The regulation of the global minimum tax (GloBE) has had a significant impact on the Hungarian subsidiaries of multinational enterprise (MNE) groups starting in 2024. The goal of the rules is to ensure that every corporate group with annual revenues exceeding EUR 750 million pays an effective tax rate of at least 15% in each country where it operates. The new system introduces several reporting, calculation, and top-up tax obligations, such as the QDMTT (Qualified Domestic Minimum Top-up Tax) and the IIR (Income Inclusion Rule).
The introduction of the GloBE rules raises a number of interpretative questions, which are particularly relevant for corporate CFOs, tax advisors, and accountants. In this post, we have collected the most frequently asked questions and dilemmas that have emerged during our webinars and advisory projects.
Our goal is to provide practical and understandable answers, even though the complexity of the GloBE framework poses a significant challenge. At first glance, the rules may seem overly theoretical, but as the deadlines approach, their practical interpretation becomes increasingly urgent. We aim to support this process—through clear examples and well-defined considerations—by focusing on the most frequently asked questions.
Different Financial Years at the Ultimate Parent Entity (UPE) and the Hungarian Subsidiary – What Should Be Done in the GloBE Filing?
The question is not a simple one, especially if, for example, the ultimate parent entity closes its financial year on June 30, while the Hungarian subsidiary closes on December 31. In such cases, the question often arises: whose financial year should be used for the GloBE notification in Hungary regarding the subsidiary, and for which tax year and by what deadline should the top-up tax be calculated and reported.
According to the legislations:
- The tax year (or financial year) is the reporting period for which the ultimate parent entity of a multinational enterprise group or a large domestic group prepares its consolidated financial statements.
- Based on this, the minimum tax-related obligations must be aligned with the financial year of the ultimate parent entity.
Nevertheless, according to information received from the Tax Authority, the legal provision regarding the obligation to submit the GloBE notification form refers to the tax year of the domestic group member in which it has a direct tax liability.
Thus, the GloBE notification form must be submitted in accordance with the subsidiary’s own financial year for the purposes of fulfilling the preliminary reporting obligation.
Returning to the example mentioned above: if the ultimate parent entity closes its financial year on June 30, while the Hungarian subsidiary closes on December 31, then the deadline for calculating and declaring the top-up tax aligns with the ultimate parent entity’s financial year (i.e., June 30). However, the timing for submitting the GloBE notification form must be aligned with the financial year of the domestic subsidiary.
What Types of De Minimis Exemptions Exist in the GloBE System? Are De Minimis Exemptions Only Applicable During the Transitional Years?
It has been raised as a question whether the de minimis exemptions can only be applied during the transitional years. This is particularly important if the multinational enterprise group wishes to be exempt from the calculation of the top-up tax, the related administrative obligations, and the payment of the top-up tax itself.
The global minimum tax system recognizes two types of de minimis exemptions that provide relief from the top-up tax obligation: on the one hand, a permanent exemption (also known as an exclusion from the top-up tax), and on the other hand, a so-called "Safe Harbour De Minimis" exemption applicable during the transitional period.
It is also important to highlight that these similarly named exemptions are based on two different logics, data contents, and timeframes when assessing the group member(s):
- Under the Safe Harbour De Minimis test, it must be examined whether the total revenue for the tax year is less than 10 million euros, and whether the pre-tax profit for the tax year is less than 1 million euros in Hungary.
- For the permanent de minimis exclusion, the recognized average revenues and average profits (or losses) of the Hungarian group members must be examined over a three-year average. Here, the average total revenue of all Hungarian group members must not exceed 10 million euros, and the average profit (or loss) must not be greater than 1 million euros in Hungary.
The two tests operate based on different logics, examining different data and timeframes. While the former looks at figures on an annual basis, the latter considers a three-year average. Therefore, it is recommended to treat both tests separately and not to assume automatically that if a company is not exempt under the former, it cannot qualify for exemption under the latter.
When calculating the Effective Tax Rate (ETR), can the local business tax (hipa) and the innovation contribution be taken into account in Hungary?
A common question is which types of direct taxes can be included when calculating the effective tax rate (ETR). This is especially relevant in the case of the local business tax (hipa) and the innovation contribution. The answer varies depending on which element of the GloBE obligation is being discussed:
- It is a relatively well-known rule that, when calculating the domestic top-up tax (QDMTT), the local business tax and the innovation contribution can also be taken into account as covered taxes.
- However, a common mistake is that companies apply the same calculation method for the applicability of the CbC Safe Harbour exemptions as they do for calculating the QDMTT. A deeper interpretation of the rules reveals that, in the case of the transitional exemption, only income taxes can be taken into account during the simplified ETR test. This means that only those taxes that are reported as income taxes in the accounting records used by the ultimate parent entity to prepare its Country-by-Country Report (CbCR) can be included in the numerator of the simplified ETR calculation. For example, if a multinational enterprise group presents data for its Hungarian group member in its CbCR based on the Hungarian company’s financial statements prepared under Hungarian accounting standards, the local business tax and innovation contribution expenses cannot be considered in the simplified ETR test calculation. This is because, under Hungarian accounting rules, these taxes are recognized as other expenses, not as income tax expenses. The situation may differ, however, for companies maintaining their books under IFRS.
Therefore, it is very important that when a multinational enterprise group examines exemption possibilities or determines its top-up tax, it is aware that the same taxes must be treated differently in various tests and tax calculations. The key here is recognizing the appropriate context, as situations may arise where Hungarian group members improperly apply exemptions from the global minimum tax.
What Data Is Required to Perform the Transitional Exemption Tests (the So-Called "Transitional CbCR Safe Harbour")?
For many multinational enterprise groups, it is already timely to examine the various GloBE exemptions, but it is not always clear which data should be used for the tests. The answer here is also twofold:
For the transitional CbCR Safe Harbour exemption test, the data presented in the Country-by-Country Report (CbCR) prepared by the ultimate parent entity for the 2024 financial year is essential. This report contains the data that forms the basis for testing the GloBE transitional exemptions. However, in most cases, the CbCR is not yet available, as its preparation deadline for the 2024 financial year is typically the end of 2025. Nevertheless, it is not advisable to wait until then to conduct the CbCR exemption analysis, given that Hungarian subsidiaries with a calendar-year financial year must calculate and pay their domestic top-up tax prepayment by November 20, 2025. Moreover, in most cases, it is worthwhile to review the exemptions already when preparing the 2024 financial statements, since if the conditions for any exemption are met, the Hungarian group member will not need to calculate, record, or report the top-up tax in its financial statements.
In practice, the best approach is to start preliminary exemption testing—even in the absence of the CbC report—using the accounting data on which the ultimate parent entity will base its Country-by-Country Report. This helps ensure proper planning and allows for timely identification of whether a more detailed top-up tax calculation is necessary or if separate actions should be taken to ensure exemption compliance.
We would like to point out that at the time of preparing our blog, the ministerial decree detailing the rules for the transitional exemptions has not yet been issued.
What Can a Company Do If It Is Uncertain About Its GloBE Obligations?
The global minimum tax system places a significant burden on large corporations. Accurate interpretation and application require up-to-date knowledge of the rules and precise handling of local and international accounting frameworks. In the case of Hungarian subsidiaries, special attention must be given to reporting deadlines, exemption opportunities, and the calculation of the effective tax rate.
Do you have any questions about the global minimum tax?
Contact the RSM Hungary tax advisory team—our experts are ready to assist you with tax optimization, leveraging exemption opportunities, as well as preparing calculations and filing documents.
