Global minimum tax (domestic top-up tax)
In Hungary, Act LXXXIV of 2023 on Top-up Taxes Ensuring the Global Minimum Tax Level and on the Amendment of Certain Related Tax Laws (the “Minimum Tax Act”) entered into force on 31 December 2023. The Act enables Hungary to levy the difference in the form of a top-up tax—referred to as a Qualified Domestic Minimum Top-up Tax (QDMTT)—if the effective tax burden of the Hungarian group members does not reach the 15% threshold, and to do so before another jurisdiction could impose such a tax.
I. Subjects of domestic top-up tax and notification obligations
The Minimum Tax Act applies to domestic group members of multinational enterprise groups or large domestic enterprise groups with a Hungarian tax residency whose annual revenue, as reflected in the consolidated financial statements prepared by the ultimate parent entity, reaches or exceeds the EUR 750 million threshold in at least two of the four fiscal years immediately preceding the tax year.
If a domestic group member becomes subject to the top-up tax for the 2025 tax year, its first obligation is to fulfil its notification obligation to the Hungarian tax authority by the last day of the second month following the last day of the relevant tax year, that is, by 28 February 2026 for taxpayers whose tax year corresponds to the calendar year. It is important to note that the reporting obligation also applies to entities that, as a general rule, fall within the scope of the global minimum tax but are exempt from paying the tax based on specific conditions.
II. Payment of the Global minimum tax
The following order of application must be observed in connection with the global minimum tax:
- If a jurisdiction has introduced a domestic top-up tax, that jurisdiction is entitled to collect the domestic top-up tax first, which must be calculated based on the aggregated data of all group members located in that jurisdiction.
1.1 Calculation of the qualified domestic minimum top-up tax
Recognised net income or loss | Adjusted covered taxes | Effective tax rate |
[A] | [B] | [C]=[B]/[A] |
1.1.1 Recognised net income or loss and adjusting items
To determine the net income or loss of group members within a jurisdiction that fall under the scope of the global minimum tax, the starting point is their aggregated accounting net income or loss, which must then be adjusted by the items listed in the Minimum Tax Act and in Section 3.2.1.1 of Decree No. 46/2025 (XII.23.) of the Ministry of National Economy on the detailed rules of data reporting related to top-up taxes ensuring the global minimum tax level.
1.2 Calculation of adjusted covered taxes
The amount of covered taxes represents the aggregated actual tax expense of the group members falling within the scope of the global minimum tax in the given country, which amount is adjusted by the modifying items specified in the Minimum Tax Act and in Section 3.2.1.2 of the above-mentioned NGM Decree No. 46/2025 (XII.23).
Covered taxes shall include, in particular (but not exclusively), corporate income tax, local business tax, income tax of energy suppliers, and the innovation contribution.
2. If the qualified domestic minimum top-up tax described in point 1 is not collected, then the jurisdiction of the ultimate parent entity is entitled to levy tax under the Income Inclusion Rule (IIR). It is important to note that the ultimate parent’s jurisdiction may collect the tax only if it has implemented the IIR into its domestic law and the rule is recognised as a qualified IIR under the global minimum tax framework.
3. Finally, if the top-up tax cannot be collected on the basis of the above, the states in which any group member has a presence and which apply the undertaxed payments rule (UTPR) are entitled to enforce the tax under the UTPR.
III. Forms
- Notification obligation – GLOBE notification form
The notification obligation can be fulfilled electronically using the GLOBEA form (on the top-up tax liability ensuring a global minimum level of taxation, and on certain group-related information) and GLOBEM form (notification by the designated local entity acting on behalf of all domestic group members regarding their data).
The form must include the ultimate parent entity's data (name, country of residence, tax number, community tax number), and the domestic group member's data. Additionally, it must be declared whether the ultimate parent entity or the given group member will submit a data report or top-up tax return for the given year.
Simplified GLOBE Notification
A simplified GLOBE notification can be submitted if the data of the ultimate parent entity (UPE) and the domestic group members for the 2025 tax year are identical to those of the previous financial year. However, if any information relating to the UPE or any domestic group members changes, the submission of a full-content GLOBE form becomes mandatory.
- Advance tax return –‘GLBADO Form
The advance tax return must indicate which group member or group members are subject to the payment obligation and, in the case of the application of an exemption, the relevant legal basis for the exemption.
The form must include the details of the ultimate parent entity. In addition, the following data must be provided separately for each group member:
- name of the group member
- tax identification number of the group member
- amount of the qualified domestic minimum top-up tax advance payable by the group member
- currency of the advance payment
- exemption declaration
The purpose of the global minimum tax advance return is to enable the tax authority to collect the expected amount of the domestic minimum top-up tax arising in Hungary already prior to the submission of the final GLOBE return.
The return may be prepared in euros or in USA dollars.
3. Annual tax return and payment
As a general rule, the domestic group member submits the data reporting related to the top-up tax to its own tax authority. The annual global minimum tax return must include the full amount of the tax liability, and if this amount differs from that reported in the advance tax return, the difference must be settled.
However, the DAC9 Directive provides the possibility for the global minimum tax return to be submitted in a centralised manner, either by the ultimate parent entity or by a designated group member on behalf of all members of the group. For this purpose, a harmonised EU return format – the Top-up Tax Information Return (TTIR) – will be introduced within the European Union. In addition, the Member States will exchange information automatically, sharing data relevant to the application of the GLOBE rules.
IV. Deadlines
Financial year | Notification (GLOBE)
| Advance tax return (GLBADO)
| Tax return (GIR – GloBE Information Return) |
2024 | 31.12.2024 | 20.11.2025 | 30.06.2026 |
2025 | 28.02.2026 | 20.11.2026 | 31.03.2027 |
V. Exemptions
The law provides several exemptions concerning the domestic top-up tax, but the detailed regulations are included in separate government decrees.
CbCR temporary exemptions "Safe Harbour": According to the OECD guidance, transitional safe harbours may be applied for a period of three years (expected to be extended by one additional year). These safe harbours allow groups to be exempt from the top-up tax based on simplified calculations using the data from the CbCR (Country-by-Country Report) that forms part of the group's transfer pricing documentation. The safe harbours include the De Minimis Test, the Simplified ETR Test, and the Routine Profits Test.
- De minimis test: This exemption can be chosen annually if the aggregated revenue of all domestic group members in the tax year is less than 10 million euros, and the aggregated income in the tax year is less than 1 million euros.
- Simplified effective tax rate test (ETR): This exemption may be applied if the ratio of the income tax expense reported in the group’s financial statements to the profit before tax reported in the CbCR for the jurisdiction reaches 16% for the 2025 tax year.
- Routine profit test: A group member can be exempt from the top-up tax if the amount of the substance-based income exclusion for the Hungarian group members equals or exceeds the profit before tax allocated to Hungary in the CbCR.
It is important to note that if a corporate group, with respect to a given country once falls outside the scope of the transitional Country-by-Country Reporting Safe Harbour exemption, or chooses not to apply one of the exemptions, it may not return to the application of these exemptions in subsequent years, even if the conditions for the exemption would be met in later years. It is called the “Once out, always out” rule.
De minimis exclusion: This exemption can be chosen annually if the average recognized revenue of all domestic group members is less than EUR 10 million, and the average recognized profit is negative or less than EUR 1 million. The indicators must be assessed based on the three-year average (the relevant tax year and the two preceding tax years).
Substance-based income exclusion (SBIE): This exemption can be chosen annually. The rule ties the exemption calculation to the actual wage costs and tangible assets, assuming real economic presence and the existence of personal and material conditions.
Initial five-year exemption: This provision allows reducing the top-up tax payable in Hungary to zero in two cases:
- If a multinational group is present in no more than six countries during the first five years of its initial international activity phase, and the combined book value of significant tangible assets among members outside Hungary does not exceed 50 million euros.
- Large domestic corporate groups, which only have Hungarian members, can also enjoy the initial five-year exemption starting from the year when they first fall under the law's scope.
VI. Sanctions
The tax authority may impose a default penalty of HUF 5 million for failure to comply with, or late fulfilment of, the notification obligations related to the global minimum tax. Furthermore, a default penalty of HUF 10 million may be imposed for failure to comply with, or for late, incomplete, incorrect or false submission of, the top-up tax return, as well as for breaches of any data reporting obligations.