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CMS Expert Guide to Mastering OECD's Pillar Two in Hungary

Key stages in the introduction of global minimum taxation

Table of contents
  1. Has there been a formal indication of the intention to implement Pillar Two/GloBE rules?
  2.  What is the implementation status of Pillar Two/GloBE rules?
  3.  Have your tax authorities published guidelines commenting on Pillar Two/GloBE rules?
  4.  When will the Income Inclusion Rule (IIR) come into force?
  5.  When will the Undertaxed Payments Rule (UTPR) come into force? 
  6.  Is there any intention to implement a Qualifying Domestic Minimum Top-Up Tax (QDMTT)? If so, when?
  7. Further comments
Hungary
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1.Has there been a formal indication of the intention to implement Pillar Two/GloBE rules?

Yes.

2. What is the implementation status of Pillar Two/GloBE rules?

30 November 2023: Act LXXXIV of 2023 on supplementary taxes ensuring the global minimum tax level and amending certain tax laws in this context was published, which implements the global minimum tax into the Hungarian legal system. The act is coming into force on 31 December 2023.

3. Have your tax authorities published guidelines commenting on Pillar Two/GloBE rules?

No.

4. When will the Income Inclusion Rule (IIR) come into force?

2024.

5. When will the Undertaxed Payments Rule (UTPR) come into force? 

2025.

6. Is there any intention to implement a Qualifying Domestic Minimum Top-Up Tax (QDMTT)? If so, when?

2024.

7. Further comments

Since Hungarian corporate income tax is 9%, which is significantly below the 15% global minimum rate, the Hungarian government was initially against the introduction of the global minimum tax.

However, Hungary has finally agreed to implementation in December 2022 based on the information that local business tax was going to be a tax covered by the Pillar Two global minimum tax. Local business tax is levied at up to 2% of turnover, with the specific tax rate being determined by the municipalities (typically 2%). Since local business tax is levied on turnover rather than profits, Hungary hoped that including this tax will result in reaching the 15% tax level. 

In addition to local business tax, the adopted act lists Robin Hood tax (income tax of energy suppliers) and Innovation Contribution as taxes covered in Hungary by Pillar Two/GloBE rules.