On 30 November 2023, Hungary published Law LXXXIII of 2023 on the amendment of individual tax laws and Law LXXXIV of 2023 on additional taxes in Gazette No. 171 of 30 November 2023. The recently enacted laws ensure a global minimum tax level and introduce amendments to certain tax laws.
Law LXXXIII of 2023 outlines various tax measures for implementation. One of the primary measures is implementing a defensive measure to prevent double non-taxation. It’s mentioned that interest and royalty payments made to non-cooperative or low/no tax jurisdictions won’t be deductible for taxes unless such payments are based on legitimate economic and commercial purposes, rather than tax benefits.
Taxpayers must prove this by providing the following information for filing their annual tax returns within a deadline, which includes: the name, registered office, tax number, or company registered number of the foreign person or entity; information on the contract including the expenditure and cost; the purpose of the underlying expenditure and cost; the quantification of the actual tax benefits and economic benefits, and the interest and royalties amount for which the foreign person or entity has paid tax corresponds to the corporate tax and certification of payment.
Another significant measure is an extension of the suspension of the advertising tax. This is provided by maintaining a 0% tax rate and suspending certain invoice/receipt and declaration obligations. The suspension was last extended to 31 December 2023, and again to 31 December 2024 under the Law LXXXIII.
Law LXXXIII also includes amendments to the progressive retail turnover tax rates, which are as follows:
- up to HUF 500 million – 0%
- over HUF 500 million up to HUF 30 billion – 0.1%
- over HUF 30 billion up to 100 billion – 0.4%
- over HUF 100 billion – 2.7%
Law LXXXIV of 2023 also implements the Pillar 2 global minimum tax (GloBE) rules as per Council Directive (EU) 2022/2523 of 14 December 2022. The law also introduces an R&D tax credit as a refundable tax credit in accordance with the global minimum tax (GloBE) rules. On 21 November 2023, the Hungarian Parliament passed a legislation to enact the global minimum tax pillar 2. On 17 October 2023, the Ministry of Finance initiated a public consultation process on the bill, which was later submitted to the Parliament on 31 October 2023.
