Global Minimum Tax (GloBE/Pillar Two) and QDMTT in Hungary 2026

Introduction

The implementation of the OECD/G20 Inclusive Framework’s Pillar Two rules—commonly known as the Global Minimum Tax or GloBE (Global Anti-Base Erosion) rules—represents the most significant change to the international corporate tax landscape in a generation. For multinational enterprise (MNE) groups with consolidated revenues exceeding EUR 750 million, the Pillar Two rules impose a minimum effective tax rate (ETR) of 15% on a jurisdiction-by-jurisdiction basis, with top-up tax mechanisms designed to ensure that undertaxed profits are brought up to the 15% floor.

Hungary, with its headline corporate income tax (CIT) rate of 9%—the lowest in the EU—is particularly affected. The interaction between the 9% CIT rate, Hungary’s generous investment incentive system, and the 15% GloBE minimum creates both risks and planning opportunities that require careful analysis. This article examines the practical implications of the Pillar Two rules in Hungary in 2026, focusing on the GloBE declaration, the Qualified Domestic Minimum Top-Up Tax (QDMTT), the creditability of Hungarian tax incentives, and the interplay with double taxation agreements (DTAs).

The GloBE Framework: A Brief Recap

Pillars of the Mechanism

The GloBE rules operate through three interlocking mechanisms:

1. Income Inclusion Rule (IIR): The ultimate parent entity (UPE) of the MNE group is required to pay a top-up tax in its jurisdiction of residence if the ETR in any jurisdiction where the group operates falls below 15%;
2. Undertaxed Profits Rule (UTPR): Where the IIR does not fully capture the top-up tax (e.g., because the UPE’s jurisdiction has not implemented the rules), the UTPR allocates the residual top-up tax to other jurisdictions in which the group operates;
3. Qualified Domestic Minimum Top-Up Tax (QDMTT): A domestic top-up tax levied by the jurisdiction in which the low-taxed income arises, bringing the ETR up to 15% at source. The QDMTT has priority over the IIR and UTPR, meaning that if the source jurisdiction collects the top-up tax itself, no additional top-up tax is payable in other jurisdictions.

EU Implementation

Within the EU, the Pillar Two rules were transposed by Council Directive (EU) 2022/2523 of 14 December 2022 (the “Minimum Tax Directive”). Member States were required to transpose the IIR by 31 December 2023 (applicable for fiscal years beginning on or after that date) and the UTPR by 31 December 2024. Hungary transposed the Directive through Act LXXXIV of 2023 on the Implementation of the Global Minimum Tax (a globális minimumadó bevezetéséről szóló 2023. évi LXXXIV. törvény) and the related implementing government decree.

Key Filing Deadlines in 2026

GloBE Information Return: 28 February 2026

For MNE groups with a fiscal year ending on 31 December 2024, the GloBE Information Return (GIR) is due by 28 February 2026 (15 months after the end of the first fiscal year in which the rules apply, with a transitional extension for the initial period). The GIR is a standardised return that provides the following information on a jurisdiction-by-jurisdiction basis:

• The GloBE income or loss for each constituent entity;
• The adjusted covered taxes allocated to each jurisdiction;
• The calculated ETR for each jurisdiction;
• The top-up tax payable (if any) under the IIR, UTPR, or QDMTT;
• Details of any applicable safe harbours or exclusions (e.g., the substance-based income exclusion).

The GIR is filed in the jurisdiction of the UPE (or, where applicable, a designated filing entity). In Hungary, the GIR is filed with the National Tax and Customs Administration (Nemzeti Adó- és Vámhivatal, “NAV”) through the electronic filing system.

QDMTT Return: 30 June 2026

Hungary has elected to implement a QDMTT, which is administered as a separate return filed with NAV. For the 2024 fiscal year, the QDMTT return is due by 30 June 2026. The QDMTT return requires:

• Calculation of the GloBE ETR for Hungary, using the same methodology as the GIR;
• Identification of the domestic top-up tax payable, if any, to bring the Hungarian ETR up to 15%;
• Data on the adjusted covered taxes paid in Hungary by each constituent entity;
• Documentation supporting the computation, including reconciliation to the Hungarian statutory financial statements and the group’s consolidated financial statements.

The QDMTT is payable at the time of filing. Late filing or underpayment may result in default interest and administrative penalties under the general provisions of Act CL of 2017 on the Rules of Taxation (adózás rendjéről szóló 2017. évi CL. törvény, “Art.”).

The 15% ETR vs. 9% Hungarian CIT: Bridging the Gap

The Core Challenge

Hungary’s 9% CIT rate is well below the 15% GloBE minimum. This means that, in the absence of other factors, the ETR for a Hungarian constituent entity of an in-scope MNE group will prima facie be below 15%, triggering a top-up tax obligation. The gap between 9% and 15% represents a 6 percentage point differential that must be filled, either through the QDMTT (collected by Hungary) or through the IIR/UTPR (collected by another jurisdiction).

However, the actual ETR computation is more nuanced than a simple comparison of headline rates. The GloBE rules define both the tax base (GloBE income) and the covered taxes according to specific rules that differ from both Hungarian statutory accounting and Hungarian tax law. Key adjustments include:

• GloBE income is based on the financial accounting net income of the constituent entity, adjusted for certain items (e.g., excluded dividends, excluded equity gains and losses, policy disallowed expenses);
• Covered taxes include not only CIT actually paid but also deferred tax adjustments, withholding taxes on intra-group payments, and certain qualified credits.

Impact on Tax Incentives

The critical question for many multinational investors in Hungary is whether their existing tax incentives—particularly the development tax credit (fejlesztési adókedvezmény, Tao. tv. 22/B. §) and the R&D super-deduction—remain valuable in a Pillar Two world.

Development Tax Credit

The development tax credit allows qualifying investors to reduce their Hungarian CIT liability by up to 80% over a period of up to 13 years. Under the GloBE rules, the relevant question is whether the development tax credit is treated as a qualified refundable tax credit (QRTC) or a non-qualified credit.

• If treated as a QRTC, the credit is added to the numerator (covered taxes) in the ETR calculation, effectively preserving its value even if the nominal tax paid is reduced below 15%;
• If treated as a non-qualified credit, the credit merely reduces covered taxes, potentially driving the ETR below 15% and triggering a top-up tax that offsets the benefit of the credit.

Under current guidance from the OECD Inclusive Framework and the European Commission, the Hungarian development tax credit is generally not treated as a QRTC because it is not refundable independent of tax liability. This means that, in practice, the benefit of the development tax credit may be partially or fully neutralised for in-scope MNE groups, as the resulting lower ETR will trigger an offsetting QDMTT or IIR top-up tax.

R&D Super-Deduction

Hungary’s R&D super-deduction (allowing a deduction of 200% of qualifying R&D expenditure from the CIT base) operates differently. Because the super-deduction reduces the tax base rather than the tax payable, its impact on the GloBE ETR depends on the treatment of the corresponding GloBE income adjustment. In general, the R&D super-deduction does not directly reduce covered taxes but instead reduces GloBE income, which has a comparatively less adverse effect on the ETR calculation.

Substance-Based Income Exclusion (SBIE)

The GloBE rules provide a substance-based income exclusion that allows MNE groups to exclude a portion of income attributable to tangible assets and payroll costs in each jurisdiction. The SBIE is calculated as:

• 5% of the carrying value of eligible tangible assets (land, buildings, machinery, equipment) located in the jurisdiction; plus
• 5% of eligible payroll costs for employees performing activities in the jurisdiction.

(These percentages are subject to transitional phase-in rates during the initial years of application.)

For capital-intensive or labour-intensive operations in Hungary, the SBIE can significantly reduce the amount of income subject to the top-up tax, thereby preserving some of the benefit of Hungary’s low CIT rate. Companies with substantial manufacturing operations, large workforces, or significant fixed-asset bases in Hungary should carefully quantify the SBIE in their GloBE calculations.

Interaction with Double Taxation Agreements

Hungary has an extensive network of double taxation agreements (DTAs) with more than 80 countries. The interaction between the Pillar Two rules and DTAs raises several important questions:

• DTA override: The GloBE rules, as implemented through EU and domestic legislation, operate independently of DTAs. This means that a top-up tax imposed by Hungary (QDMTT) or by the UPE’s jurisdiction (IIR) may not be creditable under the terms of a DTA that was negotiated before the advent of Pillar Two;
• Withholding tax implications: Where Hungary imposes withholding taxes on outbound payments (dividends, interest, royalties) that are covered taxes for GloBE purposes, the GloBE ETR calculation incorporates those withholding taxes in the covered taxes numerator, which may partially mitigate the top-up tax;
• Mutual Agreement Procedure (MAP): Where the application of the GloBE rules results in economic double taxation that is not relieved by the normal credit or exemption mechanism of the DTA, affected taxpayers may seek relief through MAP, though the practical effectiveness of this avenue remains uncertain.

Substance Requirements and Anti-Abuse

Real Economic Activity in Hungary

The GloBE rules place a premium on substance—the presence of real economic activity, employees, and tangible assets in a jurisdiction. For Hungarian constituent entities that are primarily holding companies, financing vehicles, or intellectual property (IP) holding structures with limited substance, the SBIE will be correspondingly small, and the risk of top-up tax exposure is heightened.

Companies should review their operational substance in Hungary and consider whether additional investment in personnel, tangible assets, or operational activities is warranted—both to maximise the SBIE and to ensure that the Hungarian operations withstand scrutiny under the general anti-abuse provisions of the GloBE rules and of Hungarian domestic tax law.

The QDMTT Safe Harbour

Hungary’s QDMTT is designed to qualify as a QDMTT safe harbour under the OECD Administrative Guidance, which means that MNE groups can rely on the QDMTT computation to satisfy their Pillar Two obligations without the need to perform a separate, full GloBE computation for Hungary. This simplification reduces compliance costs and provides certainty, provided that the Hungarian QDMTT legislation remains aligned with the OECD model rules.

Compliance and Planning Recommendations

Immediate Actions

1. Assess in-scope status: Determine whether the MNE group’s consolidated revenues exceed the EUR 750 million threshold, triggering Pillar Two obligations;
2. Compute the Hungarian ETR: Prepare a preliminary GloBE ETR calculation for Hungary, incorporating all covered taxes, deferred tax adjustments, and the SBIE;
3. Evaluate the impact on tax incentives: Model the interaction between the development tax credit, R&D super-deduction, and the QDMTT to determine the net after-Pillar-Two value of existing incentives;
4. File the GIR on time: Ensure that the GloBE Information Return is prepared and filed by 28 February 2026;
5. File the QDMTT return: Prepare and file the Hungarian QDMTT return by 30 June 2026, with payment of any top-up tax due.

Medium-Term Planning

• Restructure incentive reliance: Where the development tax credit is neutralised by the QDMTT, consider alternative incentive structures (e.g., direct cash grants, which are treated differently under the GloBE rules);
• Optimise substance: Invest in tangible assets and personnel in Hungary to maximise the SBIE;
• Group-level coordination: Ensure alignment between the Hungarian tax function and the group’s global Pillar Two compliance team, as the GIR is filed centrally and the QDMTT computation must be consistent with the group-level ETR calculation;
• Monitor regulatory developments: The OECD Inclusive Framework continues to issue administrative guidance and clarifications. Stay abreast of developments that may affect the computation methodology, safe harbour eligibility, or the treatment of specific tax incentives.

Transitional Safe Harbours

Country-by-Country Reporting (CbCR) Safe Harbour

For the transitional period (fiscal years beginning before 31 December 2026 but no later than 30 June 2028), MNE groups may rely on a CbCR-based safe harbour that simplifies the GloBE calculation. Under this safe harbour, no top-up tax is required for a jurisdiction if:

• The simplified ETR (calculated using CbCR data and qualified financial statements) is at least 15% (transitioning from 15% to 15% over the phase-in period); or
• The jurisdiction’s revenue is below EUR 10 million and its pre-tax profit is below EUR 1 million (the de minimis test); or
• The SBIE equals or exceeds the jurisdiction’s pre-tax profit (the substance test).

For Hungary, the CbCR safe harbour may provide relief in certain cases, particularly for MNE groups with significant tangible assets and payroll costs in the country. However, the safe harbour is not available where the CbCR data is unreliable or where the group has elected to apply the full GloBE computation.

Practical Filing Challenges

The preparation of the GIR and the QDMTT return presents significant practical challenges for affected MNE groups:

• Data gathering: The GloBE computation requires financial data from every constituent entity in every jurisdiction, often prepared under different accounting standards and in different currencies. Consolidation and adjustment of this data to the GloBE standard is labour-intensive;
• Deferred tax adjustments: The GloBE rules require complex adjustments to deferred tax assets and liabilities that may differ from the treatment under local GAAP or IFRS;
• Currency translation: GloBE income and covered taxes must be translated into the group’s presentation currency using specified exchange rates, which may give rise to translation differences;
• Multi-jurisdictional coordination: The GIR is filed centrally but draws on data from all jurisdictions. Ensuring consistency between the central filing and the Hungarian QDMTT return requires robust internal processes and communication channels.

Groups that have not yet invested in Pillar Two compliance technology solutions should do so urgently, as manual computation is impractical for any MNE of significant scale.

Conclusion

The global minimum tax fundamentally changes the calculus for multinational investment in Hungary. While Hungary’s 9% CIT rate and generous incentive system remain nominally in place, the effective benefit for in-scope MNE groups is now mediated by the 15% GloBE floor. The QDMTT ensures that top-up revenues accrue to Hungary rather than to other jurisdictions, but the net tax burden for affected groups is materially higher than in the pre-Pillar Two era. Careful planning, early compliance preparation, and a clear-eyed assessment of the post-GloBE value of Hungarian tax incentives are essential for all affected taxpayers.

Dr. Ildikó Nagy and her tax advisory team assist multinational groups with Pillar Two compliance, QDMTT computations, and tax incentive optimisation in Hungary. To schedule a consultation, please contact our office.