Hungary's Draft Law T/387, submitted to Parliament on 17 July 2026 to meet Recovery and Resilience Facility commitments, abolishes tax exemptions for trusts and private foundations, phases out several corporate tax allowances from 2027, scraps four minor taxes, and restructures the NAV presidency's employment status.
Hungary’s government has submitted Draft Law T/387 to the parliament on 17 July 2026 to implement commitments under the Recovery and Resilience Facility (RRF) plan by August 31, 2026, alongside other government programs.
This legislative document details a comprehensive tax reform proposal submitted by the Hungarian government in July 2026 to fulfil requirements for European Union recovery funding. The core reforms include scrapping tax exemptions for trust management and private foundations, cutting the overall number of tax types, and unifying the conditions applied to retail taxes, all framed as competitiveness measures. The bill also restructures how the National Tax and Customs Administration’s leadership is appointed and paid, pushes forward business digitalisation, and introduces formal definitions for cryptocurrencies so they fit into the existing fiscal framework rather than sitting outside it.
The key tax reforms are as follows:
Reduction of the number of corporate tax allowances
To increase corporate tax revenues, Hungary committed to reducing the number of preferential tax elements. The phase-out includes:
- Monument projects: The corporate tax base allowance for monument projects will be phased out from 1 January 2027. The 2026 tax year will be the last time this tax base reduction can be utilised, and any unused credits cannot be carried forward to subsequent years.
- Growth tax credit: This credit will also be abolished starting 1 January 2027. For credits generated before 2027, the tax obligations and investment conditions must be fulfilled based on the rules in effect on December 31, 2026, but the credit cannot be used to reduce taxes due on instalments after 2026.
- Public interest asset management foundations: The 300% tax base allowance for supporting these foundations, or higher education institutions maintained by them, will be repealed and can be applied for the last time in the 2027 tax year, effective 1 August 12027).
Reduction of number of tax types
To simplify the tax system and meet RRF commitments, several taxes and contributions are being completely abolished:
- Immigration tax
- Dog contribution
- Municipal tax
- Carbon quota tax (abolished retroactively from 7 October 2023). Taxpayers can claim a refund of previously paid tax and related interest within 90 days.
Retail tax
To unify competition conditions within the retail tax sector, the draft law repeals Title 5 of the Retail Tax Act. This modification is applicable starting from the 2026 tax year.
Ending the tax exemption for trusts and private foundations
Hungary’s RRF-linked reform removes the personal income tax exemption that trusts (fiduciary asset management) and private foundations have relied on.
- Taxation adjustments: There’s no new entry tax on assets transferred into a trust at the outset. Capital gains are where the rules bite: if an asset changes form inside the trust (say, stock sold for cash) and the yield gets distributed, it’s taxed as a dividend. Distribute the asset in its original form instead, and that transfer is tax-free, but the beneficiary picks up the asset’s original historical acquisition cost, so any future sale triggers capital gains tax on the full gain since that original acquisition, not just the gain since distribution.
- Expanded data reporting and audits: Reporting duties expand sharply. Trustees and private foundations must report annually by 31 January on the registered value of managed assets, detailed asset value increments, and closing values of separate registers. The first such report, covering the partial 2026 year, is due 31 March 2027. On the enforcement side, the tax authority will run mandatory audits on every trust formed before 12 September 2023, then move to comprehensive audits of all trusts starting in 2028.
Status of the president of the tax authority (NAV)
The draft law actually abolishes the State Secretary status of the NAV President. Instead, the President will become an employee of the NAV, with their unified personal salary set by the minister, while continuing to receive benefits identical to those of a state secretary. The minister will continue to appoint and dismiss the President, while the President will exercise operational employer rights over the vice-presidents to provide greater legal clarity.
