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InvoiceProxy
Seamlessly switch from paper to electronic
We offer you the experience of fully data-driven electronic invoicing, with the security of the infrastructure provided by the National Tax and Customs Administration (NAV).
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TaxConsole
Automate your Invoices with TaxConsole
Our TaxConsole application allows access to NAV’s digital services directly from your computer.
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- Accounting and Tax automation
What companies are subject to the global minimum tax?
The legislation will apply to groups of companies with annual revenues above EUR 750 million (approximately HUF 286 billion). The revenue threshold is to be determined on the basis of the consolidated financial statements of the ultimate parent company and will be assessed for the 4 years preceding the tax year concerned: if this threshold is exceeded in at least 2 years, a group will be subject to the global minimum tax rules. Thus, any group of companies that is subject to Country-by-Country Reporting (CbCR) will also be subject to the global minimum tax. However, it is important to note that a number of entities have been defined as excluded entities and thus exempt from the global minimum tax, and in certain cases both the subsidiary and the group may be exempt.
When does the global minimum tax apply?
The global minimum tax rules will apply from tax year 2024, with the exception of the Undertaxed Profit Rule (UTPR), which will only apply from tax year 2025.
When is the global minimum tax due?
A group of companies will only be subject to global minimum tax if one of the group members (not necessarily the parent company) is resident in a “low tax jurisdiction”. A low tax jurisdiction is defined as a state where the effective tax rate on the profits of the group member with tax residence is there lower than the 15% tax rate adopted as the global minimum tax.
In particular, the taxes covered in Hungary are the following:
- corporate income tax (CIT; rate: 9%),
- local business tax (LBT; rate varies from municipality to municipality, but is limited to 2%),
- innovation contribution (rate: 0.3%),
- income tax of energy suppliers (rate temporarily 41% in 2024).
In addition to the actual tax liability, a deferred tax adjustment may be taken into account. The difference between the sum of these taxes and the 15% defined as the minimum will be levied according to the rules of the global minimum tax.
How to pay the global minimum tax?
The minimum tax rules define 3 types of methods for collecting the tax differential, in the following order:
- the Qualified Domestic Minimum Top-Up Tax (“QDMTT”), which may be collected by the country of under-taxation,
- the Income Inclusion Rule (“IIR”), which may be applied by the country of the parent company; and
- the Undertaxed Profit Rule (“UTPR”) which may be applied by the countries of the group members if the country of the parent company has not introduced the IIR rules or the parent company is an excluded entity.
Thus, the first step is to calculate the Qualifying Domestic Deductible Tax (QDMTT) payable to the Hungarian Tax and Customs Administration (NAV) on profits arising in Hungary.
What deadlines should be kept in mind?
For the minimum tax, group members have an annual notification requirement (within 12 months of the start date of the tax year), so the first notification for a tax year corresponding to the calendar year must be made by 31 December 2024.
The tax return must be filed and any payment obligation must be fulfilled within 15 months of the last day of the tax year, with the exception of the transitional year 2024, when this deadline is extended to the end of the 18th month. In other words, companies whose tax year corresponds to the calendar year will first have to file a tax return by 30 June 2026.
What sanctions are in place?
Default penalty:
- HUF 5 million in case of failure to file the notification or for late filing,
- HUF 10 million in case of failure to file a tax return or for filing late, incomplete, incorrect or false tax returns.
Tax penalty:
- 50% of the established tax shortfall;
- in fraudulent cases, up to 200% of the assessed tax shortfall may be imposed as a tax fine in the event of a subsequent audit by NAV.
Late payment fee:
- in case of a tax shortfall, an interest calculated at the base rate of the central bank (currently 9%) plus 5 percentage points may be charged for a period of up to three years from the date on which the tax was originally due until the date of the tax audit minutes.
Why choose our Global minimum tax consultancy services?
- We determine whether your group is subject to the global minimum tax, or whether an exemption may apply.
- Based on your business plans, we calculate the amount of qualified domestic minimum top-up tax you can expect to be recognised.
- We provide tax and accounting advice on global minimum tax issues in Hungarian, English, and German.
- We provide tax planning concerning the qualified domestic minimum top-up tax, with a particular focus on the eligibility for tax allowances, such as development and R&D tax allowances.
- For reports to be submitted to the group headquarters on a monthly/quarterly/semi-annual basis, we calculate the expected amount of qualified domestic minimum top-up tax.
- We provide ongoing support to the group headquarters and other member companies for the coordination and reporting of global minimum tax planning and calculation.
- After the tax year, we prepare the calculation of the qualified domestic top-up tax and the tax return.
