Hungary

The corporate income tax rate in Hungary is 9%.

There are some sectors where extra sectorial taxes are applied besides the normal corporate income tax; however, there are no specific rates.

Credit institutions and financial enterprises pay an extra tax of 10% based on their adjusted pre-taxed profit. When the adjusted pre-taxed profit exceeds EUR 50 million, the extra tax rate increases from 10% to 30%

Distributors of investment fund units and investment funds pay a 0.05% tax based on the total yearly average of the daily net asset values of the funds.

Insurance companies are subject to normal and additional insurance tax payment obligations. The normal insurance tax base is the insurance fee, and the tax rate varies from 10–23% depending on the type of insurance product. Additional insurance tax is levied on insurance income; the tax rate is 3% until EUR 120 million and 14% above this threshold.

Energy traders and energy producers pay 31% extra profit tax based on their adjusted pre-tax profit.

Retailers are also subject to extra tax, which is turnover based. The tax rate is 0% up to EUR 2.5 million tax base, 0.15% between EUR 2.5 million and 128 million, 1% between EUR 128 million and 384 million, and 1% for amounts in excess of EUR 384 million. Platform operators are also subject to the retailers’ extra tax, but in their case the tax base is the sales turnover of products sold through the internet platform.

Advertisers are also required to pay an additional tax on advertising revenue exceeding HUF 100 million. The tax rate is 7.5%. Tax liability applies to advertisements disseminated for consideration:

• media services;
• press products predominantly published or distributed in Hungary in the Hungarian language;
• outdoor advertising media as defined in the Advertising Act;
• means of transport, real estate properties or printed matter; and
• the internet, predominantly in the Hungarian language or on Hungarian-language websites.

Currently the tax rate is reduced to 0%.

Hungary applies global minimum tax and applies qualified domestic minimum top-up taxation of Hungarian tax resident entities subject to global minimum tax.

Besides corporate income tax (9%), local business tax and innovation contribution tax qualifies as local covered tax. These additional two local covered taxes are not “classical” income taxes, the tax base is the turnover of the taxpayer reduced by certain items (costs of the goods sold, services purchased, subcontractor fees, material costs, research and development (R&D) direct costs). The tax rate of the local business tax is maximum 2% whereas the innovation contribution rate is 0.03%. The local business tax is collected not by the state tax authority but by the local municipalities. Municipalities have the right to set the local business tax rate below 2% or to refrain from introducing it.

Hungary obliges taxpayers subject to global minimum tax to pay Qualified Domestic Minimum Top-up Tax if their effective tax rate is below the required 15%.

Hungarian and foreign tax residents

Hungarian tax resident entities are subject to taxation with their worldwide income; however, bilateral tax treaties may exempt or limit double taxation. It is important to note that any non-resident whose principal place of business management is in Hungary shall be treated as resident taxpayer.

Foreign tax residents are subject to Hungarian corporate income tax to the extent that the relevant double taxation treaty allocates the right to tax to Hungary, or, in the absence of a treaty with the relevant country, the income is generated through a branch or from participation in a Hungarian real estate holding company.

Tax base

The tax base is the pre taxation profit of the taxpayer calculated in line with Hungarian accounting provisions or IFRS. Both trading income and capital gains are part of the accounting pre-tax profit. Tax base is determined by applying tax base increasing and decreasing items listed in the Corporate Income Tax Act to the pre-taxed profit.

The main tax base decreasing items are:

• tax losses carried forward up to 50% of the positive tax base of the respective year;
• tax depreciation;
• capital gains realised on reported participations (EU participation exemption regime);
• development reserves created for future fixed assets investments;
• dividends received;
• disbursement received in course of capital decrease or winding up of subsidiaries;
• 50% of proceeds generated by qualifying intellectual property (IP);
• development costs of protected monuments and real estate;
• qualifying R&D direct expenses; and
• capital gains from preferential share exchange.

The main tax base increasing items are:

• accounting depreciation;
• book value of sold or transferred fixed assets;
• 50% of the losses realised on qualifying IP;
• non-qualifying costs and expenses;
• computation of non-distributed assets of controlled foreign companies;
• remitted receivables and receivables written off;
• financial expenses exceeding the interest limitation rule; and
• losses realised on reported participations and on shares issued by controlled foreign company.

In accordance with the transfer pricing guidelines of the Organisation for Economic Co-operation and Development (OECD), Hungary applies transfer pricing rules to transactions between related parties. Taxpayers are free to decide whether they apply transfer pricing in their related party transaction, in which case the balance sheet and the profit and loss calculation already reflect the transfer prices, or to apply transfer pricing rules only as a tax base adjustment. Notably, if parties apply transfer prices in their related-party transactions, it is sufficient that prices applied in the related-party transactions are within the range of market prices. If parties fail to apply market prices when settling their accounts from the related-party transaction, and transfer pricing is applied by them only in their tax returns as a tax base adjustment item, then the market price applied for the tax base adjustment shall reach the median value. In Hungary parties must report their related party transaction, as well as the applied transfer pricing method in their tax return.

Hungarian transfer pricing regulations are unique in that, for transactions exceeding the annual threshold of HUF 150 million that are subject to documentation requirements, the transfer pricing documentation must be fully complete—including both the master file and the local file—at the time of filing.

There are certain tax incentives which allow taxpayers to reduce their cash tax payment obligations. The most common tax incentives are:

• SME tax incentive;
• film industry incentives;
• sports incentives;
• investment and development incentives; and
• research and development incentives.

Hungary applies VAT. Besides VAT Hungary applies excise tax for tobacco, fuel, energy and alcohol products.

In a business-to-business relationship, Hungarian tax law does not apply withholding taxes. Withholding taxation only applies to business-to-individual relationships, subject to any further limitations that a double taxation treaty may impose.

Hungary has implemented general anti-avoidance rules into national tax laws.

In particular, Act CL of 2017 on tax administration (the “Tax Administration Act”) declares in Article 1§ that taxation rights shall be exercised in line with their intended purpose. Any transaction the main purpose of which is to avoid or circumvent the provisions of a tax law will not constitute the exercise of rights in accordance with the intended purpose.

Article 2§ of the Tax Administration Act declares the substance over the form principle on the basis of which tax authority has the power to recharacterise a transaction for taxation purposes.

Article 3§ of the Tax Administration Act declares that transactions shall be treated by tax laws in line with the economic impact, and tax obligations are not affected by breach of or non-compliance with any other legal provisions.

Article 4§ of the Tax Administration Act declares that if, due to a mismatch between the provisions of international treaties, income is not taxed in any jurisdiction which may otherwise have the right to tax it, Hungary disregards the hybrid mismatch and will not exempt such income from domestic taxation.

Besides the general principles mentioned above, the Corporate Income Tax Act also contains general anti-avoidance rules. In Article 1(1) it is declared that any rule which results in the decrease of tax obligations (tax exemptions or tax credits) is applicable only to the extent the underlying transactions (series of transactions) are in line with the purpose of the respective tax benefit and the transaction itself is commercially and economically well founded. The applicability of preferential tax rules shall be proved by the taxpayer.

Besides the general anti-avoidance rules, the Hungarian Corporate Income Tax act includes an interest limitation rule, exit taxation rules and controlled foreign company rule.

Yearly tax audit plan of the Hungarian tax authority

The Hungarian tax authority publishes its audit protocol every year, allowing taxpayers to see in advance which sectors and which taxes will be the focus of tax audits. In 2026, the focus of the Hungarian tax authority will be on the following territories:

• audits to ensure completeness and correctness of tax data;
• detection of VAT carousels;
• targeted audits of high-risk taxpayers;
• sectoral audits of high-risk sectors; and
• multinational enterprises and large taxpayers.

The data completeness driven audits will focus on:

• data provided by online cashier machines;
• data of the online invoicing systems;
• data provided by the online road transportation monitoring system;
• international automated data exchanges; and
• transactions of Hungarian taxpayers with counterparties registered in tax purposes non-cooperative jurisdictions.

In detecting VAT carousel structures, the tax authority heavily relies on artificial intelligence to analyse the online invoicing data automatically uploaded to the tax authority and to identify fictive invoices. Companies issuing and receiving such fictive or suspicious invoices can be chosen for detailed tax audit.

In 2026 the following sectors will be in the focus of the tax audits:

• used vehicle trade;
• hiring of workers;
• wholesale and retail of electronic products;
• web shops, online platform operators;
• textile wholesale and retail;
• sale of fruit and vegetables and other agricultural products;
• construction works and sale of construction materials;
• hospitality and other touristic service providers;
• sectors with regular product imports; and
• traders and producers of excise products.

Our experience

In practice we see tax controversies deriving basically from VAT and from corporate income tax (CIT).

The vast majority (approximately 80%) of the Hungarian tax authority’s audit activities relate to VAT. Thanks to regulations introduced over the past decade, the tax authority has real-time access to the data on all invoices issued by taxpayers. This data—supplemented by tax return data and VIES verification data — form a data asset that enables the Hungarian tax authority to determine, through immediate risk analysis, where urgent audits are needed.

Regarding VAT, we can differentiate between carousel cases — which are always very complex, fact intensive and involve long-lasting audits and disputes — and other VAT-related cases. VAT carousels are identifiable in various sectors of the economy, such as online trade, wholesale trade of high-value goods such as smartphones, computers, food industry (sugar and oil, coffee), construction, manpower lending and others.

Other VAT-related cases can arise from mismatches of online VAT data, or from the VAT treatment of a special transaction. In recent years, the VAT treatment of activities on the borderline of VAT-exempted activities has been a focus of the tax authority, and cases have arisen in connection with the VAT treatment of insurance, insurance brokerage companies, as well as certain private health service providers. VAT is always a special attention point in real estate transactions, where controversies arise from incorrect implementation of real estate related VAT terminology, and administrative errors in the VAT status registration of the seller or the buyer.

In the field of corporate income taxation, we see the following major attention points:

• tax and accounting depreciation calculations;
• transfer pricing documentation and transfer pricing (re)classification of related party transactions;
• tax increasing and tax decreasing items, in particular R&D tax base reduction; and
• tax incentives.

A special type of corporate tax audit is the audit of tax incentives. Among these, the audit of a company’s development tax credit stands out, as the tax authority is required to audit this type of tax credit within three years of its first use.

General background

The Tax Administration Act defines two main categories of the supervision procedures initiated by the tax authority. The first category is the tax audit of tax returns, which focuses on the correctness of the tax base and the cash tax liability calculation of the submitted tax return. The second category is a so-called compliance audit which intends to investigate the performance of certain tax obligations by the taxpayer, or to collect data and information about the taxpayer or its partners, or validity of the transactions.

A tax audit may be started for all tax returns of the taxpayer (comprehensive tax audit), or may focus on specific taxes such as CIT, VAT or local business tax, and so on. The limitation period is generally five years from the last day of the year when tax return had to be filed.

A compliance audit may be issued to:

• supervise the timely and proper performance of certain tax obligations (calculation, reporting or payment of taxes);
• collect information to validate the data, facts and circumstances indicated in the tax returns of the taxpayers;
• supervise the genuine nature of certain economic transactions;
• collect data for the purpose of data base building; and
• supervise proper performance of transfer pricing related obligations.

The compliance tax audit does not turn into a normal tax audit automatically. However, on the basis of the information received the tax authority may conclude that it is worth starting a tax audit.

In addition to comprehensive and compliance audits, Hungary has a special procedural mechanism known as the “support procedure”. Rather than conducting a formal audit, the tax authority identifies anomalies in the available data and requests that taxpayers voluntarily review their tax returns and submit self-assessments.

Participation in the procedure is voluntary for all taxpayers. If they accept the discrepancy identified by the tax authority and correct their original tax return, the procedure is concluded successfully. In all other cases, the procedure is concluded without result.

Tax audit procedure

The tax audit always starts with the delivery of the engagement letter of the tax auditors. The delivery is made electronically or personally. For companies, every procedural step must be taken electronically. Individuals are entitled to use a not-electronic form to connect to the tax authority during the procedure. A self-revision can be submitted by the taxpayer up to 15 days before the handover of the engagement letter. Once the audit has been started the taxpayer cannot revise the period and the taxes subject to the audit.

The general deadline of a tax audit is 90 days, which can be prolonged by an additional 90 days (three times). The audit period for large taxpayers is 120 days. In extraordinary circumstances the chief of the national tax authority can prolong the audit deadline by up to 365 days.

Following the COVID-19 pandemic, comprehensive tax audits have become document-based and files are submitted electronically. The personal interactions are very rare. During the audit, the burden of proof is on the tax authority. The tax authority may collect and use any evidence. In course of the tax audit, it has the right to request documents, accounting files, invoices, any materials necessary to prove the correctness and completeness of the tax returns. The tax authority may question witnesses, request statements from contractual partners and conduct audits at the premises of contractual partners. In addition, the tax authority may investigate the premises of the taxpayer. If special knowledge is necessary to assess the R&D nature of the activity carried out by the taxpayer, the tax authority may hire experts.

The tax authority has the right, but not the obligation, to issue a decree during the audit procedure in which the taxpayer is requested to deliver all relevant documents and provide all necessary information and fact to the tax authority which are necessary to evaluate the audited tax returns. If such a decree is issued, the taxpayer will not be entitled to use any new or additional evidence not submitted to the tax authority during the audit process in the course of any eventual appeal.

The tax authority summarises its factual and legal findings in documents called minutes. The minutes are delivered to the taxpayer or its representative electronically. The taxpayer has 30 days to reply to the minutes. After the receipt of the reply, the tax authority has 60 days to issue the first-instance decision.

In the first-instance decision the tax authority has the right to accept the originally submitted tax return or to amend the tax return and apply the taxation consequences of such amendment. In such a case, the tax authority will not only establish the difference of the tax payable but will also calculate a late payment interest and will apply a penalty. The default penalty is 50% of the tax difference (tax shortage) between the original tax return and the amended tax return. In the case of fraudulent dealings, the penalty can be 200% of the tax difference. If the taxpayer subject to audit is a reliable taxpayer the penalty is reduced to 25% of the tax difference.

Appeal and other remedy within the tax authority

A first-instance decision is subject to appeal; this can be submitted within 30 days after the receipt of the decision. If the taxpayer submits a declaration that they waive the right to appeal and settle the taxes and the late interest charge within the appeal deadline, then the penalties are reduced by 50%.

The appeal must be submitted to the first-instance tax authority, which will forward it to the Appeal Directorate of the National Tax Authority within 15 days. The second-instance tax authority has 60 days to issue its decision.

The second-instance tax authority has the right to repeal the first-instance decision and order a new tax audit procedure. In the repeated audit the instruction given by the second-instance tax authority is binding on the first-instance authority.

The second-instance tax authority may also amend the first-instance decision. It may also approve in whole the first-instance decision.

Besides the normal appeal procedure, the taxpayer may request a so-called supervision review (felügyeleti intézekdés) from the supervisory tax authority and the ministry if the final and binding decision is unlawful. This request may be filed within 12 months after the availability of the final decision. Judicial review of the second-instance decision does not exclude a supervision review; however, the supervisory tax authority or the ministry may reject the application for this reason. If, as result of the supervision review, the original decision is amended or repealed, this has to be announced in the pending court procedure, and plaintiff (taxpayer) has the right to amend or rescind its claim before the court.

Enforceability of the decision

The second-instance decision is final and binding and becomes enforceable by the tax authority. Taxpayers have the right to request payments in up to 12 monthly instalments. Private person taxpayers may ask for the partial release of the cash tax liability; legal persons are not entitled to do so.

If judicial review is requested from the court against the second-instance decision, the taxpayer may request the court to suspend its enforceability. To submit such a request, the taxpayer has to evidence by accounting records that the performance of the payment obligation would cause irreparable harm to the taxpayer.

Judicial review

The taxpayer is entitled to request judicial review of the second-instance decision within 30 days from the receipt. The timing of the court procedure varies from nine months to one and a half to two years. The defendant in the case is the second-instance tax authority.

There is a possibility of requesting that the national court refer a case for preliminary ruling to the European Court of Justice (ECJ), if the underlying tax question requires the interpretation of EU law. In practice, VAT-related cases and cases where the EU law conformity of certain national extra taxes or sectorial taxes arise have a realistic chance of being referred by the court to the ECJ.

The court has the right to amend the decision of the tax authority, repeal it, and, if necessary, order a repeated first or second-instance procedure. The court may also uphold the decision of the tax authority.

The court decision is final and no further ordinary appeals are available. However, if the court decision is dealing with fundamental issues, involves breaches of material procedural rules, or is clearly against previous rulings of the High Court of Justice (Kúria), either the tax authority or the taxpayer may submit an extraordinary appeal to the Kúria.

Self-revision triggered tax audit

Tax disputes are usually driven by the tax audit initiated by the tax authority. However, taxpayers may also trigger disputes by submitting a self-revision of previous tax returns. If the tax authority is not in alignment with the self-revision, they may initiate tax audit.

There is a special category of cases in which, if the taxpayer believes that the tax laws are not in compliance with the constitutional regulations, or the laws of the European Union or the applicable international treaties, the taxpayer may submit a self-revision and establish their tax obligations in accordance with its legal position. In this case, the tax authority delivers a decision — without any previous tax audit process — to the taxpayer within 15 days and the taxpayer has the possibility to seek the above remedies against such decision.

In Hungary, there is no arbitration forum or alternative dispute settlement mechanism between taxpayers and the tax authorities.