Vehicles subject to the tax

Tax is payable on a car owned by a non-individual, such as a company, association or other organisation, and the car is registered in Hungary and has a Hungarian licence plate.

Tax is also due on all passenger cars for which a "non-individual" has charged costs or expenses under the Accounting Act, or an individual has charged costs or depreciation under the Personal Income Tax Act. In this case, the car can be registered either domestically or abroad.

Based on the above rules, a domestic resident company (limited liability company, limited liability partnership) is therefore legally obliged to pay company car tax on any car registered in the Hungarian official register, even if it does not charge any expenses at all or because it is subject to the itemised tax of small taxable enterprises.

Please note that a company does not have to pay company car tax on a car owned by an individual, where the individual's use of the car is used solely to offset the costs of reimbursement of expenses not exceeding the rate laid down by law:

- on the basis of a travel order issued for official or business travel,

- in connection with a journey to work

Subject to tax 

As a rule, the taxable person is the non-individual owner of the car as registered in the national register, or, in the case of multiple owners, the co-owners in proportion to their ownership shares. In the case of a car leased under an operating long-term lease and registered in an official register, the taxable person is a non-individual who is registered as a lessee and is a long-term lessee. In the case of a passenger car that is not registered with a domestic authority, the person or organisation that accounts for expenses ont he car is the taxable person.

A private individual will only be subject to the tax if they account for an expense for the carthey own, in accordance with the Accounting Act or the Personal Income Tax Act.

The tax rate

The amount of tax payable (tax rate) depends on the power of the car in kW and its environmental classification. 

Under Government Decree No 197/2022 (4.VI.) on extra-profit taxes

the monthly rate of company car tax from 1 July 2022 to 31 December 2022:

Company car tax payment and return

As a general rule, company car tax is assessed, returned and paid by the taxable person, in special cases the person who accounts for the costs or uses the car, on a self-assessment basis, quarterly, by the 20th of the month following the quarter. If there is more than one owner of a car, each taxable person must fulfil the procedural obligations individually (according to their share of ownership).

Exclusion of double taxation

To ensure that no-one is taxed twice on the same car, the company car tax payable for the quarter can be deducted from the vehicle tax payable on the taxpayer's car. A deduction is possible for the vehicle tax for the months of the quarter in which both the company car tax and the vehicle tax liability for the car were incurred. A further condition for the deduction is that the taxpayer must fulfil the obligation to pay the taxes on time.

Duration of the tax liability

The tax liability arises on the 1st day of the month following the acquisition of ownership, financial or opretaing lease of car owned or leased by a non-individual and entered in the official register. The tax liability ceases on the last day of the month in which the car entered in the official register is disposed of by the non-individual owner, or returned to the lessor.

The tax liability for non-individuals is therefore for at least one month, and in any case for a full calendar month, even if the expense is only incurred for the duration of a one to two-day rental period in a calendar month.

Car temporarily withdrawn from circulation

Under the legislation on company car tax, the liability for company car tax does not depend on whether or not the car subject to the tax has been temporarily withdrawn from circulation, as the legislation does not include withdrawal from circulation among the grounds for cessation.

If a car that is not owned by a private individual is temporarily withdrawn from circulation without a transfer of ownership, the company car tax liability continues until the car is sold. 

Company car tax payable on short-term rental of a car with a foreign registration number

If a company hires a car for its employees for a short period of time during a business trip abroad and then charges costs (e.g. rental fees, fuel, insurance premiums), it will be liable to pay company car tax in Hungary on the foreign rental car.  

The tax liability for an occasionally hired (foreign) car that is not registered in the Hungarian official register is - if the cost settlement is made within one month - in the month preceding the month in which the cost settlement was made.

To determine the rate of tax, the power of the car in kW and its environmental classification are required. This information is typically included in the documents required for the use of the vehicle (registration). If the environmental classification of the vehicle is not known to the company for the purposes of determining the tax liability, the environmental classification of the passenger car is "6", as provided for in the  regulation of KöHÉM on the technical conditions for the registration and circulation of road vehicles.

Environmental product tax for a car hired from abroad

For foreign-owned companies, it is often the case that the foreign owner transfers the car leased in the home country to the domestic subsidiary for use.

According to the Act on Environmental Product Tax (hereinafter referred to as Ktdt.), motor vehicles have components, such as tyres, batteries, lubricating oil and electrical and electronic equipment, which are subject to product tax.

According to the provisions of the Ktdt., the obligation to pay the environmental product tax arises when the product subject to the tax is placed on the market, used for own purposes or taken into stockand and is to be paid by the first person to place it on the domestic market or first user for his own account. Private use means the use of a chargeable product for the private use of the person liable for the charge, or of an employee of the person liable for the charge, or any other use, including use, consumption or supply in the course of the provision of a service.

On the basis of the above, the domestic subsidiary incurs a product charge liability for own-use of the components of motor vehicles subject to the product charge on the date the  private use is expensed.