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Pillar Two – Based on the OECD's initial assessment, Hungarian top-up tax regulation provides a safe harbour for multinational groups
We would like to draw your attention to a significant milestone regarding Hungarian global minimum tax legislation. On 15 January 2025, the OECD has published the Central List of Legislation with Transitional Qualified Status: a list of countries (jurisdictions) having domestic top-up tax regulations meeting the relevant requirements based on the preliminary analysis. As Hungary is one of the listed countries, it obtained the transitional QDMTT Safe Harbour status concerning the qualified domestic minimum top-up tax (QDMTT), which results in significant advantages for multinational groups with a presence in Hungary.
The advantage of the QDMTT Safe Harbour status is that the amount of top-up tax obligation payable concerning group members located in a QDMTT Safe Harbour jurisdiction should be considered as zero for the purposes of the charging mechanisms of other countries (the IIR and UTPR rules) during the calculation of the global minimum tax obligation of the multinational group.
For example, the foreign ultimate parent entity may presume that the global minimum tax obligation has been fulfilled in Hungary in respect of the local constituent entities, as Hungary's transitional QDMTT Safe Harbour status implies that the local regulation is suitable to ensure compliance with the OECD's Pillar Two requirements. Therefore, the ultimate parent entity is not required to prepare a global minimum tax (IIR) calculation concerning the Hungarian constituent entities.
In addition to the transitional QDMTT Safe Harbour list mentioned above, the OECD has published an administrative guidance regarding the interpretation of transitional rules (with particular attention to certain deferred tax-related matters), as well as detailed rules concerning reporting obligations related to top-up taxes (the GloBE Information Return, GIR).
We would be pleased to assist you with any questions related to the above or further global minimum tax obligations. If you are interested in it, our experts would be delighted to schedule a call to discuss the next steps.