The government of Hungary presented a new tax package on 19 June 2018 for corporate and business tax. The changes of taxes are as follows:

  • The deduction allowance for investment in start-ups will be capped at HUF 20 million;
  • A deduction for providing work-place kindergartens/childcare will be allowed, provided that at least 80% of the children are children of employees;
  • The development reserve amount allowed for deduction will be increased from HUF 500 million to HUF 10 billion;
  • Local governments will be allowed to introduce local business tax exemptions and allowances to promote investment;
  • The local business tax allowance for increased employment will be abolished, along with the recapture of any allowance granted to companies in the previous three years if the number of employees decreased by more than 5%;
  • Certain VAT changes are introduced, including the transposition into domestic law of the EU VAT rules on vouchers, an extension of the reverse charge for grain and steel products, and a 5% VAT rate for ESL (extended shelf life) and UHT (ultra-high-temperature pasteurized) milk; and
  • Social security contributions will no longer be required for employees receiving old age pensions, with only the 15% income tax payable on gross income.