The tax system in Hungary permits tax relief in the form of a deduction (a reduction in the taxable income) and in the form of a direct credit of the amount of tax payable (tax credit).
An individual may receive a tax credit in the following circumstances:
- A credit for children - HUF 66,670 per month for families with one child, HUF 133,330 for families with two children.
- Payments to insurance funds - a credit of 20%. Up to a limit.
- Repayment of loans for a residence - a credit up to a limit.
- Donations to public institutions or church, up to 1% of the tax payable.
Hungary Business Deductions
- Offset of losses - a loss generated before 2023 may be offset forward until 2030 up to 50% of the current year's income.
A loss generated from 2015 forward can be offset forward up to five years.
There is no carry back of losses.
- Transactions between affiliated parties - parties are defined in law as affiliated when one parties holds more than 50% of the shares of the other or has 50% or more of the control over the other.
The price for transactions between affiliated parties that are completed on payment of a sum that is significantly higher than the market price is not allowable.
- Related parties have to report the tax office about such transactions prior to the tax return.
- Consolidated Returns – A consolidated tax filing is subject to certain terms.
- Interest Expenses-interest can be deducted up to the higher of 30% of the EBITDA of the taxpayer or EUR 3 million.
Hungary Depreciation of Fixed Assets
Depreciation is allowable at the following rates
|Class of Asset||Annual Depreciation (%)|
|Machinery and equipment||14.5/33|