In mid-November, the Hungarian Parliament adopted an 11-point tax and administrative relief package. According to the Government, the newly approved measures aim to significantly ease the burden on small and medium-sized enterprises (SMEs), stimulate investment activity and support a more stable economic environment. Several provisions take effect this year, while others will apply from 2026 and 2027.
One of the most notable changes is the increase of the VAT-exemption threshold: from 2026, businesses may remain exempt up to HUF 20 million in annual turnover, with a further adjustment expected in 2027. The rules of the lump-sum taxation (“átalányadó”) will also be revised; from 2027, an across-the-board 50% cost ratio will apply to several sectors. Individual entrepreneurs will benefit from a reduced social contribution tax base, leading to lower monthly payroll-related charges. In addition, eligibility for the small business tax (KIVA) will be broadened, enabling thousands of companies to switch to a more favourable tax regime.
The package also contains measures to encourage investment. Brownfield and environmentally focused projects may qualify for tax credits of up to HUF 100 million, an incentive the Government positions as a boost to sustainable economic growth. The retail sector will see changes to the special retail tax brackets, potentially reducing the burden on many businesses. Administrative simplifications, such as eased rules on tax prepayments and simplified reporting, are likewise expected to reduce compliance costs. Overall, the Government estimates that the package will cut business tax burdens by HUF 80–90 billion in 2026, with even greater effects in later years.
By Rozsa Rusvai-Darazs, Attorney at law, KCG Partners Law Firm
