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Justifying sustainability investments is a challenge for many ESG professionals. In this short article, we aim to offer a simple, 5-step method to address this problem.
Investments in sustainability initiatives create business value that is often not calculated or tracked, which makes it difficult to secure internal support—especially in periods of limited financial resources. For this reason, it is essential from the beginning to assess the internal business justification of the investments needed to implement or maintain sustainable business initiatives. Embedding sustainability-related investments into capital allocation and decision-making processes can increase both the volume and the speed of these investments.
The method presented below builds on the assumption that embedding sustainability into business strategy leads to improvements through a number of intermediary factors:
These developments
- increase revenue,
- improve profitability, and
- raise corporate valuation,
which ultimately result in higher business value and greater positive social impact.
Unfortunately, this value is often not calculated due to missing data or because the finance team is not involved in the accounting of sustainability value, and the monetary expression of avoided risks is difficult.
The 5-step approach
First, the specific sustainability objective must be defined for which investment justification is required. In our example, we use greenhouse gas emission reduction as one of the most common objectives.
Second, identify the measures and practices linked to the selected objective to provide a basis for defining the benefits. Continuing with the previous example, list the measures and practices introduced to reduce greenhouse gas emissions, such as switching to renewable energy or implementing energy-efficiency measures. A deeper analysis is often needed to understand the full context. For example, how is the transition to renewable energy planned? Through own generation or a virtual power purchase agreement?
Third, identify the benefits arising from the measures and practices. Use the list of intermediary factors described in the introduction. For example: does switching to renewable energy improve customer loyalty, support the retention of employees increasingly committed to sustainability, or help avoid potential fines? This analysis may require a cross-functional team to ensure all benefits are identified.
Fourth, assess each benefit, quantify them where possible, and set a timeline for their realisation. Transitioning to renewable energy through green electricity purchases is, for example, much faster than installing a geothermal well, with different costs and pay-back periods. At this stage, the involvement of the finance function is valuable—and generally unavoidable—because some of the value recognised through intermediary factors is typically also recognised in traditional accounting.
Finally, calculate the net present value (NPV), i.e., the sum of future cash flows discounted to present value over the investment’s lifetime, applying the relevant time horizon and discount rate for the company and the selected measures. A geothermal well investment, for example, has a much longer time horizon than a VPPA, and your finance department can advise on the appropriate discount rate.
Why does this matter?
This approach can also be used to analyse the financial impact of potential future sustainability investments. It can, for instance, help assess the benefits of acting earlier than required on sustainability regulation, or the financial risks of inaction in areas such as waste management or the introduction of recycled packaging materials.
The true “plus” lies in the use of intermediary values—the assessment of a broader range of benefits—which can reveal financial advantages not captured by traditional financial analysis, thereby enabling a wider range of sustainability investments to gain leadership support.
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Contact our ESG specialists to turn your sustainability investments into measurable business value.
As the holiday season approaches, not only private individuals but also companies are increasingly giving various benefits as gifts. These gestures are excellent tools for motivating employees or strengthening business relationships. However, the related tax obligations may vary significantly depending on the value, form, and recipient of the gift. Our experts provide guidance to help you navigate the maze of tax regulations.
Corporate gifts towards the end of the year
Nowadays, companies also like to reward their partners and employees, expressing their gratitude for their work and cooperation throughout the year. It is important that the gift reflects the company’s values and philosophy and brings joy to the recipient. A Christmas gift may take the form of a product, a service, or a voucher redeemable exclusively for such products or services. In this summary, we focus specifically on the taxation aspects of giving vouchers as gifts.
Taxation of business gifts
For tax purposes, a common feature is that the individual’s income (that is, the basis for calculating the tax liability) is determined based on the nominal value of the voucher, not on its acquisition cost (even if purchased at a discount).
“Business gifts — i.e. gifts given in connection with the donor’s business, official, professional, diplomatic, or religious activities — qualify as ‘certain specified benefits’ regardless of their value.”
This means that if a company provides a voucher as a business gift, it is subject to a tax liability amounting to 15% personal income tax (PIT) and 13% social contribution tax (SCT), calculated on 118% of the nominal value of the voucher.
Thus, the total tax burden equals 33.04% of the nominal value of the voucher.
Gifts for employees: key considerations
The preferential taxation of “certain specified benefits” also applies if the employee gift qualifies as a “small-value gift” — that is, if it is provided no more than three times per year, each time not exceeding 10% of the statutory minimum wage, and appropriate records are maintained.
However, if any of these conditions are not met, the Christmas gift provided to the employee will be taxed as employment income.
Continuing the example of a flight voucher: based on its nominal value, the employer must pay 13% SCT, while the employee (unless entitled to tax allowances) pays 15% PIT and 18.5% social security contribution, which must be covered from their other income.
Of course, the employer may also decide to “gross up” the benefit — that is, to cover the employee’s personal tax liability as part of the gift. In this case, the total tax burden rises to 69.92% of the nominal value of the voucher.
To motivate employees effectively, companies may therefore take advantage of the small-value gift category, which allows for benefits worth up to HUF 29,080 (per occasion, three times per year) at a 33.04% total tax burden.
Corporate Christmas raffle: how to make it tax-exempt
In addition to directly gifting employees, company Christmas parties increasingly feature raffle games, where prizes may include products, services, or vouchers redeemable exclusively for such items.
It is important to note that the prize of a lawfully organized raffle, which meets the conditions set forth in Section 16 of the Act on the Organization of Games of Chance, does not qualify as income.
However, if the legal requirements are not met, the prize received by the employee will be taxed as employment income, as described above.
To qualify for tax exemption, the following conditions must be met:
- raffle tickets may only be sold to those present at the event;
- the draw must take place at the venue and during the event;
- the total number of issued tickets must not exceed 5,000, or their total face value must not exceed HUF 2 million;
- the total consumer value of the prizes must exceed 80% of the total value of the issued tickets;
- the organization of the raffle must be reported to the gambling supervisory authority at least 10 days prior to its announcement;
- any unclaimed prizes must be redrawn at the event venue and during the event until all prizes have been claimed by present winners;
- the drawing must be documented by a notarial deed, or the organizer must appoint a raffle committee of at least three members, responsible for overseeing the draw and preparing official minutes;
- the organizer must prepare a final accounting report and submit it to the gambling supervisory authority.
Grant Thornton research: ESG and business growth go hand in hand
According to Grant Thornton’s latest international research, mid-market companies worldwide increasingly regard sustainability not merely as a regulatory obligation, but as a strategic growth driver. Nearly 90% of the surveyed businesses plan to maintain or increase their sustainability investments over the next 12 months, while more than half of business leaders already associate ESG directly with tangible business benefits.
Across the globe, we see that sustainability initiatives are less about compliance and more about creating business and economic value, becoming key drivers of competitiveness and brand strength. Mid-market leaders have recognized that ESG is not a cost but an investment — one that simultaneously enhances operational efficiency, strengthens employee engagement, and opens doors to new markets.
The Grant Thornton International Business Report (IBR) surveyed nearly 15,000 mid-market business leaders across 35 countries worldwide.
In 2025, 41.6% of companies cited staying ahead of competitors and 38% cited reputation enhancement as their primary sustainability-related business goals — both significantly stronger motivations than a year earlier.
The long-term business benefits are equally tangible: more than half of mid-market companies (54%) believe sustainability increases future profitability, while 51.3% expect it to drive revenue growth.
Key findings from the research:
- 85.9% of mid-market firms plan to maintain or increase sustainability investments this year.
- Nearly half (49.8%) say sustainability performance is key to entering international markets.
- A majority (54%) expect higher sales prices and improved profitability as a result of sustainability-related investments.
A defining strength of mid-market companies is their agility in responding to market changes. It is now clear that those who proactively integrate sustainability into their business strategy gain a competitive edge. This is not only about regulatory compliance but also about meeting the expectations of clients, investors, and employees alike.
Where are the investments flowing?
The most popular area is renewable energy (43.5%), supported by cost-efficiency and tax considerations. At the same time, commitment to diversity and inclusion has grown markedly: in the U.S., the proportion of mid-market firms investing in such programs rose from 31% to 44.8%.
In Hungary, the situation is partly similar — renewable energy continues to play a major role, while climate adaptation and internal governance measures (ethical codes, whistleblowing systems, supplier due diligence) are gaining importance, particularly as the mandatory “compliance” component of sustainability reporting gradually eases.
Reporting: a business tool, not a burden
Despite the changing regulatory landscape — including the EU’s CSRD simplifications — 72.9% of mid-market companies continue their sustainability reporting efforts. Among them, 44.8% consider transparency valuable from a business perspective, and 35.9% regard it as an integral part of their corporate mission.
Companies unable to demonstrate credible sustainability practices risk jeopardizing key business relationships. This is not merely a reputational issue — it can determine whether they remain part of critical supply chains.
It is also important to highlight the role of collaboration: costs and complexity remain shared challenges. Working together with investors, industry peers, and clients makes it easier to develop viable and broadly applicable sustainability practices.
Barriers and opportunities
The most significant barriers include costs (40.9%), regulatory complexity (35%), and administrative resource demands (32.3%). However, businesses increasingly recognize that sustainability investments can yield rapid returns and create long-term operational stability.
Currently, the greatest challenge is not cost, but economic uncertainty. The business confidence index is 26% lower than a few years ago, prompting many companies to act cautiously and scale back investments.
At the same time, the easing of regulatory pressure has opened up new opportunities: together with our clients, we can now focus more on identifying and implementing value-creating, long-term sustainable projects. These initiatives not only generate competitive advantages but also contribute to cost reduction and enterprise value growth.
Thanks to the trust of our clients, we have already prepared numerous ESG reports for first-wave obligated companies — and our experience shows that these almost invariably deliver tangible business benefits.
For Grant Thornton, sustainability represents a shared opportunity for strategic value creation together with our Partners and Clients. Strengthening this commitment, our firm has joined the IFRS Sustainability Alliance — a global professional community shaping the future of ESG reporting and sustainability standards.
Established by the IFRS Foundation, the Alliance works to harmonize sustainability reporting and promote the widespread adoption of the IFRS Sustainability Disclosure Standards (IFRS SDS). Its members include leading global corporations, regulators, investors, and advisors who are collectively seeking answers to the business challenges of sustainability.
Through Grant Thornton’s active participation, the firm will:
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gain direct access to the latest international developments and guidelines,
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represent the interests of its clients in global sustainability discussions, and
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develop practical solutions for mid-market and large enterprises to meet both regulatory and market expectations.
“For our clients, it is essential not only to comply with ESG regulations, but to create real value through them.
By joining the IFRS Sustainability Alliance, we have gained another channel through which we can actively help shape the professional environment in which sustainability can become a genuine competitive advantage.”
This membership marks another milestone for Grant Thornton Hungary, reinforcing our ability to combine the global knowledge of our international network with local expertise — supporting clients throughout their sustainability transition in the service of business growth and long-term value creation.
Budapest, September 9, 2025 – Leadership change at the Hungarian office of the world’s sixth-largest advisory network: as of September 1, Gábor Szarka holds the position of Managing Partner of Grant Thornton Hungary, succeeding Waltraud Körbler, who led the company for more than three decades. Gábor Szarka’s appointment promises a combination of professional excellence and people-centered leadership at the firm.
Under the leadership of Waltraud Körbler, Grant Thornton Hungary has become a key player in the domestic advisory market: she built new service lines and established strong international embeddedness.
“Over the past more than thirty years, we have achieved success together; without the support and commitment of colleagues, we could not have come this far. I am confident that Gábor’s commitment and professional experience will guarantee the further strengthening of the company,” said Waltraud Körbler.
Gábor Szarka has been working in the financial and advisory sector for more than twenty-five years, ten of which at Grant Thornton. He previously expanded his professional experience in the banking sector, at international advisory firms, and in real estate development. At the Hungarian office of Grant Thornton, he has led numerous areas, from business valuation and transfer pricing advisory to outsourcing, and later played a leading role in the development of internal functions and the introduction of new innovative advisory fields. In addition, he has been actively involved in connecting the company’s regional and global network with local operations. His broad professional experience provides a solid foundation for the company’s future growth.
“Throughout my career, I have always worked along the principles of Anglo-Saxon openness, mutual respect and integrity. This attitude is particularly important in an industry where, in addition to professional excellence, human relationships represent the greatest value,” said Gábor Szarka.
As the new leader, he considers it a key priority to continuously develop the professional knowledge of the team, deepen domestic and international cooperation, and strengthen the recognition of the Grant Thornton brand in Hungary.
“I would like our colleagues in Hungary to be truly proud of working at Grant Thornton. This shared culture, cohesion and professional high standards will be one of the cornerstones of our success,” he emphasized.
Grant Thornton is present in more than 150 countries worldwide and works at the forefront of the advisory market. Under the leadership of Gábor Szarka, the Hungarian office will continue to strive to support its clients at the highest professional level in a rapidly changing economic and business environment, while further strengthening its professional position and, through its international connections, ensuring clients the combination of global knowledge and local expertise.
The Hungarian deadline for submitting an application for reclaiming value added tax (VAT) paid abroad during the 2024 calendar year is 30 September 2025. The reclaim process is complex; below we present, without claiming completeness, the most important detailed rules.
Hungarian resident companies cannot reclaim abroad paid VAT (“VAT”) in their Hungarian VAT return. The reason is that in the case of services used abroad or goods purchased there, the VAT paid by the Hungarian company is paid into the budget of the foreign country and not into the Hungarian budget; therefore, in such cases, the Hungarian Tax Authority (NAV) is not the competent authority.
By what methods can VAT paid abroad be reclaimed?
The right to deduct VAT (subject to other conditions being met) applies to all taxpayers established within the territory of the European Union; therefore, there are two methods available for reclaiming VAT paid abroad (which, however, are not alternatives to each other):
- registration (tax registration) in the given EU Member State; or
- reclaiming foreign VAT as discussed in this article.
The former (reclaim by way of registration) is only possible if in the given EU Member State a taxable economic activity was also carried out to which a locally performed transaction is linked. Since in the vast majority of cases this is not the case, in the absence of such activity as well as of a local seat or establishment, VAT may only be reclaimed through a separate procedure, according to the rules of foreign VAT refund.
It is in any case necessary to define what we mean here by “abroad.” For Hungarian taxpayers – based on Council Directive 2008/9/EC – VAT paid in all EU Member States (currently 26 countries in addition to Hungary) may be reclaimed. Outside the EU, however, only VAT charged in a country with which Hungary has concluded a bilateral reciprocity agreement may be reclaimed. At present, the following six countries are included: the United Kingdom (which left the EU), as well as Liechtenstein, Norway, Switzerland, Serbia and Turkey.
Thus, in relation to the foreign VAT reclaim procedure discussed here, a total of 32 (European) countries are concerned: 26 EU Member States and 6 “others.”
Who can apply for a refund of VAT paid abroad?
The reclaim process can be started by completing a special application form (the so-called ELEKAFA form) and submitting it (exclusively) electronically. The reclaim has several conjunctive (simultaneously applicable) conditions:
- the applicant must qualify as a foreign taxpayer in relation to the country concerned;
- the applicant may not have had an establishment in the country concerned during the application period;
- the applicant may not have had any locally performed transaction in the country concerned during the application period;
- the applicant must have used the goods or services concerned for taxable economic activities.
Consequently, a Hungarian taxpayer is not entitled to a refund of VAT paid abroad if, by virtue of its domestic activities, it is not entitled to deduct VAT at all, or if it has chosen exemption for small taxpayers.
When reclaiming foreign VAT, the rules of the source country apply!
For reclaims from any of the 26 EU Member States, the application must be submitted to the Hungarian Tax Authority (NAV), whereas for the other six countries – including the United Kingdom – it must be submitted directly to the tax authority of the country concerned. Applications submitted to the NAV are automatically forwarded by NAV to the tax authority of the Member State concerned, and the applicant has no further action to take in this respect. In all cases, the application is assessed by the tax authority of the country concerned.
As a result, the language of the procedure is not Hungarian, and if the foreign tax authority has further questions, it will almost certainly not contact the applicant company in Hungarian. Based on our experience, it is advisable to regularly check the spam folder of the e-mail inbox during the procedure, and it may also be worth involving a foreign tax advisor as a contact person to make communication with the foreign tax authority easier and faster and thus speed up the assessment of the refund claim.
For fuel, if the tax base reaches EUR 250, and in other cases if it reaches EUR 1,000, copies of the invoices proving the economic activity must also be attached to the application. It is essential to collect the invoices and other documents concerned in advance, as only one application can be submitted per period and per country. It should also be noted that above EUR 400, it is not mandatory to wait until the annual submission deadline, as in this case an application may already be submitted for a period covering at least three months. However, even then the single-application rule applies.
It should be emphasized that in the case of foreign VAT refund, in all cases the national rules of the source country are applicable, i.e. only that VAT may be reclaimed which can be deducted in the country concerned (regardless of whether such VAT would also be deductible in Hungary). Although VAT regulation is in principle harmonised at EU level (as national VAT Acts were all prepared on the basis of the same EU Directive), there may still be national specificities in certain details. A typical example is that, unlike in Hungary, in some EU Member States the VAT content of fuel for passenger cars is also fully deductible.
The deadline is of forfeiture nature
In the case of EU Member States, the deadline for submitting the application is forfeiture: 30 September (this year it falls on a Saturday; nevertheless, the relevant legislation does not extend the deadline to the next working day). Missing this deadline means there is no remedy or request for justification possible. In the case of the six non-EU countries, specific deadline rules apply.
Applications are usually assessed within 4 months. If the foreign tax authority requests supplementation or a statement, the deadline may be extended, but the procedure may not exceed 8 months.
As can be seen, reclaiming foreign VAT is by no means a routine task even in the life of an average business. Difficulties may arise from the fact that the deadline is of forfeiture nature, that the relevant background rules must be precisely known (which in some cases means knowledge of the national regulations of the foreign country concerned), and also from the fact that the procedure is not conducted in Hungarian.
Our tax experts with international background are at your disposal to support you and your company in this procedure full of pitfalls!
This newsletter was prepared based on the information available at the date of publication and for general informational purposes only; it does not constitute personalised tax advice and does not substitute it in any respect.