Large company taxation: 15% corporate income tax above EUR 500 million in revenue

Three similar concepts with different legal consequences

From 2027, several size-based concepts will coexist in the CIT Act, and their similar names can easily be misleading. The 15% rate applies exclusively to large companies (nagyvállalat), while the concept of large enterprise (nagyvállalkozás) is relevant only for the development tax benefit.

A company with 300 employees and net sales revenue of EUR 40 million that does not belong to a group is therefore a large enterprise but not a large company, and will continue to be taxed at 9% in 2027.

Who qualifies as a large company?

Under the Proposal, there are three routes to large company status. Taxpayers applying special tax base rules, such as foundations, associations, public benefit non-profit companies and regulated real estate investment companies (REITs), cannot qualify as large companies.

• Consolidation route: A taxpayer qualifies as a large company if it is fully included in consolidated financial statements and the annual revenue according to those statements reaches the HUF equivalent of EUR 500 million in the second tax year preceding the tax year. Where consolidated financial statements are available at several levels, the ultimate (highest-level) consolidated financial statements are decisive. The conversion must be made at the official exchange rate of the National Bank of Hungary (MNB) valid on the last day of the second preceding tax year, and for tax years shorter than 12 months the threshold must be prorated on a daily basis. The taxpayer’s own size is therefore irrelevant: the highest consolidation level of the group is decisive.
• Standalone route: A taxpayer also qualifies as a large company if it does not fall within the scope of the above consolidated financial statements but itself reaches the EUR 500 million threshold based on its standalone financial statements for the second preceding tax year.
• Election: A taxpayer below the threshold may elect to be treated as a large company. The declaration must be submitted on a dedicated form of the Hungarian Tax Authority (NAV) by the 20th day of the penultimate month of the tax year preceding the tax year of the election. The declaration may not be amended or withdrawn.

Notification obligation: Taxpayers qualifying as large companies under the consolidation or standalone route must notify the tax authority of their status by the same deadline. Under the transitional rule, the deadline for both the notification and the election for the 2027 tax year is the 20th day of the second month of the 2027 tax year, i.e. 20 February 2027 for taxpayers whose tax year corresponds to the calendar year. If the financial statements for the second preceding year are subsequently corrected due to an accounting error and, as a result, the condition is no longer met, this must be notified within 15 days. In this notification, the taxpayer may nevertheless decide to treat itself as a large company for the given tax year.

In practice, this means that the 2027 status will be determined by the 2025 financial statements, at the exchange rate of 31 December 2025, and the 2028 status by the 2026 figures.

Illustrative examples of the classification

The examples below relate to the 2027 tax year; the figures are for illustration purposes only.

• Small subsidiary, large European group. A Budapest-based Kft. with 15 employees and net sales revenue of a few billion forints is a member of a German group that prepares consolidated financial statements under IFRS and has revenue of several billion euros. The Kft. is a large company, is taxed at 15%, and must notify its status by 20 February 2027.
• Domestic group below the threshold. A Hungarian holding company with consolidated revenue of EUR 400 million does not qualify as a large company, and the group members apply the 9% rate.
• Standalone large company. A Zrt. owned by private individuals and not included in any consolidation has standalone revenue of EUR 550 million. It qualifies as a large company under the standalone route.

What follows from large company status?

15% tax rate, without tiered progression

The corporate income tax rate of a large company is 15%, applied to the entire positive tax base. The system is not tiered: for taxpayers subject to the 15% rate, the 9% rate does not apply to any portion of the tax base.

Corporate income tax group: one member is enough

If a corporate income tax group has even a single member that qualifies as a large company, the entire group is taxed at 15%. Group members that do not qualify as large companies must also determine their individual tax bases as if they were large companies. We discuss the impact of this on the group decisions to be made by 20 November separately below.

Special tax base rules

Large companies apply the general tax base rules with the following deviations, which, according to the explanatory memorandum, are intended to align with the global minimum tax rules:

• Deferred tax: the taxpayer may decide to bring forward the tax base expected after the tax year and account for it as a tax base increasing item, provided that it recognises or could recognise a deferred tax liability in respect of it. When the deferred tax liability decreases, the corresponding portion of the amount previously added back may be deducted as a tax base decreasing item. This is a timing tool: it brings the tax base forward but does not provide a permanent reduction.
• Stricter dividend exemption: dividends received from companies other than controlled foreign companies reduce the tax base of a large company only if – in contrast to the current rules, which prescribe neither a minimum shareholding nor a holding period – the large company’s shareholding is at least 10% at the time of the distribution or, if it is lower, the large company holds the shareholding continuously for at least 12 months (the wording does not make clear whether the 12-month period must have elapsed by the time of the distribution). For ownership interests in an investment entity, a further condition is that the taxpayer does not apply the taxable distribution method. Dividends received from controlled foreign companies remain subject to the unchanged special rule.

Cap on tax benefits

The 15% tax value of certain cost-based tax base allowances of a large company, together with certain tax benefits, may not exceed the lower of the following two amounts:

• 5.5% of the higher of wage costs and depreciation;
• 1% of the book value of tangible assets as shown in the financial statements.

The cap applies, among others, to the R&D tax base allowance, the allowances for dual vocational training and for the new form of sports support, as well as the development tax benefit. The project-based R&D tax benefit (20% of eligible costs), however, is not subject to the cap.

An illustrative example for a shared service centre (the figures are for illustration purposes only):

• wage costs of HUF 3 billion;
• depreciation of HUF 100 million;
• book value of tangible assets of HUF 300 million;
• R&D tax base allowance of HUF 500 million.

The cap is the lower of HUF 165 million (HUF 3 billion × 5.5%) and HUF 3 million (HUF 300 million × 1%), i.e. HUF 3 million. Of the HUF 75 million tax value of the HUF 500 million R&D tax base allowance, only HUF 3 million can therefore be utilised. For an asset-light, labour-intensive profile, the R&D tax benefit, which falls outside the cap and is increased to 20%, may therefore be the realistic option – although it can still be claimed only up to the amount of the calculated tax and the per-project ceiling, and it cannot be claimed together with the tax base allowance for the same costs.

Local business tax credit

Large companies, as well as corporate income tax groups with a large company member, may credit 85% of the local business tax (LBT) recognised as an expense against their corporate income tax payable, up to 25% of the tax payable calculated without this credit. The LBT credit alone can therefore reduce the tax burden relative to the tax base to no less than 11.25%.

Tax advances in 2027

If a large company’s tax advance for the first half of 2027 does not reach 50% of the amount that would be due had it already qualified as a large company in 2026, the difference must be declared in the corporate income tax return for 2026 and paid by the due date of the last tax advance instalment for the first half of 2027. The tax advances for the second half of 2027 and the first half of 2028 must also be determined as if the taxpayer had qualified as a large company in 2026. The same applies to corporate income tax groups taxed at the 15% rate.

The large company rules must also be applied accordingly for the purposes of the energy suppliers’ income tax.

Interpretation issues

What does “annual revenue” mean?

Neither the Proposal nor the CIT Act currently in force defines what is to be considered “annual revenue”. The CIT Act uses the concepts of “net sales revenue” and “total revenues”, but the large company definition refers to neither of them; instead, it is based on the revenue according to the consolidated or standalone financial statements. An interpretation in line with the global minimum tax seems obvious, since the global minimum tax rules also link the EUR 750 million threshold to the annual revenue according to the consolidated financial statements, and the explanatory memorandum also identifies alignment with the Pillar Two rules as an objective. However, this is merely an interpretation: for groups close to the threshold, the content of revenue (for example, whether financial income or other income is included) may in itself determine the classification.

Groups consolidating under non-EU accounting frameworks

The consolidation route only refers to consolidated financial statements prepared under the Accounting Act, IFRS or the national rules of an EU/EEA Member State. Based on a literal reading of the text, the Hungarian subsidiary of a US group consolidating exclusively under US GAAP does not fall under the consolidation route in the absence of an intermediate EU consolidation. The standalone route only applies if the subsidiary’s own revenue reaches EUR 500 million. The same question arises for groups consolidating under Japanese, Chinese or UK GAAP, since the United Kingdom is not an EU/EEA Member State. It cannot be ruled out that the legislator will address this issue through amendments, or that the tax authority will apply a broader interpretation; affected groups should therefore adopt a cautious position.

Corporate income tax group: new considerations for the 20 November decision

As we noted in our previous newsletter, groups of companies whose tax year corresponds to the calendar year may apply for corporate income tax group status, or to join an existing group, for the 2027 tax year between 1 and 20 November 2026. Due to the large company rules, this decision now requires reconsideration in two respects.

Maintaining an existing group. If even a single member of the group is a large company, the entire group is taxed at 15%, and the smaller members must also calculate their tax bases under the large company rules. It is therefore worth recalculating whether the benefits of the group (the use of losses within the group, relief from transfer pricing obligations) outweigh the additional burden of 6 percentage points for members otherwise subject to the 9% rate. If not, leaving the group or terminating it may also be an option. This situation may arise primarily in groups formed under the old 75% affiliation requirement that also include companies outside the consolidation, since the Hungarian members of an international group above the EUR 500 million threshold are large companies regardless of their group membership. Under the current rules, leaving or terminating a group during the year takes effect as of the last day of the previous business year, so this decision can still be made during 2027.

Forming a new group under the old conditions. Under the Proposal, from 2027, instead of the 75% affiliation requirement, only taxpayers fully included in consolidated financial statements prepared under the Accounting Act, IFRS or the rules of an EU/EEA Member State may form a group, provided that they have the same balance sheet date and prepare their financial statements uniformly under Hungarian accounting rules or IFRS. Existing groups, as well as groups approved on the basis of applications submitted by 20 November 2026, may continue to apply the old conditions for as long as they meet them. If they also meet the new conditions, they may elect to switch to the new rules; the first declaration to this effect must be made by 20 February 2027. Where the new conditions would not be met, for example in the case of sister companies jointly owned by private individuals that do not prepare consolidated financial statements, the current deadline may be the last opportunity to form a group. However, before forming a new group, it should also be examined whether the group will have a large company member, as this would bring the other members under the 15% rate as well.

What is worth considering now?

The 2027 classification depends on the 2025 figures, so it can already be assessed whether a company is affected. We particularly recommend a preliminary review in the following situations:

• Hungarian subsidiaries of international groups where the ultimate consolidated revenue exceeds EUR 500 million, regardless of the size of the Hungarian company;
• groups consolidating under non-EU accounting frameworks;
• corporate income tax groups where a single large company member brings the entire group under the 15% rate;
• companies claiming significant cost-based tax base allowances and tax benefits, where the new cap may substantially reduce the value of these incentives;
• groups close to the threshold, where the election and exchange rate effects also play a role.

Affected taxpayers must also take into account the top-up of tax advances for the first half of 2027 and the notification deadline of 20 February 2027.

Our experts are pleased to assist you in the preliminary assessment of whether you are affected by the large company rules, in modelling the impact of the 15% rate and the cap on tax benefits, in preparing decisions on corporate income tax groups, and in fulfilling the notification and tax advance obligations.