At the beginning of 2026, new regulations entered into force that significantly modify the tax treatment of corporate hospitality. Based on Government Decree No. 10/2026 (I.30.) on measures to improve the competitiveness of restaurants, certain representation benefits provided in the form of food and beverages consumed in restaurants and confectioneries have become tax-exempt up to a specific threshold.

This change is particularly relevant for businesses, as hospitality related to business meetings, maintaining partner relationships or professional events is a common part of corporate operations. At the same time, the application of the tax exemption is subject to strict conditions, and proper documentation plays a key role.

Below we provide an overview of the concept of representation, the main elements of the new regulation and the most important practical considerations.

What does “representation” mean under the Personal Income Tax Act?

The concept of representation is defined in the Hungarian Personal Income Tax Act (Act CXVII of 1995):

“Representation means hospitality (food and beverages) provided in connection with business, official, professional, diplomatic or religious events organised by the provider, as well as hospitality provided on the occasion of state or church holidays, together with services related to the event (such as travel, accommodation, leisure programmes etc.), provided that such benefits do not qualify as representation if, based on the documentation and circumstances of the benefit (organisation, advertising, itinerary, destination, place and duration of stay, proportion of professional or religious programme and leisure programme etc.), misuse of rights can be established even indirectly.”

Based on the above definition, hospitality provided in the framework of a business meeting (e.g. lunch or dinner) may qualify as representation.

By contrast, restaurant consumption provided during a purely recreational corporate team-building event does not qualify as representation, as it lacks a professional element.

Similarly, an event primarily aimed at hospitality or leisure activities does not qualify as representation.

The new regulation: tax-free restaurant and confectionery representation

The Government Decree No. 10/2026 (I.30.) on measures to improve the competitiveness of restaurants allows representation benefits provided in restaurants or confectioneries to be treated as tax-exempt under certain conditions.

The maximum amount of the tax exemption is:

• up to 1% of the company’s total annual revenue,
• but not exceeding HUF 100 million.

This rule may create more favourable conditions for corporate hospitality; however, it remains essential that the benefit qualifies as representation under the applicable legislation.

Proper documentation is essential

In the case of events organised for clients or business partners, it is particularly important that the documentation clearly supports the nature of the representation benefit.

In practice this means that:

• the professional purpose of the event should be identifiable,
• invoices and expenses should be clearly traceable,
• where necessary, an expense breakdown (e.g. in Excel) should be prepared indicating
  • what was purchased,
  • for what purpose,
  • and in what amount.

Such documentation helps determine which expenses may be treated as tax-exempt representation within the statutory limits.

Which hospitality establishments fall under the decree?

A key condition for the tax exemption is that the hospitality must take place in a restaurant or confectionery defined by the decree.

According to Government Decree No. 10/2026 (I.30.):

Restaurant:
a hospitality establishment registered by the local commercial authority as a business type defined in Annex 4, point 1 of Government Decree No. 210/2009 (IX.29.).

Confectionery:
a hospitality establishment registered by the local commercial authority as a business type defined in Annex 4, point 3 of Government Decree No. 210/2009 (IX.29.).

Restaurant – main characteristics according to the regulation

According to Government Decree No. 210/2009 (IX.29.):

Confectionery – main characteristics according to the regulation

Practical question: how can the establishment be identified on invoices?

In practice, it is often not clear from a receipt or invoice whether the consumption took place in a restaurant, confectionery or another hospitality establishment not covered by the decree.

As the tax exemption applies only to establishments defined by the regulation, it is advisable to clearly mark such invoices.

Therefore, we kindly ask to indicate on invoices:

“restaurant/confectionery – representation”

if the expense meets the above conditions and is intended to be treated as tax-exempt representation.

How Grant Thornton can help

The tax treatment of representation expenses often raises practical questions, particularly in relation to documentation, accounting and regulatory compliance.

Grant Thornton’s experts can assist with:

• the tax qualification of representation expenses,
• the development of internal policies,
• the review of documentation practices,
• and ensuring compliance with applicable legislation.

If you would like to review how the new rules can be applied safely within your organisation, please contact our experts.
We are happy to support the practical implementation and help minimise tax risks.