Contents

• Personal income tax
• Social security, social contribution tax
• Value added tax
• Corporation tax
• Accounting Impact of Transfer Pricing Modifications
• Rules of taxation and tax administration
• Pillar 2
• KIVA – Taxation for small businesses
• Other taxes

Dear Clients, Dear Readers,

On 18 November 2025, the National Assembly adopted the autumn tax package, which primarily contains amendments for the year 2026, but certain provisions will enter into force from the day following their publication. The aim of the amendment is to facilitate the simplification of tax administration, to ensure compliance with the requirements of EU legal harmonization, and to reduce the tax burden of businesses.

The most important amendments are summarised below.

Personal income tax

Changes affecting flat-rate taxation

In the case of flat-rate sole entrepreneurs applying a 40% expense ratio, the expense ratio will increase in two stages: to 45% from 1 January 2026 and then to 50% from 1 January 2027.

Income from crypto transactions

The government has significantly changed the rules for income from crypto transactions between tax years, i.e. the system of tax equalization. Until now, the taxpayer aggregated all income and expenses achieved in a given tax year together to determine whether it had a profit or a loss. The two-year time frame will be abolished, and tax equalisation will become unlimited in time. The new settlement without a time limit can already be applied in the 2025 tax return.

Taxation of income from home support

The new regulation introduces the concept of home support, which can be provided to certain private individuals working in the public sector to supplement their own contribution required for the repayment of housing loans or the purchase of a home. The subsidy amount of HUF 1 million is taxed similarly to fringe benefits, and the public charges are not paid by the private individual, but by the organization that draws the subsidy from the State Treasury. The detailed conditions and eligibility rules are determined by a government decree.

Tax advance declaration to be simplified for mothers with several children

As of 1 January 2026, mothers with three children will also be able to indicate on their tax advance declaration on the family allowance if they wish to take advantage of the allowance provided for mothers raising three children. The same opportunity will be opened – in an ascending system – from next year for mothers with two children, who will gradually become eligible for the allowance.

As a further relief, the mother concerned may declare that the employer or payer treats the submitted declaration as a continuation tax advance declaration, which remains valid until a new declaration is made.

Compensation from credit institutions as tax-exempt income

Amounts refunded to bank customers who have fallen victim to phishing on the grounds of fairness are not considered taxable income. The tax exemption can only be applied up to the amount of the damage actually suffered. If the compensation provided by the bank exceeds the extent of the damage, the general tax rules still apply to the difference.

Social security, social contribution tax

The concept of a long-term agency relationship will be introduced, which refers to an agency contract that the employer expressly reports to the tax authority in this way. Unlike in the case of a traditional agency relationship, in this case, the employer is obliged to pay contributions monthly for the entire duration of the legal relationship. The contribution is based on the commission fee, but at least 30% of the prevailing minimum wage, and social security contributions and social contribution tax must also be paid on this minimum. The new category aims to simplify administration for those who work for a longer period of time with an agency contract. At present, each payment has to be notified and closed separately, which imposes a significant administrative burden on the principal, especially in the case of contracts lasting several months or years.

A Complex Legal Status Register (KJNY) is introduced, which will be a digital database where natural persons can access all their details with regards to their social security data.

From 1 January 2026, the social contribution tax base of full-time sole proprietors and partnerships will be harmonised with the social security contribution: the previous multiplier of 112.5% for the tax base will be abolished, therefore the tax base will be at least the minimum wage or the guaranteed minimum wage.

From this year, not only flat-rate taxpayers, but also sole entrepreneurs who opt for taxation based on entrepreneurial income will have to submit a quarterly return on social security contributions, indicating the amount to be paid on a monthly basis. The contribution for the quarter must be paid by the 12th day of the month following the current quarter.

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Value added tax

Changes affecting group VAT liability

The formation of VAT groups will become simpler: in the future, it will be sufficient for the group member to declare that their registration system is suitable for the clear, reliable and complete separation of internal and external transactions, and there will be no need to present the system in detail.

If the legal status of a representative of a VAT group is terminated, the group must appoint a new representative within 15 days and report this for the tax authority. If this does not happen, the tax authority will automatically appoint the member with the highest tax performance as a representative. Therefore it is not anymore possible that a VAT group will be dissolved because of that reason.

The law specifies the provisions related to the joint and several liability of VAT groups: in the future, group members will be liable not only for obligations under the VAT Act, but also in the event of a breach of them, in accordance with Tax Administratior Act.

VAT tax exemption threshold

In order to reduce the administrative burden of small and medium-sized enterprises, the annual income threshold for the tax-exempt income will be increased in three stages: HUF 20 million from 1 January 2026, HUF 22 million from 1 January 2027 and HUF 24 million from 1 January 2028.

Invoice reporting in VAT returns

In the domestic purchase report, the details of purchase invoice data will be extended: taxpayers will have to indicate the amount of VAT actually deducted in addition to the tax base of the invoice and VAT and not only the amounts mentioned on the invoice. Taxpayers who submit their tax returns through the eVAT system are exempt from detailed data reporting. The amendments will first have to be applied in the tax returns to be filed for the tax assessment period including 1 July 2026.

Corporation tax

R+D tax allowance

In the future, enterprises engaged in R+D activities in cooperation with higher education institutions, research institutes or the Hungarian Academy of Sciences (MTA) will only be able to claim 10% of their R+D costs as tax relief, in contrast to the previous rule, which allowed the total amount of costs to be taken into account as a tax allowance. At the same time, in the case of other R+D activities, the upper limit of the allowance was already set at 10% of the eligible costs.

Tax allowance for investments aimed at eliminating environmental damage

A new tax allowance can be applied to support investments that serve the elimination of environmental damage or other specific environmental objectives. The tax allowance can be used in the case of investments or renovations with a present value of at least HUF 100 million, for a maximum of six consecutive tax years. Its amount depends on the nature of the investment and the size of the eligible costs, but it may not exceed the HUF equivalent of EUR 30 million in total. The allowance can first be applied to investments started after 31 December 2025.

Accounting Impact of Transfer Pricing Modifications

It is not sufficient to show the transfer price adjustments (the difference between the applied and the arm’s length price) based on the transfer pricing documentation as a tax effect only in the corporate tax return, but it must also be recorded in the accounts. Therefore, with such a difference, the cost of the asset, the net sales revenue, and the value of the already accounted costs and expenses must be modified.

Rules of taxation and tax administration

Automatic cancellation of a tax number

The tax authority will automatically cancel the tax number if the taxpayer fails to report the legal representative applicable to it, or if it fails to fulfil its tax return obligations – such as the VAT summary statement, the VAT return, and the monthly tax and contribution returns – within 90 days of the statutory deadline.

The tax authority provides the taxpayer with an additional deadline of 30 days before the cancellation of the tax number, calling on the taxpayer to remedy the deficiencies.

After the cancellation of the tax number, it is possible to re-establish it, provided that the taxpayer certifies the restoration of the conditions of lawful operation. However, the right to deduct tax on purchases made in the period prior to cancellation is automatically extinguished in this case, which may result in significant financial disadvantage.

Automated decision-making in tax matters is also introduced, which will allow the tax authority to make decisions automatically if all the necessary data is available.

Pillar 2

Several new terms have been introduced in connection with the application of the Transitional CbCR Safe Harbour, such as the definitions of simplified covered tax, recognised country-by-country reporting and recognised financial statements, as well as the concept of simplified effective tax rate.  In addition, the rules of the transitional allowance for SBIE (Substance-Based Income Exclusion) have also been clarified, therefore for the 2024 tax year, the rate of on wage costs is 9.8%, while the rate of on tangible assets is 7.8%.

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KIVA – Taxation for small businesses

According to the change affecting KIVA, from 2026 the value of electronic funds, such as the amounts in the virtual finance accounts (like Revolut), will no longer have to be taken into account when calculating the tax base increase and decrease items related to the cash register.

The entry thresholds for KIVA will be modified: the upper limit of the number of employees will be increased from 50 to 100 people, and the maximum of income and balance sheet total will be increased from HUF 3 billion to HUF 6 billion.

The conditions for the termination of KIVA will change, the threshold for the transfer of income will increase from HUF 6 billion to HUF 12 billion, and the number of employees will increase from 100 to 200. The higher thresholds will apply to taxpayers who have notified the tax authority of their choice of KIVA status on or after 1 December 2025.

Other taxes

Based on the autumn tax package, the retail tax with a different rate will remain in place for motor fuel retail trade until 2026.

The new range limits for the retail tax have been set at HUF 1 billion, HUF 50 billion and HUF 150 billion. The modified range limits will be applicable to the 2025 tax year as well, therefore the retail tax for 2025 will have to be determined on the basis of the tax rates associated with the new range limits. Businesses that have made an overpayment as a tax advance are entitled to a refund of the overpaid amount.

According to the new rules, the member’s loan waived during the voluntary liquidation will be exempt from gift tax.

The current 0% tax rate of the advertising tax will remain in force until 30 June 2026, and for the year 2026, the tax advance will only be paid in half for the period between 1 July and 31 December 2026. Taxpayers engaged in advertising activities must register with the tax authority within 30 days, otherwise a fine of up to HUF 10 million may be imposed repeatedly. If the publisher of the advertisement fails to make a statement to the customer, he can also expect significant default penalties – even multiplying – in the future. In the event of a replacement of the notification or declaration, the tax authority will waive the most recent penalty and may reduce the previous ones.