Hungarian Parliament adopts tax law amendments

Tax changes

The aim of the Act is

to transpose emergency legislation, simplify administration, harmonise EU law and introduce the necessary amendments to achieve the government's tax policy objectives.

The rules on extra-profit taxes, the 'Brent-Ural' tax, the insurance surcharge and the retail tax — all of which are set out in government decrees issued during the 'state of danger', which has been in place for five years — will become law.

The changes to personal income tax are mainly technical and necessary due to the introduction of new laws providing benefits for families with children, the government explains. The micro-employment tax credit has been increased from 100% to 150%. The decision to raise the VAT exemption threshold from HUF 12 million to HUF 18 million from January is also being enshrined in law.

The amendment includes the introduction of the general receipt data service on 1 September 2026, rather than 1 July 2025. The HUF 50 million limit on the corporate tax base exemption for research and development activities carried out jointly with higher education institutions or research centres will be raised to HUF 150 million.

To encourage the uptake of micromobility, the proposal increases the recognised power limit for electric company bicycles from 300 to 750 watts. To protect the corporate tax base, if a Hungarian company becomes a foreign company, corporate tax will be payable on the revaluation of assets, even if no final balance sheet is drawn up.

A legal successor arriving in Hungary through a cross-border transformation from abroad may declare the shares acquired by the predecessor, thereby becoming entitled to a tax exemption on the sale of these shares. This year, the income tax rate for energy suppliers will remain at 41%, but will revert to 31% in 2026.

In addition, citizens' organisations and volunteer fire brigades will be exempt from company car tax for vehicles used for their core activities. On-the-spot inspections by the tax and customs authorities will also be paperless.

Changes to dual citizenship rules

On Wednesday, Parliament adopted Fidesz MP János Halász's bill, which will allow the suspension of Hungarian citizenship for dual citizens posing a threat to public order, public security or national security in Hungary. The bill was passed with 133 votes in favour, 48 against and six abstentions.

According to the adopted bill, Hungarian citizenship may in future be suspended for:

• individuals who hold the citizenship of a non-EEA state (including EU candidate countries) in addition to their Hungarian citizenship; and
• individuals who engage in conduct that constitutes a threat to public order, public security or national security of Hungary.

The law also specified who constitutes a threat to public order and national security in Hungary.

• A person who serves in the military or civil service of a third (non-EEA) state, unless they do so in an allied state to Hungary, is paid for it and "the nature and content of the service is not such as to create a danger".
• Any person who, in the representation of, on behalf of or in the interests of a foreign power or organisation, acts in a manner prejudicial to the sovereignty, constitutional order or national security of Hungary.
• Any person who is associated with, or a member of, an organisation that is considered a terrorist organisation under international law.
• Any person who has been convicted by a final court ruling of an offence that, according to the Penal Code, poses a serious threat to public order, public security or the constitutional order, specifically including genocide, crimes against humanity, apartheid, violent alteration of the constitutional order, conspiracy against the constitutional order, treason, disloyalty, support for the enemy, espionage and terrorist offences, as well as the financing of terrorism.

According to the law, the following must be taken into account before suspending citizenship: the person's actual relations with Hungary; the effects on their individual and family life; the time that has elapsed since the threatening conduct; and their current life situation.

A minister designated by government decree may order the suspension of Hungarian citizenship, but it is not yet known who this minister will be. The period of suspension cannot exceed ten years.

According to the proposal, anyone may submit a report/suggestion regarding the suspension of citizenship, but the procedure will be initiated by the minister ex officio, rather than upon notification. The minister may also conduct an evidentiary procedure to clarify the facts, and may request the advice of the National Information Centre and the police.

The decision to suspend Hungarian citizenship must be communicated to the relevant individual and published in the Official Gazette. The affected individual may appeal against the decision within 30 days, and the Curia (Supreme Court) will reach a decision within 30 days through an administrative procedure.

According to the law, Hungarian citizenship can be restored to anyone who can prove beyond doubt that their restoration of citizenship does not pose a threat to public order, public security or national security in Hungary during the period of suspension. The minister makes this decision, and according to the law, restoration can only be applied for once during the suspension period. The proposal also includes the restoration of Hungarian citizenship for individuals who become stateless during this period.

A constitutional amendment in April paved the way for the bill adopted today.

The suspension of Hungarian citizenship for a limited period is a new concept in the Hungarian legal system. There is no similar solution in the international context either.

Local news portal Telex pointed to the absurdity of the constitutional amendment by saying that the Fundamental Law itself strongly protects Hungarian citizenship. Similar to the European Convention on Nationality, it prohibits the deprivation of legally acquired citizenship, a practice that was last seen in the Kádár era.

A fundamental right enshrined in the Constitution is the right of Hungarian citizens to return to and reside in Hungary at any time without conditions and to not be expelled from the country. Hungarian citizenship can only be revoked if it was obtained fraudulently, and then only within a certain timeframe.

Boldizsár Nagy, an international lawyer and Professor Emeritus at the Central European University (CEU) in Vienna (an institution practically ousted from Hungary via legislation by Viktor Orbán's government), told Telex that the provision in the Fundamental Law regarding the suspension of Hungarian citizenship is incomprehensible, impracticable, and incompatible with fundamental rights.

It is as absurd as discussing the colour of a bald angel's hair.

The amendment was opposed by international lawyers in Hungary in a resolution.

"In our view, the suspension of nationality is an unprecedented concept in international law that could easily be open to abuse. Expelling a state's own citizens from their home country may constitute exile and inhuman treatment, which could contravene the human rights conventions to which the state in question is a party," they wrote.

Cover image (for illustration purposes only): Getty Images