The accounting pre-tax profit or loss can be amended by several items. There are items that simply do not allow certain costs and expenditures to be included in the tax base, while there are other items that remove certain revenues from it. We will summarise the most important such items below:
Items that increase the tax base (not recognised costs and expenditures):
- provisions for prospective expenses and obligations which are uncertain and cannot be defined exactly (contractual costs and expenditures that will be certainly incurred can be recognised as reducing the tax base)
- impairment loss claimed in connection with receivables providing that bad debts, the irrecoverability of which is verified by the liquidator, can be deducted from the tax base
- fines and late charges
- interest charged in addition to the undercapitalisation rules
- fees paid to CFCs
- costs and expenses that are not documented sufficiently or have not been certifiably incurred in the interest of business operations
Items that can be deducted from the tax base and other allowances
- the tax base can be reduced by up to 50% percent by losses claimed in the previous years (losses accumulated before 2015 can be accrued by 2025, whereas those accumulated after 2015 can be accrued for a maximum of five years)
- by 50% percent of donations given to priority non-profitto tertiary education institutions and organisations of major public benefit
- by the capital gains realised on notified shares (privilege of holding companies)
- by the revenues from the sale of notified intangible assets (e.g. royalties, licences, brand names)
- the amount placed into a reserve for development purposes, which must be used for investments in the following four years (essentially this functions as advance depreciation)
- accelerated 50% (or, in certain disadvantaged regions, up to 100%) write-off rate in corporate tax for a wide range of assets (e.g. IT tools, furniture, other machines and equipment)
- the value of new asset investments acquired by small- and medium-sized enterprises, up to the amount of the pre-tax profit (not exceeding HUF 30 million)