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New Allowances in Corporate Taxation

New Allowances in Corporate Taxation

Hungary
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From 1 January 2024, taxpayers can benefit from a tax allowance for investments in the construction of electricity storage facilities. The tax allowance is available for 6 tax years, with the first tax year being either the year of installation or the following tax year, at the taxpayer's option. This incentive is intended to encourage the installation of new electricity storage facilities which enable the taxpayer to store electricity generated for its own use.

To qualify, the taxpayer must purchase at least 75% of the energy fed into the electricity storage during the year from a renewable energy power plant connected to the public grid at the same point as the electricity storage. The aid intensity of the tax incentive, including all state aid, is 30% of the eligible costs of the investment in present value, up to a maximum of EUR 30 million. The intensity can be increased by 20 percentage points for small enterprises and 10 percentage points for medium-sized enterprises. Eligible costs are the cost of the investment, calculated at market prices in the case of linked enterprises.

The tax allowance can only be applied if the taxpayer makes the relevant electronic notification to the Minister responsible for tax policy before the planned start of the investment. It is advisable to pay particular attention to the deadlines, as no request for verification can be submitted if the notification is late. The tax incentive can be claimed in accordance with the regulations in force at the time of the notification. In order to benefit from the allowance, there are further conditions (such as a valid and effective network connection contract and network usage contract).

The tax allowance cannot be used in combination with the development tax credit, the energy efficiency tax credit and the aid under Commission Decision SA.102428. Moreover, the tax incentive is not accessible to - among others - operators of fisheries and aquaculture products, companies facing financial difficulties or having unpaid debts resulting from illegal aid. Compliance with the conditions of the tax allowance will be monitored at least once before the end of the third tax year following the first use of it.

By Krisztian Kiralyvolgyi, Attorney at Law, KCG Partners Law Firm

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

Firm's website.

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