Summarising the 2024 tax amendments is not an easy task, since the detailed rules for many different taxes have changed based on the tax amendment proposals adopted in 2023, and in several stages too. There is barely any type of tax that hasn’t been affected, the Hungarian-US double taxation treaty has been terminated, and the new global minimum tax system is now in place. The eVAT system is also up and running: taxpayers can log into the interface and are greeted by a clear and modern platform. Below you will find the details of the eVAT system and a brief summary of the 2024 tax amendments that may be important for decision-makers. 

Minimum wage

From 1 December 2023 the minimum wage was increased to HUF 266,800 gross, while the guaranteed wage minimum rose to HUF 326,000. This also means, for example, that from 2024 the individual value of low-value gifts subject to preferential tax treatment has increased to HUF 26,680, while the amount of expenditure on gifts given to participants in connection with an event organised for several individuals (including business partners) – and subject to preferential tax treatment – has increased to HUF 66,700.

Preferential tax regime benefits

Provision of wine and wine products

From 16 November 2023, bottled wine and wine products with a protected designation of origin or protected geographical indication purchased directly from a winery are exempt from tax, if they are

• provided in the context of hospitality for entertainment and non-entertainment purposes,
• as a business gift, or
• as a low-value gift.

In such cases, no personal income tax or social contribution tax is payable on the supply of these wine products.

Low-value gift

Until now, once a year it was possible to provide a gift as an ‘other benefit’ bearing tax lower than wage tax, up to 10% of the minimum wage. Following the 2024 tax amendments, such benefits can be provided three times a year in 2024.

Tax exemption for winnings

For traditional lotteries (lotto, 6-number lotto, Scandinavian lotto, keno, etc.), winnings are exempt from personal income tax from 1 January 2024.

Acquiring stakes in start-up companies

One element of the 2024 tax amendments intended to stimulate the economy is that a stake acquired free of charge or at a preferential price by employees or senior management in a start-up business (micro or small unlisted enterprise that has been registered for five years or less, has not yet distributed profits, and has not been created by a merger or division) does not qualify as income.

Trusts

The input taxation introduced in 2023 in relation to trusts is replaced by output taxation on account of the 2024 tax amendments in cases where income is transferred to the beneficiary from the value of the initial capital of the assets under management or private foundation assets, five years have not passed between the release of the asset and the initial transfer of the asset to assets under management or private foundation by the settlor or founder (joining individual), and such transferred assets were revalued upwards at the time transferred (asset value appreciation).

Conventions avoiding double taxation

The double tax treaty discontinued by the US will no longer apply from 2024, but several related amendments have been introduced into Hungarian tax laws. The rule on offsetting tax paid abroad has changed, while the rules on other income do not apply to income from securities issued by a person with a registered office in an OECD Member State, or to interest paid by a person with a registered office in an OECD Member State. We should not forget that the Russians also suspended certain provisions of the Hungarian-Russian double taxation treaty in 2023!

Global minimum tax

One of the 2024 tax amendments triggering the biggest reaction was the new tax rolled out from 1 January: the global minimum tax. Although this does not concern a significant number of companies, those that are affected will have to prepare for considerable changes and will have to familiarise themselves with new penalties:

• up to HUF 5 million for failure to comply with notification obligation, or late compliance,
• up to HUF 10 million in the event of failure to file a return, or late, incomplete, incorrect or untrue returns

Reported shares

Taxpayers can take advantage of a one-time reporting option for their holdings declared as of 30 December 2023 that do not qualify as shares, if they meet the definition of a reported share at the time of the reporting. The reporting deadline is the deadline for the 2023 fiscal-year annual report. If the shares are reported, corporate tax of 9% is payable on 20% of the positive difference as of 31 December 2023 between the book value and the market value between independent parties. The difference is determined as if a sale was made at a profit to an independent party on 31 December 2023. No deductions – such as loss carryforwards or tax benefits – can be applied in this respect. The independent market value must be certified by an auditor or a qualified expert.

Corporate taxation

The corporate tax element of the 2024 tax amendments extends the range of costs that are not incurred in the interests of a business. This means that no costs can be deducted for royalty and interest payments to countries that are on the EU list of non-cooperative jurisdictions and territories or that are classified as having zero or low tax rates. Non-compliant royalty and interest payments made cannot be deducted from the corporate tax base, and the profit before tax must be raised by the accounting cost or expense not affected by the double non-taxation.

The criterion of having a real economic or commercial benefit as the primary goal is not fulfilled if (one of) the primary goal(s) of the royalty and interest payment is a tax advantage, even if there is a real economic or commercial benefit. The burden of proof is on the taxpayer, to be provided by the deadline for filing the tax return.

eVAT

The eVAT system previously postponed several times was finally introduced as part of the 2024 tax amendments. The system in place from 1 January 2024 allows taxpayers to submit their tax returns via the eVAT platform too, in addition to traditional VAT returns. This platform enables draft returns to be approved, supplemented and modified, either using data compiled by the NAV or data transmitted via the automated interface. Under the rules, the first return filed counts as the taxpayer’s return (if multiple returns are filed). Self-revisions can then be submitted either on a form or via the electronic interface. Taxpayers who opt for the automated interface in the eVAT system are exempt from any inspection for 15 days. During this time, any errors or discrepancies in the return can be corrected. The eVAT system is also available from the online invoicing system and via the separate eVAT website in Hungarian, English and German after logging in via the government portal. Easy-to-follow tutorials help you understand the interface and processes.

In the eVAT system you can find the menu items on the left-hand side, where you can view your taxpayer profile and make settings among other things, but you can also select the returns of given periods, and in the document list you can find documents from other data services in the system (typically the online invoicing system), which were uploaded by the tax authority when the draft return was created. You can review the data of the documents in detail as well, and if you accept the documents you can set the status of each individual document to ‘reviewed’.

Real estate and construction

The procedure for submitting declarations for the reverse charge treatment of construction/assembly services is also changing, and becoming more practical. From 1 January 2024, if the authorisation is linked to the activity of the service provider, then from now on they will declare this to the client.

Simpler administration

Continuous tax advance declaration

The 2024 tax amendments also aim to reduce the administrative burden for taxpayers. This means that from 1 January 2024, key tax base deductibles can even be claimed on a continuous basis, without the need to submit a new tax advance declaration to the employer or regular-income payer every year. The new option will apply for the first time to tax advance declarations made after 31 December 2023. The easiest way to submit tax advance declarations is via the online document management webpage called ONYA (available in Hungarian).

Quarterly payer return instead of monthly

From 2024 onwards, payers have to assess public levies and declare and pay the taxes and contributions related to payments and benefits not on a monthly basis, but quarterly, for the period including the month of the benefit. So instead of monthly, contributions will now have to be declared and paid in the quarter that includes the month of the benefit.

Social security

As a result of the 2024 tax amendments, in the case of a third-country national posted from Hungary, the income earned in the given month as consideration for the activity will be deemed the contribution base, and thus also the base for the social contribution tax. In other words, the reduced contribution base rule applicable for postings, according to which the contribution base is the basic salary, but at least the average gross salary, will be abolished for this category of personnel only.

Vehicle tax

Until 2024, vehicle tax had to be paid in two instalments. Please note that from now on, vehicle tax must be paid in one lump sum by 15 April.

Tax on public utility lines, advertising tax

The 2023 autumn tax law amendments removed telecommunication lines from the scope of the public utility tax from 1 January 2024, and repealed the Act on Public Utility Tax from 1 January 2025. The current 0% advertising tax rate will remain in force until 31 December 2024.

Household work

The 2023 autumn tax law amendments abolished the HUF 1,000 registration fee obligation for household workers, but the notification obligation still applies.

Most taxpayers will be affected by the listed points of the 2024 tax amendments.  In particular, we would like to draw your attention to the changing legislation brought on by the discontinuation of the Hungarian-US double taxation treaty, the global minimum tax and eVAT. If you have any questions regarding the changes, or their impact, please do not hesitate to get in touch with our tax specialists.