The most significant change in corporate taxation is that the institutional system of Tax Corporation is introduced. Just as it is the case with group VAT.

The most important conditions for corporate taxation are:

  • affiliated business relationship based on a voting right of at least 75% of the taxpayers wishing to participate in the group,
  • same accounting system,
  • same balance sheet date and date,
  • same book-keeping currency.

One of the significant advantages of the new regulation is that the tax base of group members with a negative tax base in the respective tax year, can be offset against up to 50% of the tax base of members with positive tax base, which will result significant savings. For the establishment of group taxation, all the respective parties for the first time shall apply between 1st of January, 2019 and 15th of January, 2019; hence quick reaction time is needed, as the communicated deadline is peremptory.

Based on the new interest deduction limitation rules, the net financing costs of 30% or 939.810.000 HUF for the period before interest payment, taxation and depreciation were recognized for interest deduction. Unused interest deduction capacity may in some cases reduce the tax base for the following years.

Exemption from the classification as a controlled foreign company will only apply to active services and in addition to that the automatic exemption of listed stock exchange companies will also be terminated.

Supporting team sports is complemented with the possibility of subsidizing the costs of running a sports recreational property.


The Act offers the possibility to automatically apply for 50% rate for renting a car when the rented car is used for both economic and private use. If a higher proportion of commercial use is justified, a corresponding deduction rate may be applied.

As of January 1st, 2020, the sales tax on new residential property will again rise to 27%. The new regulation makes it clear that the 5% VAT rate can still be applied to the sale of residential property if the building permit or the declaration about the building was made before 2nd of November 2018.

The threshold for tax exemption entitlement rises from the current 8 million forints to 12 million forints. Thus, the subject-matter of the tax exemption of VAT and KATA’s electoral limit is the same.

The law governs taxation related to the transfer of single-use vouchers. Tax-pay obligations arise even after the free assignment of single-use vouchers when the taxpayer was subject to a right of deduction in connection with the purchase of the voucher.


The most significant change is that the tax incentive scheme, which is reinforced by the social contribution tax on R & D workers is significantly wider.Based on the Act of the new Szocho law, if the enterprise carries out its R & D activity as its core or principal activity or its related activities, 50% of the co-payment on the wage cost accounted for as direct costs of R & D can be enforced as a tax allowance. The wage costs thus taken into account – of course – can no longer be deducted from the corporation tax base. As from 1st January 2019, the personal and group risk insurance concluded by the paying agent (employer) is taxable. In the case of group insurance, the proportion of the insurance premium that is proportional to the private individual is the taxable insurance premium. Where the proportion of individuals cannot be determined by the above proportionality, the insurance premium would be subject to tax as a certain defined benefit and payer tax.

Effective from 2019, the employer’s contribution to the voluntary mutual fund and the employer’s donation would be considered as income from the employment status, after which the employer’s deduction from the gross amount of the employer’s subsidy should be deducted by the employer. There is no tax advance for the voluntary mutual insurance fund that is taxable for other incomes and it is payable by the date of the declaration.

The tax exemptions of the non-repayable employer’s allowance for housing purposes cease to exist, but there is no need to establish an interest-benefit income when the employer provides a worker with housing loans under certain conditions.


The KIVA requirement of the expected amount for receipts, receivables, and the balance sheet total (small business tax) changed from 500 million HUF to 1 billion HUF as of December 1st, 2018.

In the event that the taxpayer transfers from the scope of the corporation tax to the taxation of subsidiaries (KATA), the amount invoiced on the basis of the supply of goods and services by the company during the period of corporation tax would be a corporation tax, irrespectively of the date of delivery.


The foregoing summary is intended to raise awareness and does not constitute legal advice.

If you have any questions or need further information, please do not hesitate to contact us.

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