The Hungarian Parliament has adopted the 2025 tax law amendments. The majority of the proposals described in our earlier article and submitted on 29 October were adopted at the parliamentary session on 26 November. Changes to payroll and HR services in the 2025 tax law amendments have already been described separately, so below we go into much more detail on the new tax laws of importance to business decision-makers.
Personal income tax
Perhaps the change that will affect most people in the 2025 tax law amendments is that the monthly family tax allowance will increase in two stages, from 1 July 2025 to HUF 100,000 for one eligible dependant, to HUF 200,000 for two eligible dependants, and to HUF 330,000 for three eligible dependants. Then in the second stage, from 1 January 2026, the same amounts will rise to HUF 133,340, 266,660 and 440,000.
Another change affecting personal income tax is the narrower scope of foreign individuals who will be eligible for the newlywed allowance and the under-25s’ allowance. In the future, these benefits will only be available to citizens of EEA countries, and non-EEA countries bordering Hungary.
For accommodation providers, the annual tax per room will increase to HUF 150,000 in municipalities where the number of overnight stays spent in the second year preceding the given year exceeded 2 million.
As we indicated earlier, under the 2025 tax law amendments a fixed part of the allowance provided by an employer to an employee under the age of 35 as housing benefit – to pay rent or to repay a mortgage – will be considered a fringe benefit from next year.
The scope of SZÉP card benefits has been extended in that SZÉP card funds can also be used for home renovations in 2025. Another change affecting SZÉP cards is that in addition to the general annual allowance of HUF 450,000, an Active Hungary wallet will be created, which can be credited with HUF 120,000 per year at a reduced tax rate. This amount can be used specifically for services linked to leading an active lifestyle.
Social contribution tax
Under the 2025 tax law amendments, social contribution tax will be payable on income from long-term investments (13% if less than three years, 8% for between three and five years, and 0% if more than five years).
In the case of the tax allowance for people entering the labour market, a Hungarian citizen – or a citizen of a non-EEA country bordering Hungary – who has been in an insured employment relationship or a sole proprietorship/partnership for a maximum of 92 days in the previous year, i.e. the 365 days before the month in which the employment starts, is considered to be entering the labour market. The allowance can be claimed in full for the first year, and at 50% for the following six months.
The 2025 tax law amendments also added a provision to the social contribution tax law stating that the tax payable by the payer shall be assessed quarterly by the payer and declared and paid by the 12th of the month following the quarter, unless otherwise specified.
Act on Accounting
According to the amended Act on Accounting, the obligation to be audited is not mandatory in cases where the entity’s annual net sales revenue did not exceed HUF 600 million and the average number of employees at the entity did not exceed 50 people on average in the two financial years preceding the given financial year.
Furthermore, any contractual term or legal declaration that obliges the highest body of the entity to choose a specific auditor, audit firm or group of audit firms to carry out the statutory audit, or where applicable, audit the sustainability report, is void.
Advertising tax
The 2025 tax law amendments extend until 31 December 2025 the current 0% rate of advertising tax for taxpayers who are not media content providers, media service providers, publishers or outdoor advertising media, or are not exempt from paying the tax.
Act on Corporate Tax
Opportunities to support spectator team sports are now complemented by opportunities to support the running costs of sport infrastructure. In this case, the amount of funding may not exceed 80% of the running costs of the property, or the HUF amount equivalent to the notification threshold for operating aid for sport infrastructure in the EU Commission Regulation.
Value added tax
The 2025 tax law amendments reduce the number of instances in which an indirect customs representative can exercise the client’s right to deduct VAT in the case of imports. The provisions also clarify the detailed partner checking rules in relation to and as a precondition for assigning the right to deduct VAT. Such checks must be carried out by the indirect customs representative.
From 1 January 2025, the reverse charge mechanism will apply to supplies between taxable natural gas traders. The legislation imposes a reporting obligation on both the taxable person supplying the gas and the taxable person purchasing it. Transitional provisions will help implement this tighter rule.
By extending the current provision for a further two years, the 2025 tax law amendments allow for the application of a reduced 5% tax rate on the sale of new residential property until 31 December 2026. This is permitted by a transitional rule for construction projects that are delayed, provided that the building permit is final by 31 December 2026. If the construction activity is subject to simple notification, then application of the reduced tax rate is conditional on the activity being notified by 30 September 2024 (whereas in the case of simple notification under the Act on Hungarian Architecture, the activity must be acknowledged by 31 December 2026).
Amending Annex 10 to the VAT Act, the legislation stipulates that the data on incoming invoices required as part of VAT returns must now be provided in HUF, and not rounded, instead of the previous approach rounding to HUF 1,000. VAT returns will continue to include all the required data rounded to HUF 1,000, the change only affects the reporting of data.
Excise tax
The definitions of other tested mineral oils and diesel will change due to modifications made to the Combined Nomenclature (CN) code.
To meet the EU’s minimum tax, the 2025 tax law amendments modify the tax rates for certain energy products. Tax rates on tobacco products are also to increase.
The excise tax rate on alcohol products will be adjusted each year after 2024 in line with inflation. The same tax rate increases for energy and tobacco products will start after 2025 due to the 2025 tax increases.
Local taxes
The concept of permanent establishment is now amended for air passenger transport operators. A foreign entity resident in a country that is party to the Convention on International Civil Aviation signed in Chicago on 7 December 1944 will not have a permanent establishment in Hungary under the 2025 tax law amendments. According to the adopted amendments, this exemption will already apply to tax liabilities for 2024.
It is important to note that the provisions in the bill relating to the abolition of special economic zones were not adopted by Parliament.
Vehicle tax and company car tax
The new legislation introduces an annual indexing of the vehicle tax, according to which the tax rate will be calculated taking into account the amount of tax for the previous year and the change in the consumer price index for July of the previous year, as determined by the Central Statistical Office. The tax rates thus determined shall be published by the NAV on its official website by 31 October each year. This shall also apply to tax on vehicles registered abroad.
Under the 2025 tax law amendments adopted, the indexing procedure described for the vehicle tax will be introduced for company car tax as well. The NAV will publish the tax rates on its website by 31 October of the year preceding the given year.
Vehicles with environmental classifications 5N and 5P will be exempt from vehicle tax until 31 December 2026 and from company car tax.
Duty
From 2025, the legislative amendments ensure that the rate of duty on the acquisition of ownership of motor vehicles and trailers will be indexed.
The amendments also change the level of duties payable for first-instance civil proceedings, according to the combined scheme set out with defined bands. One key element of the amendment is that duties will be reduced for smaller cases of litigation – under HUF 10 million. Duties will increase for higher-value litigation, and the cap will be abolished.
Retail tax
From 1 January 2025, the scope of taxpayers shall be broadened to include non-resident or resident platform operators who provide a marketplace for sellers engaged in retail activities. The deadline for registration and the first advance payment is the 15th day after starting the activity, which in many cases could be as early as 15 January 2025.
The taxpayer for the retail activity conducted via the platform will be the platform operator, not the retailer, namely the platform operators will become “quasi-vendors” for sales made via the platform. However, if a platform operator defaults on its tax liabilities and the tax debt cannot be collected from it, the retailer will be liable to pay the tax instead of the platform operator.
Registration tax
One important change is that the tax allowance for hybrid and plug-in hybrid vehicles as well as hybrid motorcycles will be removed from 1 January 2025.
The 2025 tax law amendments also put the assessment of registration tax onto new foundations from 1 March 2025. The tax rate for each vehicle will be the product of the environmental class multiplier and HUF 45,000.
As with many other taxes, the registration tax liability will rise in line with inflation from 2026, which essentially means an indexing of the HUF 45,000, rounded up to HUF 1,000. The NAV will publish the inflation-adjusted amount on its website by 31 October of the year preceding the given year.
2025 tax law amendments affecting the global minimum tax
As we previously indicated, global minimum taxpayers must register with the tax authority by 31 December 2024 using a form. The 2025 tax law amendments specify the information that must be included on the form. Please note that corporate groups applying the CbCR-based exemption with respect to Hungary are not exempt from the notification requirement.
However, one of the most significant changes to the global minimum tax, internationally known as GloBE, is the domestic obligation to pay top-up advances for those affected. This is because taxpayers have until 20 November 2025 to complete their tax return and advance tax payments for fiscal years beginning in 2024. If a taxpayer proves that they acted in good faith when failing to pay the tax advance, they may be exempt from the default penalty/tax penalty and late payment penalty.
The 2025 tax law amendments also include further GloBE clarifications (e.g. UTPR calculation formula, QDMTT calculation).
Amendment to Act CLII of 2017 on the implementation of EU customs law
One of the most significant changes in relation to EU customs law is that the legislator has clarified the conditions for VAT exemption.
The amendment enables the customs authority to grant, on request, exemption from VAT in customs administration procedures to a taxpayer acting in their own name who, at the time their application is assessed, fulfils the conditions laid down by law.
If an AEO (Authorised Economic Operator) licence cannot be used due to a suspension, then among other things, this exemption from VAT cannot be applied.
Amendments to Act CL of 2017 on Rules of Taxation
Based on the 2025 tax law amendments, in the event of a repeat offence the tax authority is obliged to close the given business, unless the taxpayer waives their right of appeal and pays a “penalty in lieu of business closure” in addition to the default penalty. This penalty is significantly higher than a simple default penalty:
- 10 times the default penalty for a 12-day closure
- 20 times the default penalty for a 30-day closure
If the taxpayer fails to comply with the conditions (waiving the right to appeal and paying the higher penalty), the tax authority will notify the taxpayer and close the business.
Small business tax
If an entity’s KIVA status is terminated due to a merger or division, but the taxpayer again opts for KIVA status, then the start of this taxpayer status is shifted to one day earlier than under the previous rules, to the date of the merger/division.
In this article, we have tried to provide a thorough summary of the most important parts of the 2025 tax law amendments that affect companies’ decision makers. If you have any questions about the rule changes detailed here, please contact the tax consulting team of WTS Klient Hungary who are always at your disposal.
