29/Sep/2025
In addition to the introduction of the e-Registration of Real Estate (’E-ING’), the rules on the jurisdiction of Land Offices also changes, as instead of the previous system of Land Registries based on territorial jurisdiction according to the location of the real estate, Land Offices have national jurisdiction, that means that any Hungarian Land Office is entitled to decide on every application for land registration submitted via electronic filing. The applications shall be filed directly with the electronic system by law firms, and the Land Office to which the case is automatically assigned by the electronic system will handle the applications. Once filed, the application data are checked immediately by the electronic system and the application is only accepted by the Land Office if the necessary data have been correctly filled in by the legal representative.
The new regulation also shortens the duration of the land registry procedure in many cases, allowing for the possibility of a summary procedure or automatic decision making, which can be completed in a much shorter time. The previous general deadline of thirty days is shortened, and in case of automatic decision making, the whole procedure can be completed on the working day following the filing of the request. From now on the E-Land Registry is also be linked to other publicly certified registers, so that in many cases the necessary data can be obtained automatically, reducing the administrative burden on individuals.
The linking of publicly certified registers also has the obvious advantage that the data in the land registry can be updated automatically, without the need for a separate registration procedure. Company data in the Land Registry (e.g. change of company name, change of registered office, etc.) and the changing of the address of individuals are transferred from the Address Registry and the Company Registry without any further procedure and without a specific decision adopted by public authorities. Furthermore, the Courts automatically send a notice of the commencement of certain litigious proceedings concerning the real estate and the Land Office then register the data on the litigious proceedings in the Land Registry without any further application.
The scope of the data that can be obtained from the Land registry also changes, so only the name, year of birth and address of natural persons are visible on the title deed, and the birth name and mother’s name of the natural person are not publicly available. The method of accessing the data also changes, since, while the content of the title deeds and maps continues to be accessible to anyone, the natural person making the request has to indicate the purpose of the request and undergo a prior identification procedure.
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This summary is intended to raise awareness and does not constitute legal advice.
If you have any questions or need further information in connection with the above, please do not hesitate to contact us.
14/Apr/2025
The new Hungarian “Cybersecurity Act”, which entered into force in 2025, brought significant changes to the regulation of cybersecurity in Hungary.
In accordance with the relevant provisions of the Cybersecurity Act, any legal person or unincorporated entity may be subject to the obligations set out in the Cybersecurity Act. For each legal entity, it is the responsibility of the directors of that legal entity to identify whether that legal entity is subject to the Cybersecurity Act. If the answer to this question is yes, then it is also the responsibility of the directors of that legal entity to determine whether the entity qualifies as an “essential” or “important” entity under the Act.
Entities are classified as “essential” in particular:
- each major economic entity under majority state control,
- legal entities which, by virtue of the services they provide, are considered critical to the functioning of the state, society and the economy,
- qualified trust service providers, regardless of their size (these providers provide and store digital certificates that enable the creation and validation of electronic signatures) and top-level domain name registries,
- DNA-providers, as well as
- legal entities that carry out an activity under Annex 2 of the Cybersecurity Act (e.g., in the subsector of electricity, public transport or water utilities) – and are at least a medium-sized enterprise.
The entities that are classified as “important” by law include legal persons that:
- are service providers and organisations operating in high-risk or risky sectors whose disruption of service could have a significant impact on public order, public safety or public health,
- processing for an essential or important organisation; furthermore
- they are engaged in an activity listed in Annex 3 of the Cybersecurity Act (for example, in the food production, waste management or chemical manufacturing sectors).
The “essential” or “important” entities concerned must notify the Authority for the Supervision of Regulated Activities (hereinafter: “the Authority”) and apply to the Authority for registration. Entities that were already registered by the Authority under the previous Cybersecurity Act in 2024 do not need to make a new notification. However, all entities registered with the Authority were required to notify the Authority by 15 February 2025 of the list of EU Member States in which the said entity provides services.
Entities subject to the Cybersecurity Act are also required to classify the data they handle and to classify the electronic information systems they use to ensure that the information system and the data and services it handles are protected in a manner commensurate with the risks.
Any entity that is subject to the Cybersecurity Act must enter into an agreement with a cybersecurity auditor listed in the Authority’s register within 120 days of registration. If the entity concerned has already started its operations before 1 January 2025, it must carry out its first cybersecurity audit by 31 December 2025. A covered entity that commences operations after that date shall conduct a cybersecurity audit within 2 years of its registration. The cyber security audit shall be repeated every two years.
In the event of non-compliance with the obligations laid down in the legislation, the Authority is entitled to impose the following sanctions on the body concerned which has committed the infringement:
- the Authority first issues a warning to the offending organisation and sets a deadline for corrective action,
- but may also appoint an information security officer at the organisation’s expense,
- if these measures fail to achieve their objective, the Authority may also impose a fine.
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This summary is intended to raise awareness and does not constitute legal advice.
If you have any questions or need further information in connection with the above, please do not hesitate to contact us.
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.
30/Aug/2024
In line with the latest summer amendment, the various types of transaction duty increase from August 1st, 2024, and the conversion duty will come into force on October 1st, 2024. In addition to the duties payable on financial transactions, the amount of tax fines that can be imposed by the National Tax and Customs Authority will also increase.
- The Rate of the Transaction Duty Changed from August 1st, 2024
The transaction duty is a type of duty paid by banks and other financial institutions to the State on the transfers of funds made by them. Provided that this duty is usually passed on by banks to their customers, it is ultimately borne by the customers. The amount of the transaction duty is determined by the type of transaction for which it is levied.
From August 1st, 2024, the transaction duty for cash withdrawals was changed from 0.6% to 0.9% of the amount withdrawn, regardless of the quantity of the amount. Similarly, the transaction duty for bank transfers has also increased from 0.3% to 0.45%, but it cannot exceed HUF 20,000 per payment transaction. Together with the above, the rate of transaction duty on securities transactions has also increased by 50%, from 0.3% to 0.45% per transaction, but the amount payable cannot exceed HUF 20,000 per transaction.
The Conversion Duty Will Arrive on October 1st, 2024
From October 1st, 2024, if a transaction involves a conversion between different currencies, an additional conversion duty of 0.45% will be levied on top of the 0.45% general transaction duty. However, the total amount of the 0.9% duty payable per transaction may not exceed HUF 20,000.
- Tax Fines Imposed by the National Tax and Customs Authority Are Increased from August 1st, 2024
From August 1st, 2024, the amount of default fines that can be imposed by the National Tax and Customs Authority for incorrect, incomplete, untrue or late fulfilment of tax obligations or non-compliance with tax obligations is increased from HUF 200,000 to HUF 400,000 for natural persons and from HUF 500,000 to HUF 1,000,000 for legal entities. Likewise, the amount of the fine for employing undeclared labour is increased from HUF 1,000,000 to HUF 2,000,000, as the upper limit for the fine for failure to comply with the obligation to submit invoices or archive documents, from HUF 1,000,000 to HUF 2,000,000.
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This 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.
5/Apr/2024
The new Act C of 2021 on the Land Registry will enter into force on October 1, 2024, and this will bring about a fundamental change in the procedures related to real estate transactions. The new legislation will allow for faster and more convenient administration, but it will also require legal entities and natural persons to use electronic signatures or Identification Based Document Authentication.
The new Act on the Land Registry is expected to enter
into force on October 1, 2024, and it will make the partially electronic land
registry procedures compulsory.
One of the main innovations of the act is the
introduction of the E-Land Registry (hereinafter ‘E-Land
Registry’). Generally, applications to the Land Registry will
be submitted via electronic filing and not in hard copies. The legal
representation will be mandatory in all land registry procedures. In land registry
procedures legal representation may be provided by an attorney-at-law, a registered
in-house legal counsel, or a public notary.
The method of authorising a legal representative to
act in a land registry procedure will also change in future, all persons
concerned – and not only the buyer of the real estate – will have to
unanimously authorise the attorney-at-law to represent them in the procedure in
order to register rights or facts in the E-Land Registry.
The Implementing Regulation of the new Act on the Land
Registry requires that the authorisation of registration granted by the owner
of the real estate is created on an electronic form provided for this purpose.
This must be signed by the owner with a qualified electronic signature or
authenticated by the Identification Based Document Authentication service (hereinafter
‘AVDH’) in the personal
presence of the attorney-at-law acting on behalf of her/his client in the
procedure. The AVDH is a free service provided by the Hungarian State,
available to all individuals with a Client Gate, which provides qualified
electronic signatures (Client Gate access can be provided by any Government Office
or by online registration with video identification, for further information,
see the following webpage: https://magyarorszag.hu/szuf_avdh_hasznalati_utmutato)
While at present land registry
procedures are largely paper based, the new regulation, which will come into force
from October 2024, will also allow to carry out the whole transaction
electronically. Legal documents required for real estate transactions, such as
sales and purchase agreements, can be electronically undersigned by qualified
electronic signature or authenticated with AVDH.
A major advantage of the new regulation
is that the contracting parties will be able to sign the necessary documents
for land registry procedures remotely, so that in the future the conclusion of
contracts and signing the related documents for real estate transactions will
not necessarily require personal presence.
The rules on the jurisdiction
of Land Offices will also change, as instead of the previous system of Land Offices
based on territorial jurisdiction according to the location of the real estate,
Land Offices will have national jurisdiction, that means that any Land Office
will be entitled to decide on every application for land registration submitted
via electronic filing.
The new regulation also
shortens the duration of the land registry procedure in many cases, allowing
for the possibility of a summary procedure or automatic decision making, which
can be completed in a much shorter time than before. The E-Land Registry will
also be linked to other publicly certified registers, so that in many cases the
necessary data can be obtained automatically, reducing the administrative
burden on individuals.
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This summary is intended to
raise awareness and does not constitute legal advice.
If you have any questions or need further information in connection with obtaining the electronic signature or any other issue, please do not hesitate to contact us.
1/Jan/2024
Based on the legislation adopted until the end of 2023, in our newsletter we summarize the amendments made to the Hungarian tax laws.
This summary only contains the major lines of the most significant amendments, due to the numerous detailed rules. The analysis of the details goes beyond the scope of this newsletter, however at your request we are standing at your disposal concerning their essential contents.
VALUE ADDED TAX (VAT)
New rules, applicable to compulsory returnable but non-reusable products are introduced in the Hungarian VAT Act. A taxpayer operating a compulsory return fee scheme under the Waste Act will be obliged to charge a redemption fee and pay tax on it if the product is not returned.
CHANGES REGARDING TAX PROCEDURE, AND TAX ADMINISTRATION ORDER
As a result of the changes to the Act on Tax Procedure and the VAT Act, from July 15, 2024, online cash registers shall gradually be replaced by other technical devices capable of issuing electronic receipts.
Further to the changes in the Act on Tax Procedure being effective since September 13, 2023, if the taxpayer fails to comply with the legal deadline for the community summary declaration obligation related to VAT and the monthly tax and contribution declaration obligation within 180 days from the legal deadline, despite the call from NAV, their tax number will be deleted. The change compared to the previous regulation is that the deadline for compliance is altered from the previous 365 days.
CORPORATE TAX CHANGES
The taxpayer will be able to write off deferred losses incurred by the last day of the tax year starting in 2014, and claim against the tax base without time limit – as opposed to the deadline of December 31st, 2030 applicable before – from July 15, 2023.
An income-increasing item must be applied if the taxpayer pays royalties or interest to a foreign individual or branch of any state listed in the tax “blacklist”, or if a corporate tax rate, which is lower than the 9% Hungarian corporate tax rate, is applicable to them.
Under the research and development support title, changes were introduced. The new tax incentive can be applied to basic research, experimental development activities, and specifically listed direct costs related to these on the decision of the taxpayer, who can opt for this instead of the previously regulated R+D tax incentive. The incentive rate is a maximum of 10% of the accounted cost.
An additional corporate tax incentive is introduced for investments in electricity storage. The tax incentive is available for a period of 6 tax years, the first year of which may be either the year of installation or the following tax year, at the choice of the taxpayer. The intensity of the grant, together with the total State grant, is 30 or 45 percent of the eligible costs of the investment, depending on the region, up to a maximum of EUR 30 million.
The definition of Affiliated Companies has been clarified: a 25% stake was sufficient to determine the affiliated nature, but this was only applicable to companies in a direct parent-subsidiary relationship. The amendment extends this and allows for a 25% stake among sister companies to also result in an affiliated relationship.
ACCOUNTING LAW DIFFERENCES
In relation to the implementation of the global minimum tax, Hungarian resident subsidiaries, branches and establishments of large global companies may become subject to additional tax liability, which must also be reflected in the profit and loss account of the relevant entities. This includes groups of companies whose annual revenue in the final consolidated accounts of the parent company equals or exceeds EUR 750 million in at least two of the four years preceding the tax year.
A new legislation imposes new reporting obligations on the companies concerning their corporate social responsibility, in line with EU rules; these rules will be included in the Accounting Act.
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This 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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