Proposed tax changes coming up in Hungary

This article will discuss the following topics regarding business and tax changes proposed for 2027 in Hungary.

• Expected changes to KATA
• Wealth tax for wealth above HUF 1 billion (ca. EUR 2.7 million)
• Income and salaries
• Business taxes
• Price margin cap going away
• FAQ

Please note that this is just a short summary of the proposed changes. Once there is a final decision on each topic, we will provide a more detailed description for each.

Expected changes to KATA

KATA is a small business tax where instead of calculating taxes monthly, KATA subjects are allowed to pay monthly taxes in bulk, covering personal income tax as well as the social security contribution and the social contribution tax. In 2022, KATA options were significantly reduced: currently, KATA is available only to freelancers who have natural person customers.

In their latest proposal, announced their intention to introduce several changes to KATA from 2027:

• KATA would be available again for those who are self-employed as a side-job (currently it is allowed only for full-time freelancers).
• Legal person customers would be allowed again beside natural persons (so KATA subjects are allowed to work for companies)
• The yearly income cap is increased to HUF 22 million, to be in line with the cap for VAT exemption.
• For new KATA subjects, monthly KATA would be HUF 100,000 for full-time freelancers, and HUF 50,000 for those freelancing as a side job.
• For existing KATA subjects, monthly KATA would be only to HUF 75,000 in 2027, same as announced earlier, increasing to HUF 100,000 from 2028.

At the same time, some things would stay the same:

• If a KATA subject surpasses the yearly income cap, they have to pay a 40% income tax on the part above the limit – same as before.

Additional rules introduced to prevent disguised employment under KATA:

• KATA subjects cannot have their current employers as their customers.
• KATA subjects cannot have their previous employers (or its affiliates) as their customers for 24 months after the end of the employment relationship.
• KATA subjects will be disqualified if at least 50% of their revenue comes from the same company (or its affiliates).

If the proposal is accepted, new KATA registration for 2027 will be available from December 1, 2026.

Wealth tax for wealth above HUF 1 billion (ca. EUR 2.7 million)

Currently, there is no wealth tax in Hungary as such. If introduced, it would be relevant to resident and non-resident private individuals as well as assets or funds that are considered separate taxpayers in Hungary. Wealth tax would be 1% for net wealth above HUF 1 billion (ca. EUR 2.7 million), and 1.5% for the part above HUF 100 billion (ca. EUR 270 million).

If the proposal is accepted, the law would come into effect on December 15, 2026, and the wealth tax should be first paid after wealth available on December 31, 2026. The deadline for both reporting and payment would be August 31, 2027.

Concerning the new Hungarian wealth tax, wealth would include real estate and business shares, as well as valuable artwork and jewelry (above HUF 3 million) and vehicles (above HUF 10 million). Personal effects in daily use are typically not considered. Double taxation should be prevented by the double taxation treaties in effect between Hungary and other countries.

Income and salaries

Personal income tax in Hungary is currently 15% regardless income bracket (except for specific cases that offer exemption, e.g. for certain mothers). According to a new proposal, tax brackets would be introduced, and starting from 2027, personal income tax would be reduced to 9% for those receiving minimum wage, adding an extra HUF 20,000 to their paycheck without additional costs to employers. Personal income tax will also be somewhat reduced on salaries below HUF 680,000 monthly (details to be announced). These measures will affect 2.5 million employees in Hungary.

People under 25 would retain their tax exempt status.

In contrast, tax exemption for mothers would be seriously restricted: only income below HUF 1 million monthly would remain tax exempt. Moreover, while the previous government planned to extend tax exemption to mothers over 40 and older, these plans are now cancelled.

The announcement included information about raising the minimum pension beside increasing lower pensions and the old-age allowance (that is different from the old-age pension). Salaries will also increase in several state-owned companies and institutions (such as in healthcare and education). These do not directly affect business owners, however.

At the same time, family allowance should double from January 2027 for all three tiers:

While this change does not directly affect employers either, payroll specialists often assist employees with the application for family allowance, and as such, they should be aware of the changes.

Business taxes

If the current proposals are accepted, the most obvious change to business taxes will be an increase in one tier of the special retail tax. Other tiers remain unchanged.

Corporate tax and the local business tax remain unchanged for now, although the way TAO can be reduced through supporting athletic associations will change. Later, a more thorough revision of the tax system is expected. When that happens, primary sectors to be affected will probably include energy, banking, insurance, and retail chains.

Company car tax would remain the same for the first car of a business if it is of a reasonable size, but the tax would increase noticeably from the second car on.

Price margin cap going away

Back in 2023, a price margin cap was introduced in retail stores on several products deemed essential, with the intention to curb inflation. The measure remained in place ever since, but it seems that the caps will be lifted as of January 2027.

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Here at Helpers our mission is to make life easier for international clients running a business in Hungary. That includes keeping an eye on developments in taxation and other relevant regulations, and making them accessible to business owners – beside providing precise accounting and HR compliance related services.

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