base reduction is conditional on a change in the data content of the receipt.

e- Receipt system

The launch of the e-Receipt system has been postponed to 1 July 2025.

Corporate Tax

Tax base correction - from 29.11.2024

To the extent that a Hungarian and a foreign person can reduce their tax base for the same set of facts due to different legal systems between countries, companies are obliged to adjust their tax base.  However, under the addition effective from 29.11.2024, double deduction of expenses is allowed, if it is made against income that is double accounted in the tax year or thereafter.

Depreciation write-off

The depreciation under the Accounting Act of land and plots of land used for the storage of hazardous waste can now also be deducted for corporation tax purposes. According to the taxpayer's choice, it can be applied for the first time for the tax year 2024.

Costs and expenses incurred in the interest of the company 

As from 1 January 2025, benefits provided free of charge (without repayment obligation) are considered to be expenses incurred in the interest of the company if the following conditions are met:

• the beneficiary is a professional sports organization in the field of spectacle team sport which generates at least 75 % of its turnover from sporting activities;

• the amount of the benefit does not exceed 1 per cent of the taxable turnover of the beneficiary for the tax year;

• the benefit is not provided under the previously known corporate tax base and tax relief;

• the beneficiary has a certificate issued by the sports organization with the legal requirements.

Tax reductions - from 29.11.2024

The eligibility for spectacle team sports benefits has been extended: taxpayers can now also provide benefits for the costs of operating sports property. However, the certificate of support will only be issued if no asset preservation measure has been applied to the eligible organization.

Small Business Tax (KIVA) - from 29.11.2024

As of 29.11.2024, the possibility of choosing the KIVA status again will be available in all cases where the taxable entity ceases to be taxable as a result of a merger or division in which there is no revaluation of assets, i.e. the assets are carried at book value (this also applies to beneficiary transformations). 

The taxpayer affected by the transformation may choose to become a small company taxpayer again within 15 days of the date of the merger or division, in which case the taxpayer becomes a small company taxpayer on the day following the date of the merger or division (previously, this was the day following the date of the merger or division).

Local taxes

Property tax

Exempt from property tax from 1 January 2025:

• storage buildings and structures (fertilizer storage, crop storage, granaries, stables, greenhouses) used for animal husbandry or plant production but not registered as such in the land register, on the basis of an official certificate issued by the competent agricultural administration;

• property classified as a monument and used as such in the year of acquisition and the three years thereafter, up to HUF equivalent to a maximum of 100 million euros.

Registration tax

From 1 January 2025, hybrid and plug-in hybrid vehicles and hybrid engines will not be exempt from paying registration tax.

From 1 January 2026, the registration tax rate will increase annually by the rate of inflation in July of the previous year. The tax rate will be published by the Tax Authority by 31 October of the year preceding the year in question.

Vehicle tax

From 1 January 2025, the vehicle tax rate will increase annually by the rate of inflation in July of the previous year. The tax rate will be published by the Tax Authority by 31 October of the year preceding the year in question. For the year 2025 until 15 December 2024.

Until 31 December 2026, hybrid and plug-in hybrid vehicles registered until 31 December 2024 will be exempted from the obligation to pay vehicle tax.

Company Car Tax

Until 31 December 2026, hybrid and plug-in hybrid vehicles put on the market until 31 December 2024 will be exempt from paying company car tax. 

The company car tax rate will apply from 1 January 2025:

From 1 January 2026, the company car tax rate will increase annually by the rate of inflation in July of the previous year. The tax rate will be published by the Tax Authority by 31 October of the year preceding the year in question.

Global minimum tax

The global minimum tax (Qualified Domestic Minimum Top-up Tax' or QDMTT) is a system whereby multinational groups of companies may be liable to pay additional tax on their excess profits in a given member country if the effective tax rate on their income in that member country is below the minimum level of 15%.

According to the Global Minimum Tax Act, which came into force on 1 January 2024, a domestic group member or its authorized local representative must file a tax return within 12 months of the end of the tax year. The deadline for filing, for the year 2024, is 31 December 2024.

The notification shall include:

• the identification data of the group members, 

• information on the overall corporate structure of the group, including the shareholdings of each group member in other group members,

• the classification of the group members, the proportion of additional tax which can be assigned to them.

A new regulation from 1 January 2025 is that global minimum taxpayers must declare and pay a recognized domestic additional tax advance (QDMTT advance) by the 20th day of the 11th month following the tax year in which the QDMTT is paid, i.e. for calendar year taxpayers, in the first case by 20 November 2025. The amount of the advance payment is equal to the total amount of the recognized domestic additional tax. In subsequent years, the deadline for filing the return is the 15th month following the tax year.

If the authorized local representative submits the advance return on behalf of all Hungarian group members, this return applies to all resident group members and therefore only one return needs to be submitted.

As a general rule, no late payment penalty, default penalty or tax penalty may be imposed in the event of incorrect calculation of the advance tax.

The QDMTT advance tax payment obligation does not apply to the additional tax payable by ultimate or intermediate parent companies in Hungary on their subsidiaries ('Income Inclusion Rule' or IIR). IIR is an additional tax on the profits of undertaxed group members, payable by the parent company, typically the ultimate parent company, if the country of the under-taxed group members does not also apply the QDMTT.

Extra-profit taxes

The following extra profit taxes will be removed from 1 January 2025:

• a special tax based on the turnover of the petroleum product producer;

• a special tax on energy producers;

• a special tax on balancing regulation service providers;

• the extra profit tax on pharmaceutical manufacturers and the additional tax on pharmaceutical manufacturers;

• the obligation for distributors of medicinal products and medical devices to pay;

• the obligation for manufacturing manufacturers to pay income tax on energy suppliers;

• the additional telecommunications tax;

• in the absence of a contract, the mining fee payable by the mining contractor;

• the contribution of airlines;

• the advertising tax will remain 0% in 2025. 

Retail Sales Tax

From January 1, 2025,the operators of the online marketplace (so-called platform) are subject to the retail tax. The platform operators are domestic or foreign-based organizations that provide an online marketplace for the sale of goods to a seller registered as a retailer on the platform.

According to the law, a 'platform' is a digital environment (software, website, application, mobile app) that provides access to users (sellers and buyers) in order to sell goods and receive payment for them.

The platform operator is the taxable person (and not the retailer) for sales made through the platform.

Duty

Inheritance duty

As of 1 January 2025, the inheritance of a listed residential building classified as a national monument and the inheritance of a dwelling in a listed building classified as a national monument will be exempt from inheritance duty.

Charge on the transfer of immovable property

From 1 January 2025, the rate of property transfer duty on motor vehicles and trailers will increase annually by the rate of inflation in July of the previous year. The rate will be published by the Tax Authority by 31 October of the year preceding the year in question; for the year 2025 until 15 December 2024.

Tax regulations, tax procedures

Data reconciliation procedure

As of 1 January 2025, a new data reconciliation procedure will be introduced to clarify minor discrepancies identified in taxpayer data reporting (previously these were resolved through a legal compliance investigation). A data reconciliation procedure will be triggered when a taxpayer and its business partner provide different data (e.g. online invoice reporting or intra-community sales). Upon request by the tax authority, a taxpayer must carry out the data reconciliation or indicate that the discrepancy is with its business partner within 15 days of receiving the request. If the company fails to carry out the reconciliation, it will be subject to a default penalty of HUF 300,000 from 1 January 2025.

Compliance investigation

In the context of a follow-up investigation, the tax authority may also check the obligations to register, declare and pay tax in connection with the arm's length price, irrespective of whether the declaration period has not yet ended.

Cancellation of tax number

As of 1 July 2025, the tax authority will cancel the tax number of a company that fails to comply with its obligation to submit a VAT summary statement, monthly tax and contribution returns or VAT returns within 90 days, despite being requested to do so. Previously, the 180-day deadline for completion was reduced to 90 days.

Opening a bank account

From 1 January 2025, Hungarian branches of foreign companies will also be required to open a Hungarian bank account.

Penalty

From the level of government regulations, fine rates have been incorporated into the Art.

Default fine rates applicable from August 2024:

• 400,000 HUF for natural persons, 1,000,000 HUF for non-natural persons, 150% for risky taxpayers;

• 2.000.000 HUF/undeclared employee;

• Non-compliance with the obligation to issue invoices or receipts 2.000.000 HUF;

• breach of obligation to keep documents 2.000.000 HUF.

From 1 January 2025, taxpayers will be able to replace the closure penalty ordered by the tax authority by paying a fine, provided that they waive their right to appeal against the decision to close the business and pay the default penalty as well as the penalty in the place of closure in full by the deadline set in the decision to close the business.

From 1 July 2025, a new system of default fines will be introduced. Employers will have a 15-day deadline to correct errors and missing information in the procedure to clarify the insured status, with a conditional default fine of HUF 100,000. Failure to clarify the status will result in a serious penalty.

TEÁOR (Hungarian activity classification)

The Hungarian activity classification (TEÁOR) will change from 1 January 2025. TEÁOR'08 will be replaced by TEÁOR'25.

 Main changes from TEÁOR’08 to TEÁOR’25:

• the tax authority will make the conversion, where codes are clearly convertible, by 31 January.  If a code has not been translated or the taxpayer does not agree to the translation, the taxpayer must initiate the change himself by 31 July. After 31 July, the previous TEÁOR classifications will be deleted.
• the categories have been extended from 21 to 22 branches.
• Section 'J' Information and communication (58-63) has been split.
• the letters indicating the branches have been changed from branch 'K' onwards to cover different activities (e.g. 'L' Financial, insurance and pension funding, 'M' Real estate.)
• 45 Sale and repair of motor vehicles, motorcycles and personal and household goods has been discontinued and moved to divisions 46-47, 95.
• In the future, the statistical classification criteria will no longer be the form/channel of sale, but the product sold. Thus, 47.9 Non-store retail sale in specialized stores and 47.8 Retail sale in specialized stores have been abolished.
• intermediary activities are recorded under a separate code within each of the sectors concerned

Along with the change in the TEÁOR, the related nomenclatures, such as the Activity Classification for Self-Employed Persons ("ÖVTJ") and the Classification of Products and Services ("TESZOR"), are also changing.

Other changes

Simplified annual report

The limits for the choice of simplified annual report are increased as follows:

• the criterion for the balance sheet total is increased from 1,200 million HUF to 2,000 million HUF,

• the annual net turnover criterion is increased from 2,400 million HUF to 4,000 million HUF,

• the criterion on the average number of employees during the financial year remains unchanged.

Consolidated reports

The criteria for the obligation to prepare consolidated reports are increased as follows:

• the criterion for the balance sheet total is increased from 6,000 million HUF to 10,000 million HUF,

• the annual net turnover criterion is increased from 12,000 million HUF to 20,000 million HUF,

• the criterion on the average number of employees during the financial year remains unchanged.

Auditing obligations

From 1 January 2025 the limit on the net turnover to be considered for exemption from the audit requirement will increase from HUF 300 million to HUF 600 million.

An audit is not required if the following two conditions are met: 

• the average annual net turnover (annualized) of the company in the two financial years prior to the financial year did not exceed 600 million HUF, and

• the average number of persons employed by the company during the two financial years prior to the financial year did not exceed 50.

Client Gate - Client Gate+ (Ügyfélkapu - Ügyfélkapu+)

On 15 January 2025, the Client Gate as an identification service will be deactivated, it means that from now on it will no longer be possible to access public websites and Tax Authority applications with a client gate. 

The document authentication service (AVDH), which has been reduced to identification, will be no longer available as of 31 December 2024.

Due to the removal of Client Gateway, everyone (individuals and legal entities) will have to switch to Client Gate+ by 15 January 2025.

Client Gate+ is an even more secure version of Client Gate with two-factor authentication. 

In practice, this means that when you log in to the Client Gate, you not only have to enter your username and password, but also a short-lived (changing every 30 seconds) 6-digit code that you can see in the mobile app.

To use the service, you must have:

• Client gateway registration,

  • A smartphone or tablet,

  • An authentication app,

  • In the absence of a smartphone or tablet, the TOTP.APP web authentication application.

Authentication applications:

- For Android phone: Google Authenticator or Microsoft Authenticator

- For iPhone phone. Microsoft Authenicator

The Client Gate+ can be used until 31 December 2025, after which only the DAP (Digital Citizenship Program) can be used. Natural persons can use both programs in parallel until that date, but those who register for Client Gate+ will no longer be able to use the former Client Gate. Anyone who terminates the Client Gate+ for any reason before 31 December 2025 can only use the DAP (re-registration is not possible).

Budapest, 8 January 2025

Gubicza Krisztina tax expert