Hungarian government prepares new tax package

The first part of the tax package is being put up for public consultation today. According to the plans, there will be two tax packages this autumn. The state secretary began the briefing by saying that the government is working to strengthen businesses.

One aspect of this is the tax reduction package that the government is working on. He added that the government may decide on this in early November.

"The first package, which I will now detail, contains legal harmonisation and technical amendments. It is expected to be voted on by Parliament at the end of November and to come into force in January," said Bence Gerlaki.

The state secretary then listed the following:

• The government is also introducing a change to personal income tax: the concept of a continuing declaration. If someone declares that they are exempt from personal income tax, this will be valid for life. This means less administration.
• The government is introducing a clarification rule for mothers under the age of 30. This will affect 2,000–3,000 mothers. From 1 January, the government will check whether they have reached the age of 30. If they do so during the year, they will be exempt from personal income tax for the entire year. These mothers will not lose their tax exemption either.
• The government is providing tax-free compensation to customers who have suffered losses as a result of bank data theft. Although credit institutions pay compensation on a voluntary and equitable basis, under current personal income tax rules, the payer is liable for tax (including personal income tax and social contribution tax). The government is now making this compensation completely tax-free.
• Small business tax: in the event of changes relating to cash registers, if a business accumulates funds, the Economy Ministry will not consider electronic funds to be taxable, and those affected will not be penalised for this amount. It will not be considered as part of the tax base (he mentioned funds held on Wise and Revolut as examples).
• In terms of retail taxation, those who sell motor fuel are subject to a different tax burden. This will remain unchanged in 2026.
• The state secretary also addressed the issue of VAT, reminding that the VAT gap rate had fallen from 22% to approximately 2%. To maintain these results, the government has introduced certain rules. Following a recommendation from the National Tax and Customs Administration (NAV), taxpayers will be required to report the full amount of the invoice in their VAT return. NAV is developing a new tool that businesses can use voluntarily to avoid placing an additional administrative burden on companies.

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• We are exempting the forest from municipal tax, which is affecting local taxes.
• There will be a change in the case of real estate sales and purchases. Taxpayers can choose to include previously sold real estate at its high value when purchasing new real estate, thereby reducing the tax base. Currently, the person concerned can deduct the value of the last sale, but this is changing, as Deputy State Secretary Botond Besesek has explained in detail.
• The government is extending the suspension of the advertising tax for a further year.
• Sole traders who suspend their activities do not have to submit an extraordinary tax return.

In addition, the Economy Ministry is working on a tax reduction package, which is expected to be announced in early November,

according to the state secretary. He also indicated that the other package deals extensively with businesses and may include a reduction of 1 percentage point in social contribution tax.

Responding to Portfolio's enequiry Bence Gerlaki said that the package presented now may have a moderate impact on the budget of around HUF 10 billion, while the tax reduction package to be presented later may have a greater impact. He added that if the second package includes a 1 percentage point reduction in social contribution tax, this could result in a shortfall in tax revenue of HUF 200–220 billion.

Mother's PIT exemption

Bence Gerlaki also spoke about the personal income tax exemption for mothers, which came into effect yesterday. He emphasised that

those affected can now begin submitting their tax advance declarations.

There are two ways to do this. They can either notify their employer in writing that they are eligible for this exemption or they can use the company portal to access the information letter sent by the NAV. According to him, the former is the more popular option. Additionally, NAV sends an information letter to all employers via the company portal to help them proactively support their employees in this area. In November, mothers will receive their increased salaries, with the extra payment amounting to HUF 100,000 per month on an average salary. The other option is to use the ONYA interface (an online tax reporting tool) on the NAV website, he continued.

Cover photo: MTI Photo/Attila Kovács