The tax changes in Hungary from 1 January 2025 are significant, ranging from personal income tax to corporate tax and various sectoral taxes, including procedural rules. Below is a summary of the most important changes that will be with us from the New Year.
The tax changes in Hungary are mainly regulated by Act LV of 2024, which was promulgated on 28 November 2024.
Personal income tax (PIT) tax changes in 2025
Tax Benefits
The amount of the family tax allowance will increase in two stages from next year, first to one and a half times the current rate, and then to twice the current rate from 2026 (the figures below are tax rates, technically the allowance is a tax base allowance that can be claimed from the tax base):
- From July 1st, 2025
- for 1 dependent: HUF 15 000 per month
- for 2 dependents: HUF 30 000 per month
- for 3 dependents: HUF 49 500 per month
- For a dependent who is permanently ill or seriously disabled: +HUF 15 000 per month
- From 1st January, 2026
- for 1 dependent: HUF 20 000 per month
- for 2 dependents: HUF 40 000 per month
- for 3 dependents: HUF 66 000 per month
- For a dependent who is permanently ill or seriously disabled: + HUF 20 000 per month
It is important to note that from 1 January 2025, the family allowance, as well as the allowance for young people under 25 and first-time married couples, will be available only to citizens of the European Economic Area (EEA) and non-EEA neighbouring countries, i.e. not to citizens of other third countries.
Fringe benefits and certain defined allowances
The system of the Széchenyi Pension Card (SZÉP card) is undergoing significant changes:
- New pocket: a new sub-account called “Active Hungarians” will be created, which can be used for services related to active spending. Employers can transfer up to HUF 10 000 per month to employees’ SZÉP cards for this purpose.
- Increasing budget: the annual budget will increase from 450 000 HUF to 570 000 HUF, in view of the Active Hungarians’ pocket. It is important to note that the annual budget for the general pocket will remain unchanged at HUF 450,000
- Home renovation: 50% of the amounts on the card on the day of January 1st 2025, and transferred in 2025 will be available for home renovation.
In addition, from 2025, housing allowances that can be used to pay the rent of a dwelling or to repay a housing loan will be considered as fringe benefits. However, this allowance can only be granted to workers under 35 years of age, up to a maximum of HUF 1.8 million per year (HUF 150,000 per month).
For both the housing allowance and the SZÉP card, once the above limits have been exceeded, the income will be taxed as a so-called “specific defined benefit”, i.e. the tax burden will be higher than for fringe benefits.
Tax-free benefits and income
The new tax package also widens the scope of tax-exempt income:
- The cancellation of student loan debts linked to having children and the amount of the employer’s allowance linked to the repayment will be tax-free.
- The use of voluntary mutual pension savings for housing will also be tax-free in 2025.
- Sports-related tax exemptions have also been included in the package, so the tax exemption will also apply to the free use of sports facilities and equipment maintained by the payer, as well as to the free use of tickets for certain key sporting events, national events as a representation and business gifts.
- Zoo admission: as with cultural admission, from 2025, zoo admission and passes will be tax-free, up to the amount of the minimum wage per year.
- Recycling fee: the recycling fee (within the DRS) will be tax-free for private individuals.
- Listed properties: income from the sale of listed properties after 3 years will be tax-free if the owner has renovated the property in accordance with the listed building preservation regulations (restoration of the listed building) and has an official certificate to this effect.
- Energy savings: retroactively, from 1 January 2024, income related to certified energy savings, such as income received for investment or retrofitting, will become tax exempt.
- Damages, compensation, indemnity, damages, compensation for injury, amounts received in satisfaction of pecuniary loss – all of these are exempt from tax, provided they are not substitutable for income. A further condition is that the damage payment cannot be tax exempt if the parties agree on its amount out of court.
Tax changes in Hungary on interest income in 2025
The provisions on the place of accrual of interest income have been clarified, providing precise guidance on the taxability of such income for Hungarian tax residents and non-residents.
Contribution of intellectual property – tax exemption
To support innovation and help start-up businesses, the private owner (i.e. the original rightholder) of an intellectual property right will be exempt from tax on the supply of the product to the company from 2025.
Changes affecting private accommodation
An earlier amendment to the Trade Act extended the definition of private accommodation to include dwellings, holiday homes and now also buildings of economic purposes suitable for human habitation. This change has also been incorporated into the VAT Act, which revises the flat-rate taxation of those engaged in the business of providing catering services.
From 1 January 2025, flat-rate taxation will only be optional if an individual carries on the activity of providing private accommodation in up to 3 properties owned or beneficially occupied by him/her. In the case of more than three properties, the tax liability will be met according to the rules applicable to self-employment income.
In order to approximate the tax playing field between private accommodation providers and hotels, the annual rate of the flat-rate tax will be increased.F rom 1 January 2025, the annual amount of the tax per room will increase to HUF 150,000 in municipalities where the number of guest nights exceeded 2 million in the second year preceding the year under review, while it will remain HUF 38,400 in municipalities where it did not reach this level.
The Tax Office will publish a list of municipalities affected by the higher tax burden on its website by 31 January each year (by 15 January in 2025).
Tax changes for flat-rate taxation in 2025
From 2025, the number of contractors eligible to apply the 80 percent cost rate will be extended and postal intermediaries will also be able to opt for it. In addition, from the new year, the activities of contractors eligible for the 80 percent cost rate will be defined by law on the basis of the activity codes (“ÖVTJ”).
Changes to the social contribution tax (SZOCHO) in 2025
- Long term investment accounts (TBSZ in HU): if the TBSZ is broken within 5 years, social contribution tax is payable on the capital gains (with no upper limit):
- 13% if un-locked within 3 years, while
- 8% in case of un-lociking between 3 and 5 years
- Labour market entrants’ benefit: from 2025, employers can reduce the social contribution tax base by the amount of the minimum wage for 1 year instead of 2 years, and by 50% of the minimum wage for the following 6 months.
- Vocational education and dual training: tax credits for this will also be restricted from 2025.
Corporate tax changes in 2025
- Tax-base corrections:
- As of 29 November 2024, double deductions of costs and expenses can be recorded as a deduction against double deducted income.
- The depreciation under the Accounting Act of land and plots of land used for the storage of hazardous waste will be deductible for corporate tax purposes for the tax year 2024.
- Eligible costs will be all free allowances granted to a professional sports organisation operating in the field of spectator team sports if at least 75% of its turnover is derived from sports activities. An additional restriction is that the benefit cannot exceed 1% of the grantor’s turnover, is not provided under a tax base or tax credit, or is properly certified.
- Tax benefits:
- In the field of support for spectator sports, a new item will be added to support for the operation of sports facilities, which will require an additional justification of support.
- For the R&D tax credit (a new type of benefit introduced in 2024 alongside the basic tax credit), a clarification has been made: the benefit is applicable to eligible costs of projects started from 1 January 2024.
Value added tax (VAT) changes in 2025
- On M forms attached to the VAT returns, data on invoices received must be provided in HUF instead of the current HUF 1,000.
- In the case of a foreign place of supply, domestic taxpayers may exercise the right of deduction if the transaction would be deductible even if it were carried out in the domestic territory.
- VAT exemption for international transactions – the rules of the VAT Act have been amended, so that international VAT exemption can also be applied to transactions carried out abroad and to distance sales, on the basis of a separate declaration, provided that the taxpayer meets the necessary conditions (EU aggregate or national thresholds). The one-stop-shop system for imports is not applicable.
- The 5% tax rate will remain in force for new construction until the end of 2026, and for construction projects that are in progress until the end of 2030, within the limits set.
- Domestic reverse charge applies to sales of natural gas between taxable traders.
- A tax base reduction will also apply on the basis of Nyugta from July, so it will not be a condition (discounts, rebates, other business discounts) that an invoice has been issued for the transaction.
- The introduction of e-Receipt (e-Nyugta) is postponed to 1 July 2025.
Global minimum tax changes in 2025
- The details of the local representative’s reporting obligations are also included in the amendment, and the details and qualification (additional tax share) of the group members must be provided in the notification.
- The QDMMT advance return and payment obligation (recognised domestic additional tax advance) is payable by group members by the 20th day of the eleventh month following the end of the tax year. For a designated local agent, a single return must be filed for all domestic group members.
Other sectoral and extra-profit taxes
- Some extra profit taxes are cancelled for good.
- Advertising tax will be suspended for another year, leaving the tax rate at 0%, and the airline levy will be phased out from the New Year.
Retail sales tax
The increased rates will remain in place for retail tax, and platform operators will also become liable from 1 January, regardless of whether they are domestic or foreign. Obligated platform operators are those entities that provide online marketplaces for retail sellers.
Under the amendment, platform operators will become liable to pay tax on the aggregate amount of net sales of goods sold through the platform. The taxable person in respect of the retail activity carried out through the platform will therefore be the platform operator, not the retailer. The law contains a number of detailed rules on the calculation of the taxable amount and, independently of this, provides for the reporting obligation of the retailer (who sells via a platform).
Financial transaction tax
The previously introduced rates have been raised to the level of the law, so the higher rates will continue to apply.
Changes in local taxes in 2025
- Monuments will be exempt from building tax in the year of acquisition and for the following 3 years up to a maximum grant of €100 million.
- Storage buildings related to livestock and crop production will also be exempt if the relevant official certificate is available.
- Special economic zones will disappear.
Environmental product charge changes in 2025
The environmental product charge (EPC) will be abolished from 1 January 2025 for products that are also covered by the EPR (extended producer responsibility). Although technically the rates of product charge in these cases were already zero, from January there will no longer be any obligation for taxpayers to register and declare them.
It is important to note that for the 4th quarter of 2024, the 2024 rules still apply, i.e. data on dual-obligation items must be provided accordingly.
The tax authority will ensure the cancellation of the registration of the product scope affected by the EPR in the product fee system ex officio.
Liabilities related to motor vehicles
- The zero rate and tax rebate for hybrid and plug-in hybrid vehicles will be abolished in the context of the registration tax. From 2026 onwards, the registration tax rate will increase by the rate of inflation (July of the previous year).
- The car tax will also be indexed to inflation from 2025, with the rate of increase to be published by the NAV. Hybrid and plug-in hybrid vehicles will be exempt from the tax until the end of 2026.
- The company car tax rate will increase significantly from 2025, and from 2026 onwards, all rates will also be indexed to inflation. Hybrid and plug-in hybrid vehicles will also be exempted from company car tax until the end of 2026, but not afterwards
Duty changes in 2025
- Inheritance tax is abolished in respect of the inheritance of a listed residential building and the dwelling it contains.
- The reversionary transfer tax (including the free acquisition tax) on the acquisition of motor vehicles and trailers will increase by the rate of inflation, according to a statement by the NAV.
- The fees for civil proceedings will be lower in some cases to ensure access to justice.
Procedural rules
- A new procedure will be introduced from 2025 as a data reconciliation procedure, which will allow the NAV to conduct a specific procedure in case of divergent data reporting, instead of the previous compliance investigations. The taxpayer will be obliged to carry out the data reconciliation within 15 days of receipt of the notice, using the electronic interface designated for this purpose. If the taxpayer fails to do so, a default fine of HUF 300,000 will be imposed.
- The scope of the compliance assessment will be extended, in particular with regard to transfer pricing cases, to include the possibility to verify arm’s length price record-keeping and document retention obligations and to examine documents.
- Online hearings will also be possible in future in tax authority proceedings.
- The increased default fines will be raised to the level set by law, i.e. HUF 400,000 for natural persons and HUF 1 million for non-natural persons. In the case of failure to declare employment or to issue invoices and receipts, or to keep documents, the maximum fine will be HUF 2 million.
- It will be triggered by the payment of a default penalty instead of closure of the business, but only if the taxpayer waives its right to appeal against the decision to close the business.
- From 2025, the grace period will be reduced to 90 days instead of 180 days for the recapitulative statement and the monthly tax and contribution return before the cancellation of the tax number.
- Employers can also request the authorities for the foreign worker’s tax identification number in the case of a third-country worker.
- The Tax Office will also check the compliant registration of seat service providers.
- In the event of the termination of a group CIT (corporate income tax) subject, there will be 90 days to submit the final return.
- Branches will also be required to open a cash account from 2025.
