What was previously visible only to the tax authorities will now be public

The introduction of public country-by-country reporting (Public CbCR) further enhances the tax transparency of multinational enterprise groups. As a result of the new rules, the corporate tax position of large companies will become understandable not only to tax authorities but also to investors, lenders, employees, civil society organisations, the media, and the general public.

The EU Directive 2021/2101 on Public CbCR has been implemented into Hungarian law through the Accounting Act (Act C of 2000). The essence of the regulation is that qualifying multinational groups must publicly disclose, among other items, the revenue, profit before tax, current tax payable and paid, employee headcount, and retained earnings reported in each jurisdiction.

The obligation primarily applies to multinational groups whose consolidated revenue exceeds €750 million in two consecutive financial years, thus targeting the largest international corporate groups. The rules apply to financial years beginning on or after 22 June 2024. A Hungarian-specific feature is that domestic legislation sets a revenue threshold of HUF 275 billion for affected Hungarian parent companies and requires simultaneous filing and publication together with the annual financial statements.

In practice, this means that for calendar-year entities, the first reporting period will generally be the 2025 financial year, with the first publication deadline being 31 May 2026 (for standalone financial statements) or 30 June 2026 (for consolidated financial statements). These deadlines differ significantly from those in virtually all other countries and may therefore impose a substantial (and unique) administrative burden on the affected Hungarian undertakings. This approach is consistent with the Hungarian legislator’s general tendency to transpose international requirements with stricter conditions.

The changes are particularly sensitive for Hungarian subsidiaries and branches of non-EU parent companies. If the foreign parent fails to publish the Public CbCR report in a timely and appropriate manner, or does not prepare such documentation at all, the Hungarian entity must take the necessary steps to ensure publication. Where the Hungarian company does not receive the required data from the parent, it must prepare the report based on the information available to it and must declare that the parent company did not provide the complete dataset.

These rules once again demonstrate that Hungarian group members may face unjustified additional time and cost burdens arising from local specific requirements. Moreover, the Hungarian legal system ties the preparation and publication of these separate reports to the peak financial reporting period — the busiest time in the year for every company’s finance and accounting team.

It is also worth noting that foreign parent companies and central management teams have often been perplexed by the unique data requests imposed on Hungarian subsidiaries under Hungarian regulations in areas such as transfer pricing. This new obligation is likely to create yet another such experience for multinational groups.

The practical risks of Public CbCR extend beyond mere data reporting. The report must be prepared in a uniform, machine-readable electronic format, which enables automated comparisons. This means that tax data reported in different countries can be quickly compared, making differences in tax positions visible even in the absence of context or explanatory background information.

This may expose group entities to risks, as the published data alone could lead to attacks or allegations by the media or individuals that would not be justified if all the facts were known.

Hungarian rules are stricter than the EU minimum in several respects: they do not permit the temporary omission of commercially sensitive data, and the explanation of material differences between tax payable and tax paid is not optional but mandatory. In addition, Hungarian companies must keep the report publicly available on their website for at least five consecutive years and retain it for eight years.

Overall, the new reporting obligation once again imposes a significant administrative burden on members of the largest Hungarian corporate groups. Although the level of penalties for non-filing or incorrect filing has not yet been published (and new obligations are usually accompanied by a one-year grace period before actual fines are imposed), based on the precedent of the previous CbCR regime, we can expect material penalty risks in relation to Public CbCR as well.