A summary of legislative changes in respect of certain duties and taxes entering into force between August and October 2024SUMMARY OF TAX LAW CHANGES FOR 2025

28/Feb/2025

I. Changes to corporate tax

As of January 1, 2025, the list of expenses incurred for the benefit of the business activity has been extended. Since the beginning of the year, it includes, and can therefore be considered as an item reducing pre-tax profit up to a maximum of 1% of the donator’s turnover for the tax year.

• grants and benefits donated without the obligation to repay;
• funds permanently transferred;
• the book value of assets transferred without reimbursement

The tax advantage is intended to support spectator team sports, and the conditions for benefiting from the advantage have been set by the legislator in accordance with this purpose. In this context, the range of legal titles for the support of spectator team sports has been extended to include costs linked to the operation of sporting immovable property. The following are to be considered as spectator sports: football, handball, basketball, water polo, ice hockey and volleyball.

II. International tax exemption in EU countries

As of January 1, 2025, the Community Special Scheme for Small Enterprises was introduced, which will significantly facilitate the administration of the Community Value Added Tax (hereinafter: “VAT”) exemption for small enterprises. Accordingly, the exemption from VAT will now be available not only for domestic transactions but also for transactions carried out abroad, as opposed to the previous regime, which stated that small businesses could only benefit from the exemption in the Member State of the European Union in which they were established for economic purposes. The international exemption will be available based on a specific legal declaration. The international exemption can be opted for if the taxable entity’s sales do not exceed the thresholds set by the EU Member State (which vary from one Member State to another) or the EU-wide limit of EUR 100,000 per year. In Hungary, the tax exemption threshold is HUF 18 million.

III. Reduction of the VAT base regarding post-contractual rebates

From July 1, 2025, after the performance of a contract, discounts granted retrospectively and not in view of the termination or modification of the contract (e.g. discounts) will be eligible for a retrospective reduction of the VAT base based on the receipt issued after the transaction. However, to qualify for a tax base reduction, the data content of the receipt must be amended.

IV. The new regulations related to the VAT

The VAT on newly built apartments will remain at 5% instead of the generally applicable VAT of 27% until December 31, 2026. The reduction will be applicable to newly built apartments (up to 150 m²) and to family houses (up to 300 m²). The deadline of December 31, 2026 applies to obtaining a building permit or, in cases where it is sufficient to make a notification on the construction, to obtain the official acknowledgement of the notification.

V. Implementation of the e-Receipt system

The e-Receipt system will be implemented from July 1, 2025. The e-receipts will be issued electronically by means of “e-cash registers”. The issuance of e-receipts is initiated by the customer via an application. After verification, the e-receipt is immediately forwarded to the National Tax and Customs Authority (“NAV”). At the same time, the buyer can download the e-receipt via the application. The application also stores the e-receipts issued for previous purchases. The application is protected by an appropriate data protection system for the data of the purchases, so that the data of the purchases cannot be disclosed to unauthorised persons. At the request of the customer, a paper copy of the e-receipt shall also be provided.

VI. Tax-advantaged fringe benefits

From January 1, 2025, the range of tax-free and tax-advantaged fringe benefits has been extended.

1. Housing benefit

Employers may grant a housing benefit of up to HUF 1.8 million per year in the form of a fringe benefit to employees under the age of 35, subject to the obligation to provide information on the said benefit. The housing benefit may be granted either based on a housing rental contract or a housing loan contract.

2. Extension of the use of SZÉP card

The use of SZÉP card (“Széchényi Leisure Card”) has been extended to include a pocket called “Active Hungarians” under the Active Hungarians Programme. The new SZÉP card pocket aims to promote an active and healthy lifestyle among employees, with a maximum annual benefit of HUF 120,000 as defined by the government decree. The maximum annual amount that can be transferred to the SZÉP card has been increased from HUF 450,000 to HUF 570,000 from 2025. After this amount, the employer is liable to pay a tax of 28%.

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Given the many detailed rules in the tax legislation, our above summary only covers the main features of the most important changes. A detailed analysis of the rules is beyond the scope of this newsletter; thus, it is only intended to raise awareness and does not constitute legal advice.