Hungary introduces VAT regimen for diminutive enterprises commencing

10.01.2025

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In accordance with EU Council Directive 2020/285 of 18 February 2020, Hungary has introduced a VAT arrangement for petite enterprises from 2025. The new regulatory framework provides small and medium-sized enterprises with the opportunity to carry out cross-border economic activities on preferential tax terms.

If you are interested in company registration in Hungary in 2025 or you are already running a business registered in this country, then familiarizing yourself with this material may be relevant.

The Hungarian Tax Authority has established a special tax regime for small businesses

Petite enterprises constituted in one of the EU confederation states possess the prerogative, if substantiated reasons prevail, to opt for a fiscal regime that stipulates an exoneration from VAT in the jurisdiction where the operation is genuinely conducted, registering a juridical entity solely at the locale of inception.

Contributors whose cumulative yearly revenue within the precincts of the European Union does not surpass the demarcated threshold of 100 thousand euros, and whose annual receipts within a specific Confederation State fail to exceed the prescribed national criterion, are authorized to invoke this tax alleviation. For contributors functioning within Hungary, this national criterion is set at a sum of 12 million forints (28,830 euros), as dictated by statute.

Conclusion

The Fiscal Authority of the Hungarian Commonwealth promulgated a prescriptive decree instituting a distinctive tax framework for diminutive and moderate-scaled entities, contingent upon solicitation commencing January 1, 2025. Affected contributors possess the prerogative of diverse selection of fiscal sovereignty. Specifically, they are entitled to designate as their fiscal domicile both the jurisdiction of primary incorporation and any other polity encompassed within the pertinent coalition or confederation, or amalgamate tax domiciles across multiple such sovereignties.

For more detailed information on this issue, please contact our company experts directly. We provide legal advice on legal and tax aspects of the activities of companies in the Republic of Hungary, and can also provide support for the activities of foreign companies in Hungary.