Numerous subsidies and tax allowance forms partially backed with European Union aid resources are still available in Hungary. For investment projects; however, we also highly support to always consider the taxation impacts carefully and not to forget about the potential related tax allowances – for which LeitnerLeitnter offers its professional assistance for tax optimization and allowance claims.
The tax payable by corporations may be reduced by 70%, 80% by means of tax credits.
Development tax allowances (80%) may be granted for investment projects (depending on the investment volume, the geographical location and also on the status of the investor), research and development activities, independent environmental projects, investments in the film industry, and creating new jobs. In general, a portion of the investment value (determined by the intensity ration given by the EU) may be credited from the corporate income tax payable within 16 tax years after the finalization of the investment in 13 tax years including the year of capitalizing the investment or the subsequent tax year. Commitments pertaining to the increase of headcount and salaries become more favourable to the taxpayers regarding certain development tax allowance schemes.
Another tax credit scheme is also available in connection to investments aiming at increasing energy efficiency. Investments resulting in any minor decrease in energy consumption may be sufficient for such tax allowance. Application in parallel to the development tax allowance scheme is not allowed. The corporate income tax payable may be lowered by 30% (for SMEs 40% or 50%) of the eligible costs of the investment, capped by EUR 15 million and 70% of the CIT payable. The tax credit is available in the year of capitalizing the investment and in the 5 subsequent tax years.
Further CIT allowances (70%) and other in-cash credits may also be available as well in the case of granting support to film production, performing art, and certain team sports such as soccer, handball, basketball, water polo and ice hockey.
As another potential tax credit, supports to film production and certain team sports may also be granted by redirecting the CIT advance payment obligations of the taxpayer. For such support, a further proportional cash credit (7.5% or 2.5% depending on the timing of the grants) may be received to the tax account of the taxpayer.
Also within the scope of de minimis support,
100% of the interest paid by SMEs to financial institutions on loans financing
tangible assets may be taken as an allowance, decreasing the CIT payable.
