Hungary: Parliament passes pillar two global minimum tax law

On 21 November 2023, the Hungarian Parliament passed legislation to implement the Pillar 2 global minimum tax (GloBE) rules as per the Council Directive (EU) 2022/2523 of 14 December 2022.  On 17 October 2023, Hungary’s Ministry of Finance initiated a public consultation process regarding a draft law for implementing the corporate minimum tax under Pillar 2. The bill was presented to parliament on 31 October 2023.

The legislation also includes a transitional country-by-country reporting safe harbor and a QDMTT safe harbor. The legislation will go into effect and is applicable for fiscal years commencing on or after 31 December 2023, except for the UTPR, which will apply for fiscal years commencing on or after 31 December 2024. About the global minimum tax, a research and development (R&D) tax credit is introduced. This credit amounts to 10% of eligible R&D costs, up to EUR 55 million per taxpayer per project in Hungarian Forint (HUF). It can be claimed in the year the R&D costs are incurred and the following three years.

For R&D projects conducted with higher education institutions, the R&D tax credit is increased to 30%, with a limit of HUF 20 million. Starting the 2024 tax year, the R&D tax credit will apply to R&D expenses and be classified as a refundable tax credit per GLOBE regulations.

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