15% Global Minimum Tax in Hungary

QDMTT, IIR & UTPR Compliance Guide

From 2024, the 15% global minimum tax has been introduced in Hungary. Learn about the practical implications of QDMTT, IIR, and UTPR, and discover the key steps to prepare for compliance.

What It Means for Hungarian Subsidiaries, Holding Companies, and Investors

In recent years, a new era has begun in international corporate taxation. The OECD’s Pillar Two initiative widely known as the Global Minimum Tax aims to ensure that all large multinational groups pay at least a 15% effective tax rate (ETR), regardless of where they operate.

This reform came into effect across the European Union — and therefore in Hungary — from 2024, introducing new rules, administrative obligations, and strategic decision points for Hungarian subsidiaries, holding structures, and foreign investors.

But what does this mean in practice? How does it affect Hungary’s competitive 9% corporate tax rate? And how can companies adapt to this system while preserving the financial advantages of their current group structures?

The Essence of the Global Minimum Tax

Under EU Directive (EU) 2022/2523, any multinational enterprise group with consolidated revenues exceeding EUR 750 million must ensure that its effective tax rate reaches at least 15% in every jurisdiction where it operates.

The new regime is built on three pillars:

• QDMTT (Qualified Domestic Minimum Top-up Tax):

If a company’s ETR in Hungary falls below 15%, it must pay the difference domestically keeping the top-up tax revenue within Hungary rather than sending it abroad.

• IIR (Income Inclusion Rule):

If a subsidiary in another country is undertaxed, the parent company pays a top-up tax in its home country to make up the difference.

• UTPR (Undertaxed Profits Rule):

Coming into force in 2025, this rule redistributes any remaining undertaxed profits among other jurisdictions where the group operates.

In essence, the system doesn’t raise nominal tax rates but sets a global floor for the actual tax burden multinational groups must bear.

Hungary’s Position: A 9% Corporate Tax with a 15% Global Benchmark

Hungary has maintained a 9% corporate income tax rate since 2017 — the lowest in the European Union. This policy has been a cornerstone of Hungary’s investment attractiveness over the past decade.

However, the global minimum tax focuses not on the statutory rate, but on the effective tax rate (ETR) — the proportion of actual taxes paid relative to profits.

The Hungarian implementation allows certain local taxes to count toward the ETR calculation, such as the local business tax (HIPA) and the innovation contribution. This typically results in an overall effective rate between 13% and 15%, though certain industries, transfer pricing structures, or incentives can drive it lower.

When this occurs, the shortfall must be paid under the Hungarian QDMTT, ensuring the additional tax stays in Hungary. This mechanism effectively acts as a protective shield — it prevents foreign tax authorities from collecting the difference abroad.

Reporting Obligations and Deadlines

The global minimum tax brings not only financial but also administrative challenges. Hungarian entities must comply with several new reporting requirements:

• Pillar Two Notification:

The first affected companies had to notify the Hungarian Tax Authority (NAV) by December 31, 2024, identifying the group entity responsible for the Pillar Two filing. Failure to comply may result in fines of up to HUF 5 million.

• QDMTT Advance Return and Payment:

For the 2024 tax year, the advance return must be filed and paid by November 20, 2025. Late filing can lead to penalties of up to HUF 10 million.

• UTPR Rules:

Starting in 2025, groups must monitor any residual undertaxed profits, which may be subject to redistribution among jurisdictions.

Compliance is therefore not a one-time task — it requires annual tax planning, accurate data collection, and coordinated financial processes across the group.

Safe Harbors: Reducing Risk and Complexity

To ease the transition, the OECD and the EU have introduced several safe harbor provisions that help reduce administrative burdens and the risk of double taxation.

• CbCR-Based Transitional Safe Harbor:

If a jurisdiction’s Country-by-Country Report (CbCR) indicates an effective tax rate above 15% or routine-level profitability, that jurisdiction can be temporarily exempt from top-up tax calculations.

• QDMTT Safe Harbor:

If a jurisdiction has implemented a qualified QDMTT that meets OECD standards, any domestic top-up tax paid cannot be collected again elsewhere.

In 2025, Hungary received “qualified” status, which provides Hungarian subsidiaries a notable compliance advantage.

These mechanisms are particularly beneficial for multinational groups, as they reduce duplication and lower compliance costs during the initial years of implementation

A Practical Example

Consider a Hungarian subsidiary with HUF 100 million in GloBE income and HUF 12 million in taxes paid (corporate income tax, local business tax, innovation contribution).

The effective tax rate is therefore 12%. Since the global minimum threshold is 15%, the shortfall of 3% (HUF 3 million) must be paid as a QDMTT in Hungary.

This ensures that the additional revenue stays with the Hungarian budget, rather than being claimed by the parent company’s home jurisdiction.

Impact on Different Stakeholders

Hungarian Subsidiaries

The key task for local subsidiaries is ongoing monitoring of their GloBE-ETR.

Given the 9% statutory corporate tax rate, companies must be aware that tax incentives, development allowances, or low profit margins can drive their effective rate below 15%.

Accurate transfer pricing documentation and proper tax base calculation are therefore critical to compliance.

Holding Companies

For holding structures, group-level coordination becomes essential.

If a Hungarian subsidiary is undertaxed, the QDMTT allows the top-up to be settled domestically, preventing the parent’s jurisdiction from collecting it through the IIR or UTPR.

This makes Hungary a legally and financially secure holding location within multinational group structures.

Investors

For investors and acquirers, the global minimum tax introduces a new valuation variable.

Effective tax rates now directly influence post-tax cash flows and valuation multiples.

In mergers and acquisitions, Pillar Two tax covenants are becoming standard, allocating tax risks between buyers and sellers in share purchase agreements.

How Can Hungarian Groups Prepare?

1. Map All Affected Jurisdictions: Create a GloBE-ETR “heat map” showing where the group’s effective rate falls below 15%.
2. Design Data Flows: Integrate financial, transfer pricing, CbCR, and tax data sources to ensure reliable ETR calculations.
3. Evaluate Safe Harbor Eligibility: Determine whether the company qualifies under the CbCR or QDMTT safe harbor rules.
4. Optimize ETR Legally: Ensure proper classification of “covered taxes,” make use of R&D and development incentives, and adjust transfer pricing policies if necessary.
5. Stay Ahead of Deadlines: Focus on the 2025 QDMTT advance filing and annual GloBE reporting requirements.
6. Communicate Transparently: Proactively explain the group’s Pillar Two position to shareholders, auditors, and investors to build confidence and minimize risk.

The introduction of the 15% global minimum tax is not a tax increase, but rather a step toward a more transparent and harmonized international tax system.

For Hungarian companies, it introduces a new strategic and compliance dimension:

• Financially, achieving and maintaining a compliant ETR level is essential.
• Organizationally, data integration and process coordination are now critical.
• Reputationally, transparent, law-abiding operations strengthen stakeholder trust.

Companies that prepare early will not only mitigate risks but can also gain a competitive advantage in the evolving international business environment.

How FirmaX Hungary Can Help

The FirmaX Hungary team provides full-spectrum advisory and administrative support for global minimum tax readiness:

• Pillar Two Readiness Audits: Assessment of GloBE-ETR, data structure, and reporting flows.
• ETR Optimization: Legal and transparent strategies for achieving the 15% threshold.
• QDMTT / IIR / UTPR Filing and Management: End-to-end compliance and submission support.
• Investment and M&A Advisory: Evaluation of tax risks and assistance in drafting Pillar Two clauses in SPA agreements.

With expert guidance, your organization can not only remain compliant but also build a resilient, predictable, and investor-friendly structure under the new global tax framework.