Corporate Tax In Hungary (Part 4): Investment In Capital Assets

Katona & Partners Attorneys at Law


Katona & Partners  the law office in pool with Schrömbges + Partner Hamburg render legal services in all fields of business law, focusing on: VAT-law, Corporate law consultancy, Customs law (EU), Labour Law, Competition law, Public procurement law, Trademark law ,Food law (these to be in bullet points)
This article is the fourth one in a seven-part series of articles covering the important rules of corporate taxation in Hungary.
Hungary Tax
To print this article, all you need is to be registered or login on

This article is the fourth one in a seven-part series of articles covering the important rules of corporate taxation in Hungary. The series will cover later on issues such cross-border treatment, anti-avoidance and penalties for non-compliance.

Investment in capital assets is the subject of the following tax treatment:

1. SME investment discount:

The micro, SME enterprises may reduce its profit before taxation under the following conditions:

- for the investment value of intangible assets not yet in use in the scope of operation,

- the investment value of tangible assets having not yet been put into use which are classified as technical equipment, machines, vehicles directly serving the activity,

- the value of renovation, expansion, change of purpose, transformation for the tax year that increases the cost value of the property,

- among intangible assets, the cost value of the right to use new intellectual property and software products recorded in the tax year,

- the value of the investment and renovation carried out and activated by the lessee on the leased property.

2. Investment in R&D Activities

According to Hungarian tax law, companies which carry out significant investments in certain research and development (R&D) activities are entitled to benefit from a tax credit of maximum of 80 percent as a development tax benefit.

3. Inventories

There are no special tax or valuation rules regarding inventories, however the inventory is normally evaluated as the lower of the acquisition/manufacturing cost and market value for both fiscal and accounting purposes. To determine the acquisition/manufacturing cost, the taxpayer may select from the three methods for inventory valuation: FIFO (First In, First Out), LIFO (Last In, First Out), and WAC (Weighted Average Cost).

4. Derivative Financial Instruments

No special tax regime is introduced regarding derivatives. Financial gains and/or losses emerging from the year-end valuation at the fair market value of derivative financial instruments, according to the correct accounting principles and International Accounting Standards/International Financial Reporting Standards) are generally recognised for Corporate tax purpose.

This article provides a general introduction regarding the corporate tax regulations in Hungary and shall not be considered as specific legal advice.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More