Hungary Introduces Mandatory Filing Form for Global Minimum Tax: Time to Take Action

The global minimum tax is no longer a distant concept for multinational enterprises (MNEs) and large domestic corporate groups in Hungary. With the recent release of the required filing form, businesses must act swiftly to ensure compliance with the 15% effective tax rate of the global minimum tax. Here’s what you need to know to stay ahead.

Hungary’s Compliance Mechanism

Hungary achieves the global minimum tax rate through a “top-up tax” system, supplementing its existing taxes, such as corporate tax, local business tax, and the innovation contribution. This approach ensures that the total tax burden meets the minimum threshold, with the top-up tax covering any shortfall.

Key Filing Deadlines: December 31, 2024

The GLOBE (global minimum tax) filing form must be submitted by December 31, 2024. The obligation applies to:

• Domestic group members of multinational enterprises or large domestic corporate groups with tax residence in Hungary.
• Designated local entities acting on behalf of all domestic group members.

Businesses falling within this scope must ensure timely and accurate submission to meet their compliance obligations.

Top-Up Tax Categories and Effective Dates

The new reporting form captures information on three types of top-up taxes:

1. Qualified Domestic Top-Up Tax (QDTT)
2. Income Inclusion Rule (IIR) Top-Up Tax
3. Under-Taxed Profits Rule (UTPR) Top-Up Tax

• The QDTT and IIR apply to fiscal years beginning after December 31, 2023.
• The UTPR applies to fiscal years beginning after December 31, 2024.

Exemptions and Revenue Thresholds

Certain entities, such as state-owned organizations, nonprofit institutions, and qualifying investment funds, are exempt from top-up tax obligations. However, these entities’ revenues must still be included in calculating the €750 million threshold for applicability.

Why Immediate Action Is Crucial

With the clock ticking, companies must assess their financial structures, prepare accurate tax calculations, and establish robust reporting mechanisms. The interplay between Hungary’s national rules and OECD model guidelines adds complexity, requiring careful planning to avoid errors and penalties.

The introduction of Hungary’s GLOBE filing form marks a significant step in global tax compliance; ensure your organization is fully prepared, and contact us.