Get free access to
Our legislation updates make it easy for you to keep on top of the latest changes affecting your business. Receive our articles, opinions, tips, industry news, country profiles, regional overviews and studies, latest events and even more, directly into your mailbox.
Check out our Newsroom to see what is included!
We will send you only relevant information we consider may be of your interest and treat your personal data in compliance with our Privacy policy and GDPR statement.
Unable to subscribe? Try this page.
The application of research and development tax incentives in Hungary is becoming an increasingly important factor for companies engaged in research and development. A Hungarian company can benefit from the available incentives even for the 2024 tax year, provided it meets the legal requirements and exercises its election right by the corporate tax return deadline.
To be eligible for research and development tax incentives in Hungary, a company must carry out basic research, applied research, or experimental development. This must be verified either through an expert opinion from the National Research, Development and Innovation Office (NRDI Office) or through other credible means.
Direct costs associated with projects qualifying as research and development activities must be recorded separately. These may include wages, materials used, depreciation of equipment, rental fees, and consultancy fees—all of which require appropriate documentation.
It’s advisable to start separating and documenting costs as early as the planning phase of the project so that comprehensive information is available retrospectively in the event of an audit.
In corporate income tax (CIT), direct research and development costs may reduce pre-tax profit, while in local business tax (LBT), the base may also be reduced by the direct costs of experimental development.
The new corporate research and development tax incentive available from 2024 can be claimed for up to 10% of the eligible costs and can be used to offset up to 100% of the corporate income tax due. It may also offer advantages over previous incentives. If the eligible costs cannot be fully utilized to reduce tax in the year they are incurred or in the three subsequent tax years—due to low tax liability—the unused portion of the tax incentive, under current regulations, may be refunded by the tax authority.
However, companies must choose between the new CIT incentive and the previous tax base reduction options, as they cannot be applied simultaneously.
Important: Unlike earlier schemes, the new CIT incentive allows for a refund of any unused benefit, whereas previously it was lost if the tax base was low. This can be especially advantageous for low-profit but research and development-intensive businesses.
Example: A software development company reports HUF 20 million in direct research and development costs in 2024. Based on the new incentive, it qualifies for HUF 2 million in tax relief but only owes HUF 1 million in tax. The remaining HUF 1 million is refundable.
If a company conducts research and development within its own operations, it may also claim a social contribution tax (SCT) incentive for its research and development employees. This incentive is 6.5% of the direct wages related to research and development activity and can be applied monthly. It may also be applied retroactively for the entire 2024 year through self-revision, provided the company has not yet claimed the SCT allowance.
If this allowance is applied, the wages (and the related taxes) of research and development employees for whom the SCT allowance was claimed cannot be deducted as direct costs from the CIT or LBT tax base.
It’s helpful to specify in job descriptions, timesheets, or work logs which research and development project(s) employees are working on. This makes accounting and claiming the allowance easier.
To safely benefit from research and development tax incentives, it is recommended to obtain an expert opinion from the NRDI Office to classify the project appropriately and to maintain precise and detailed records of all direct costs related to research and development activities. Proper documentation of employment contracts and job descriptions is also essential during tax authority audits.
Yes, there is no size restriction—any company subject to CIT and meeting the definition of research and development may qualify.
Yes, but the “no double funding” rule applies— incentive concerning the same cost cannot be claimed from multiple sources.
In summary, research and development tax incentives available in 2024 and beyond can provide significant support for Hungarian companies in financing their research and development activities, provided they comply with legal requirements and properly document related costs. This support system helps strengthen companies’ innovation capabilities and competitiveness in the market.
Get in touch with us! Our experts will guide your company and development project through the process of claiming tax benefits, potentially saving your business millions in taxes in Hungary.
About Accace
Accace is a proactive consultancy and outsourcing partner who bridges the gap between needs and solutions. Combining smart and streamlined technology with a holistic approach, we provide an all-round care to clients and consider their matters as our own. With over 800 experts and approximately 2,000 customers, we have vast experience with facilitating the smooth operation and growth of small to large-scale, global businesses.
About Accace Circle
Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 60 jurisdictions with more than 7,000 professionals, we support over 80,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 800,000 pay slips globally.
