The most important changes in the summer tax package

Personal income tax

Trusts and private foundations – the possibility of tax-exempt step-up is being eliminated

Elimination of the five-year rule: As of 31 August 2026, the personal income tax rules relating to the transfer and distribution of assets placed under trust management or transferred into the ownership of a private foundation are being amended. Under the Proposal, upon the transfer of assets – as a general rule – no tax liability arises going forward either, meaning that “entry” taxation is not reintroduced. At the same time, however, with the exception of crypto-assets, the unrealised increase in asset value must be determined and recorded by the trustee or the private foundation. Under the Proposal, the current tax exemption applicable to the increase in asset value upon distribution after five years will cease to apply.

The Proposal does not affect the existing transitional provisions, and therefore the previous rules remain applicable to trusts established before 12 September 2023, as well as to asset items already placed under trust management and stepped up under the rules currently in force. The change therefore constitutes a substantive change primarily in the case of new asset transfers taking place from 31 August 2026.

Increase in asset value in the case of a preferential exchange of shares: The Proposal stipulates that, upon the transfer into trust management or to a private foundation of a shareholding acquired through a preferential exchange of shares, if the transferring private individual opted for tax exemption during the preferential exchange of shares, the increase in asset value is the difference between the accounting book value at the time of the asset transfer and the original acquisition value of the shareholding transferred in the exchange of shares. From a practical standpoint, this means that the increase in value covered by the tax exemption during the preferential exchange of shares becomes part of the increase in asset value recorded upon the asset transfer, and the taxation rules applicable upon the distribution of assets apply to it as such.

Distribution in identical form – no tax, but no step-up either: If the beneficiary receives, upon the distribution of assets, the same asset item that the settlor or the founder transferred – for example, the same real estate or the same security – the distribution of assets will be tax-exempt under the Proposal. This identical outward form does not mean that “a security is distributed in place of a security” or “real estate in place of real estate”, but rather that the same specific asset item must come into the beneficiary’s possession. In such a case, the beneficiary may – as a general rule – take into account the historical acquisition value of the settlor or founder; thus, the step-up does not become a new acquisition value. In other words, if the beneficiary later disposes of the asset item distributed in this manner, they will have to determine their taxable income by taking into account the original acquisition value established at the level of the settlor.

Distribution of an asset item in changed form: If, upon the distribution of assets, the beneficiary does not receive the same asset item that the settlor or the founder transferred into trust management or to the private foundation – for example, the trustee sold the transferred security and money is subsequently paid out – the Proposal introduces a sequencing rule:

1. First, a benefit charged against the yield or the reserve must be presumed, which is taxable as dividend.
2. Subsequently, the part provided against the increase in asset value shown in the separate records is also taxed as dividend.
3. Only the part above this, not qualifying as dividend and charged against the initial capital, may be tax-exempt.

Example: If the settlor places into trust management a security acquired for HUF 20 million, whose value at the time of settlement is HUF 100 million, and the trustee then sells it for HUF 130 million, then HUF 30 million yield and HUF 80 million increase in asset value can be separated. If HUF 120 million is paid out to the beneficiary, of that, HUF 30 million is taxable as yield, a further HUF 80 million is taxable as dividend against the increase in asset value, while the remaining HUF 10 million, charged against the initial capital as a benefit not qualifying as dividend, may be tax-exempt.

Special rules for crypto-assets: The Proposal sets out special rules for crypto-assets:

• Asset transfer: Whereas in the case of other asset items the transfer of assets is not a taxable event (the unrealised foreign exchange gain is merely recorded as an increase in asset value), in the case of the transfer of a crypto-asset not an increase in asset value but revenue must be determined, which will be taxable in the hands of the transferor of the assets.
• Acquisition value at the time of distribution: If the crypto-asset is distributed to the beneficiary in unchanged form, they may take into account the cost / accounting book value of the crypto-asset as the acquisition value (that is, the taxed value at which the trustee or the private foundation recorded it in its balance sheet at the time of the asset transfer).

Date of acquisition of real estate: In the case of real estate distributed from the managed assets or foundation assets, the date of acquisition for personal income tax purposes is the date on which the settlor acquired the real estate. Since, in the case of the sale of real estate by private individuals, the income is tax-exempt from the fifth year, the “carried-over” date of acquisition makes the subsequent sale of the distributed real estate substantially more favourable.

Tax treatment analogous to inheritance: No increase in asset value has to be determined if the recipient – the trustee or the private foundation – acquires ownership of the asset value upon the death of the settlor, the founder or the acceding party. On the other hand, no income has to be determined if the beneficiary acquires ownership of the asset value following the death of the said person. In such a case, the beneficiary may take into account, as the acquisition value, the fair market value of the asset item at the time of acquisition (the unrealised gain accumulated until death will thus not be taxable).

Free/preferential use of an asset item – certain specified benefit: If the managed assets or foundation assets provide an asset value to the beneficiary without the transfer of ownership – typically through the free or preferential use of real estate – this qualifies as a certain specified benefit on the basis of the related cost or expense. On 1.18 times the value of the benefit, 15% personal income tax and 13% social contribution tax – together 33.04% – are payable, charged against the managed assets. The income is exempt from this if, in the case of the transfer of ownership of the given asset item, the private individual acquiring it would not incur a duty payment obligation – that is, typically if the user is a lineal relative, spouse or sibling of the settlor; in this case, the asset value acquired through use is tax-exempt for the beneficiary as well. In the case of a foreign asset item, one must proceed as if its transfer of ownership took place domestically.

Continuity of the LTIA upon a change in the person of the trustee: In the case of a long-term investment agreement (LTIA) concluded by the trustee, a change in the person of the trustee (for example, death, recall, termination of a legal entity) does not interrupt the lock-up if the new trustee concludes a new LTIA of the same type within 30 days of the terminated agreement, and all assets shown in the lock-up records are transferred in full. The amendment confirms the established legal practice.

Annual data reporting obligation: The trustee and the private foundation are obliged to report to the NAV, by 31 January of the year following the tax year, the recorded value of the managed or foundation assets, the recorded value per asset item and the increases in asset value determined, as well as the closing value of the separate records. The data reporting must also be fulfilled by already operating structures, for the first time regarding the 2026 (partial) year by 31 March 2027.

Mandatory NAV audits: The NAV is obliged to audit every trust and private foundation registered before 12 September 2023 (the introduction of the five-year grace period), including those already terminated (in the latter case, the audit is conducted against the settlor, founder or acceding party). The audit examines the genuine economic substance of the structure: the circumstances of the settlement, the content of the agreements and the duration of their existence, the relationship of the trustee with the settlor and the beneficiary, as well as the period between the settlement and the first distribution of assets made as capital. From 1 January 2028, the NAV audits all structures within the limitation period of the right to assess tax.

• The beneficiary’s subsidiary liability: If a tax debt encumbering the managed assets or the private foundation assets cannot be collected from these assets, the NAV may, by decision – up to the value of the revenue acquired – oblige the private individual acquiring revenue against these assets free of charge or on preferential terms to pay the debt.

Corporate income tax

“Castle renovation incentives”: With effect from 1 January 2027, the tax base decreasing items currently available in respect of the maintenance and renovation of protected historic properties, as well as the acquisition of tangible assets and capital contributions qualifying as investments relating to such properties, will be abolished. Taxpayers may apply these tax base deductions for the last time in respect of tax years commencing in 2026. Any previously generated but unused tax benefit balance may not be carried forward beyond the 2026 tax year.

Growth tax credit: The Proposal abolishes the growth tax credit regime as of 1 January 2027. Under the current rules, the regime allows taxpayers, subject to certain conditions, to defer the payment of corporate income tax attributable to a significant increase in profitability compared to a reference period and to settle the tax liability in instalments over subsequent tax years. Growth tax credits generated prior to 2027 will remain subject to the provisions in force as of 31 December 2026. However, the related investment tax benefit may only be claimed against tax instalments due before 1 January 2027.

Support granted to Public Benefit Trusts Performing Public Functions (KEKVAs): The Proposal phases out the special corporate income tax provisions applicable to KEKVAs. As part of this change, the currently available 300% corporate income tax base deduction related to support provided to a university maintained by a KEKVA or to its maintaining foundation will be abolished with effect from 1 August 2027. The deduction – currently capped at the amount of the taxpayer’s profit before tax – may be claimed for the last time in respect of tax years commencing in 2027. In addition, the 20% tax base deduction (or 40% in certain cases) available for support granted to a KEKVA in the absence of a higher education support agreement will be discontinued already from 1 January 2027.

Value added tax

Act LXXXIII of 2025 would have required taxpayers, with effect from the tax assessment period that includes 1 July 2026, to report on the domestic recapitulative statement of the VAT return (the “M-sheet”) – in respect of incoming invoices – not only the VAT charged but also the amount of VAT actually claimed as deductible. This information would have had to be provided invoice by invoice, broken down by tax rate and pro-rata apportionment, with the obligation extending to corrective and advance-payment invoices and with amounts rounded to whole forints.

On 25 June 2026, the Ministry of Finance announced that it does not intend to bring this stricter requirement into effect for any return period. Accordingly, the Proposal revises the “Receipt of invoices” subheading of Annex 10 of the VAT Act and reinstates the previous, simpler data content, meaning that the deductible tax need not be broken down by tax rate. It also repeals the transitional provision linked to the stricter requirement and, by means of a transitional rule, ensures that the relief may be applied retroactively, including to the return for the period that includes 1 July 2026. There is likewise no change for taxpayers who have opted for the cash-accounting scheme.

Although it is not yet included in the Proposal, according to a government announcement, prescription medicines will be made VAT-exempt from the autumn.

Amendments to certain sector-specific taxes and other payment obligations

Abolished taxes: Under the Proposal, the dog-control contribution and the special immigration tax are abolished with effect from 2027.

Air pollution charge: The air pollution charge increases significantly with effect from 1 October 2026. The unit charges applicable to emissions of sulphur dioxide, nitrogen oxides and non-toxic particulate matter are doubled. The change also feeds through into the Q4 2026 charge advances and the 2027 advance-payment obligations, in that the quarterly charge advance will equal half of the actual air pollution charge payable for the preceding year.

Income tax of energy suppliers: With effect from 1 August 2027, the transitional provision in the income tax of energy suppliers relating to support given to public-interest asset-management foundations, a provision tied to the tax-base treatment of such foundation support, is repealed. The amendment follows from the phasing-out of the corporate income tax benefits linked to public-interest asset-management foundations: once those are withdrawn, maintaining the related carve-out in the income tax of energy suppliers is no longer justified.

Retail tax: The Proposal repeals the tax-base aggregation rule in the retail tax and, as a transitional measure, provides that the tax-base aggregation rule does not apply even for the 2026 tax year. Under the previous regime, the net revenue of undertakings that had demerged after the introduction of the retail tax in 2020 and that qualify as related parties for corporate income tax purposes had to be aggregated, and the progressive tax had to be assessed on a consolidated basis. The provision therefore taxed an artificially fragmented network in the same higher bracket as if it were a single company, thereby neutralising the tax advantage arising from the fragmentation.

Carbon dioxide quota tax: The Proposal abolishes the carbon dioxide quota tax with retroactive effect to the date of its introduction, back to 7 October 2023, which the Court of Justice of the European Union found to be contrary to EU law. To give effect to the abolition, the Proposal also establishes a refund procedure: any undertaking that paid such tax may reclaim the tax paid from 7 October 2023, together with interest thereon, from the tax authority, to be credited to its domestic payment account. The refund is conditional upon the taxpayer not having previously pursued the claim by other means, for example, through litigation. The refund application must be submitted within 90 days of the entry into force of the provision, and this deadline is a preclusive time limit.

Local taxes

Reduction of tax types: To simplify the Hungarian tax system and fulfil the RRF commitments, the municipal tax will be abolished from 2027 (which, in any event, was applied by few municipalities).

Tax advance payment rules related to demerger by separation (spin-off): The Proposal clarifies the rules for advance payments of local business tax in connection with the special division of legal entities by separation (spin-off) with respect to tax liabilities arising after 14 May 2026. In the event of a spin-off, the legal successor – or the legal predecessor on its behalf – may fulfil its obligation to report advance tax payments by the 15th day prior to the due date of the next advance tax instalment. With respect to its own tax advance obligation, the successor may, within 30 days following the spin-off, submit a declaration regarding the expected amount of local business tax for the tax year following the spin-off, based on which the tax authority will determine (or adjust) the amount of tax advances due. The predecessor may also stipulate that any payment exceeding its due payment obligation be transferred to the successor’s tax account.

Tourism tax for Ukrainian refugees: As a general rule, a tourism tax is levied on individuals who, as non-permanent residents, spend at least one overnight stay within the municipality’s jurisdiction. A government decree granted refugees from Ukraine an exemption from this obligation during the state of emergency. With the end of the state of emergency on 14 May 2026, the decree ceased to be in effect; however, in light of the war situation, the favourable provision – in the form of a statutory tax exemption – remains in place.

Tax procedural rules

Act on the Rules of Taxation (Art.): Legal technical amendment related to the abolition of the municipal tax: references to this type of tax are hereby repealed.

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