Comprehensive tax package published: stricter rules on trusts; several taxes and other payment obligations abolished

At the end of July, a comprehensive package of tax law amendments related to the implementation of the Recovery and Resilience Plan was published. The legislation amends the rules governing several taxes, phases out certain tax benefits and abolishes several tax and other payment obligations.

The most important changes are as follows.

1. Personal income tax

One of the most significant changes in personal income taxation is the tightening of the tax rules applicable to trust arrangements and private foundations, which we discussed in more detail in our July newsletter.

Under the amendment, if a settlor transfers assets into trust management or transfers assets to a private foundation, an increase in asset value must be determined in certain cases. This increase may become taxable as income from the sale of assets.

The rules nevertheless contain several exceptions. For example, no increase in asset value needs to be determined when crypto-assets are transferred. Nor does such an obligation arise where the assets are acquired as a result of the death of the settlor, founder or a person joining the foundation.

The amendment also significantly expands NAV’s audit powers. From 1 January 2028, NAV will audit all trust arrangements and private foundations within the limitation period. The audits may examine, among other things, the circumstances of the asset transfer, the content and purpose of the contracts and the circumstances related to obtaining a tax advantage.

2. Corporate income tax

In corporate income taxation, the growth tax credit is being phased out. However, under the transitional rules, the previous provisions will continue to apply to any outstanding obligations related to growth tax credits arising in 2026 or earlier.

The corporate income tax base reduction available for supporting public-interest asset management foundations performing public duties will also be abolished. Under the transitional rules set out in the Act, the benefit may be claimed for the last time in the tax year beginning in 2027.

The tax base reduction rules linked to support for certain public benefit organisations, higher education institutions, HUN-REN, the Hungarian Disaster Relief Fund, the National Cultural Fund and the Compensation Fund are also amended, in several cases changing the amount of the available benefit.

3. Retail tax

For retail tax purposes, the Act abolishes the special rule that in certain cases required the net sales revenue of related enterprises or certain business forms to be aggregated when determining the retail tax base.

The change already applies to tax years beginning in 2026, so affected businesses no longer need to apply these aggregation rules when determining their 2026 retail tax liability.

4. Taxes and other payment obligations being abolished

The legislation also abolishes several taxes and other payment obligations.

With retroactive effect from 7 October 2023, the carbon tax is abolished. Tax paid from that date, together with the related interest, may be reclaimed at the request of the affected taxpayer. The reclaim must be submitted within a 90-day statutory deadline following the entry into force of the Act.

The special municipal tax is also abolished, while the immigration special tax is also being phased out. The provisions on the dog control contribution are also removed from the Animal Protection Act.

A new exemption from local taxes applies to certain individuals arriving from Ukraine. Individuals who arrived from Ukraine on or after 24 February 2022 and who had lawfully resided in Ukraine before arriving in Hungary are exempt from local tax liability. Under the Act, the provision applies to tax liabilities arising from 14 May 2026.

If you have any questions regarding the above, please feel free to contact our expert colleague.