Corporation tax (TAO)
Corporate tax is a type of income and profit tax in Hungary. Enterprises are liable to corporate income tax on income earned from the acquisition of property or from the economic activity that gives rise to it.
Corporate tax rate from 1 January 2017: 9 %
Procedure for deducting corporate tax:
Most common items increasing the tax base (+)
- Establishment of provisions
- Accounting depreciation charged
- Unplanned accounting depreciation
- Impairment losses recognized
- Unused R&D activity
- Tax audit, self-audit findings
- Fines, penalties and legal consequences recognized as an expense
- Transfer taxes on associated enterprises
- Costs and expenses not incurred in the interest of the enterprise (non-private)
The corporate tax base can be reduced by a number of benefits, the most important of which are:
Most common tax base reduction items (-)
- Use of provisions
- Recognized depreciation under tax law
- Reversal of unscheduled depreciation
- Impairment reversed
- Dividends received, receivable, shares
- R&D direct costs
- Transfer taxes on associated enterprises
- Donations, grants
- SME investment allowance
- Establishment of a development reserve
- employment benefits
- 50% of royalty profits
- Double the renovation to increase the value of the monument
- Workers' accommodation discount
- Accrued losses up to 50% of the tax base
- Sale of a registered share
- Installation of an electric charging station
- Investing in an early stage (start-up) company
Tax benefits:
Up to 80 percent of the calculated tax can be deducted as a development tax credit, and then any other tax relief can be claimed from the remaining tax, up to 70 percent.
Tax relief subject to an 80% limit:
- Development tax allowance
Tax relief subject to a 70% limit:
- Support for spectator team sports
- Support for film production
- Cooperative Community Foundation training
- Tax relief on interest on an SME investment loan
- Tax relief for investment and renovation for energy efficiency purposes
- Tax relief for live music services
Tax payments and returns:
The tax return and tax payment obligation for the tax year must be completed by the last day of the fifth month following the tax year (31 May).
The tax advance is also calculated when the annual tax return is submitted. Tax advances are assessed on a monthly or quarterly basis, depending on the amount of tax due in previous years.