Tax Audits of R&D Incentives

While the aim of our article series is to encourage businesses to identify activities that qualify for R&D incentives and take advantage of the available tax benefits, in this final article we would like to highlight the importance of compliance and the risks associated with audits.

The key consideration is that support should only be claimed for costs genuinely related to R&D projects, and every step of the process must be properly documented. It is also advisable to involve technical experts in the evaluation of projects and seek assistance from tax advisors with tax calculations and documentation.

PPWR: Ambitious Waste Reduction Targets

The European Union expects Member States to achieve progressively greater reductions in packaging waste: at least 5% by 2030, 10% by 2035, and 15% by 2040 compared to 2018 levels. These measures are expected to reduce the projected volume of packaging waste by approximately 37% by 2040.

Payroll in an International Environment – Specific Challenges

When a company operates across multiple countries and its employees and management come from an international background, payroll processing becomes significantly more complex. The cross-border status and income of expatriates, employee benefits and bonus schemes that differ from the Hungarian system, as well as reporting requirements towards foreign shareholders all add further layers of complexity to payroll operations. Moreover, international payroll is not only a payroll issue. The situation must also be assessed from legal, tax, and social security perspectives to ensure full compliance and to mitigate risks.

Discover R&D-Eligible Activities Within Your Business Operations!

Do you develop products? Improve methods and processes as part of your core business activities? Your company may already be eligible for valuable R&D tax incentives without even realizing it.

Payroll and Its Risks for a Company

Many companies view payroll as part of the accounting function, although in reality it is a distinct activity based on a different legal framework, serving different objectives and involving different types of risks. In smaller companies, payroll often encompasses HR and employment-law responsibilities as well. However, the most important difference between accounting and payroll is that while accounting errors typically result in administrative issues that can be corrected relatively easily, payroll mistakes can fundamentally undermine employee trust—the very foundation of a company's operations.

Digitalization in Accounting

Electronic invoicing, e-receipts, online cash registers, online banking, automated data processing, and automated risk management at the tax authority (NAV): in recent years, accountants and tax advisors have had to keep up with rapid changes. Accounting today is no longer mainly about mailing paper documents and manually entering data, but rather about data-driven, digital processes. But what does this mean from a business perspective?

Differences Between Accounting Under Hungarian GAAP and IFRS

At subsidiaries of foreign-owned corporate groups operating in Hungary, the question often arises whether accounting should be performed under the Hungarian Accounting Act or under IFRS.

What challenges do the Hungarian subsidiaries of international corporate groups face in accounting?

The accounting of Hungarian subsidiaries belonging to international corporate groups is more complex than that of purely domestic companies, as they must comply not only with Hungarian regulations but also with group expectations and international accounting standards.

Is there a viable way to tax large fortunes? Is it beneficial for the economy?

Over the past four decades, the total stock of wealth in developed countries has risen to more than six times national income (up from around three times), and wealth distribution has also become highly unequal. Nevertheless, most countries do not apply a general and direct wealth tax, even though it could help address the growing difficulty of financing the public sector worldwide.

Here is a practical method for comparing the value of different jobs

 Although the transposition of the EU Pay Transparency Directive into Hungarian law was not completed by the June 7, 2026 deadline, the issue remains on the agenda, and the process is expected to be finalized by the end of the year. The domestic regulation will most likely be similar to the provisions of the EU directive, so businesses can begin reviewing and reshaping their pay systems. Familiarizing themselves with the case law of the Court of Justice of the European Union and national courts can support this preparation.

When must related parties prepare transfer pricing documentation?

Related parties are required to apply arm’s length pricing, i.e. transfer pricing, in transactions between them, and depending on the value, they must also prepare documentation.

Segmentation – the greatest challenge of the new transfer pricing rules

One of the key challenges arising from the new transfer pricing regulation is the tightening of segmentation requirements. This is especially relevant for meeting transfer pricing obligations for the 2025 tax year, as this is a transitional year during which certain areas may already be subject to the new rules, while others must continue to be handled under the previous requirements.

 

Is it worth applying the new transfer pricing rules already for 2025?

The transfer pricing regulation that entered into force this year will become mandatory as of 2026; however, for the 2025 tax year it is already optional to apply the rule that no local documentation is required for transactions below HUF 150 million.

Which asset management structure is better suited to preserving the unity of the assets?

 The table below outlines the differences between an asset management foundation and fiduciary asset management.

For the management of very substantial assets, an asset management foundation is the solution.

If we are looking for a solution for the long-term preservation, efficient management, and tax-efficient generational transfer of significant wealth, an asset management foundation may be an appropriate instrument.

What does the principle of “equal pay for equal work” mean?

Since the 1970s, human rights movements and organisations have taken a clear stance and implemented measures to combat wage discrimination. As a result, improvements were noticeable for a long time; however, this process has slowed over the past decade, and since then the average gender pay gap within the European Union has no longer decreased significantly. For this reason, the European Parliament and the Council have set out concrete measures. One of the key instruments is pay transparency, as well as the practical implementation of the principle of “equal pay for equal work.

Don’t leave your GloBE filing and reporting obligations due on June 30 until the last minute

The legal framework for implementing tasks related to the global minimum tax (GloBE) is continuously evolving. In recent months, several implementing regulations have been published. The autumn tax package refined the conceptual framework of the global minimum tax and the rules on information exchange. These provisions must be applied when fulfilling the obligations due on 30 June 2026, and since the rules are quite complex, preparation should not be postponed.

Reform of the EU Social Security Regulation Expected Soon

According to current plans, the proposed reform of the EU social security framework may take place in the first half of 2026, creating new challenges and opportunities in the field of cross-border employment. Changing forms of work, a mobile workforce, and digitalisation are giving rise to increasingly complex legal and administrative issues.

The proposed tax package of the TISZA program in practice

The main difference between the TISZA program and current Hungarian practice is that so far fiscal balance has been ensured to a significant extent through inflation, consumption (VAT) revenues, and sector-specific taxes, whereas the TISZA program aims to achieve fiscal room for manoeuvre from non-fiscal sources: namely through eliminating corruption and reclaiming EU funds. The goal of the TISZA program is to reduce taxes on work and entrepreneurial activity, as well as to create a fairer tax system.

What R&D incentives are available in the Hungarian tax system and in the form of financial support?

In our previous article, we presented the changes in Hungarian economic support trends and clarified the basic concepts of R&D. In this article, we review the various available incentives. These can be grouped into three main categories: the first includes tax base and tax allowances that can be applied during research and development activities; the second category covers incentives related to the use of intellectual property created through these activities; and finally, R&D projects are also given preference in direct financial grant funding.