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Tax legislation changes in Hungary, 2017

In May 2017, changes in tax legislation has been approved by the Hungarian parliament. The changes have an effect on the corporate income tax, individual income tax and VAT laws.

On 2 May 2017, the Hungarian government submitted the 2018 Budget Bill to the parliament, which inducated changes in tax legislation at the same time.

Corporate income tax

Capital gains from the disposal of registered shares will be exempt from corporate income tax, subject to a 1 year holding of the shares. The requirement of a minimum 10% participation holding of the registered shares, which is currently binding, will be abolished. 

A foreign entity will not be deemed a controlled foreign corporation (CFC) if a Hungarian shareholder of that entity trades on a recognized stock exchange and holds at least a 25% interest in the foreign company during the greatest part of the tax year (the current provision requires that the Hungarian shareholder holds the interest for the entire tax year). 

In line with the European initiatives, the establishment and operational costs of charging stations for electric vehicles will be deductible for corporate income tax purposes; the income of a CFC will be allocated to the Hungarian entity in proportion to the shareholding (this provision is expected to apply retroactively to 2017). 

Individual income tax

Rental income derived from residential property will be subject to a 15% individual income tax (as currently) and a health care charge of 14% only on income exceeding HUF 1 million. 


The VAT rate on Internet access services will be reduced from 18% to 5%.,  and the VAT rate on fish products will be reduced from 27% to 5%.

Tax procedure

Hungarian corporate entities will be required to declare foreign bank accounts by 31 January 2018.

The reduction of the threshold requiring detailed VAT reporting (monthly returns, domestic recapitulative statements) from HUF 1 million to HUF 100,000, which was planned to become effective as of 1 July 2017, has been postponed to 1 July 2018. 

The requirement to report to the tax authorities invoices with a minimum value of HUF 100,000 has been postponed to 1 July 2018. 

From 1 January 2018, foreign resident entities will be entitled to liaise with the Hungarian tax authorities by way of e-mail correspondence, even if they are not required to register in the online register database. 

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