R&D tax credit and tax base reduction
If you are carrying out development activities, don't leave it unused!
Hungarian companies did not use 65% of their potential R&D tax breaks in 2023, and 30–40% in 2024 – despite being entitled to them.
In 2023, R&D expenditures amounted to HUF 1,014 billion, of which HUF 753 billion was realized by enterprises. In 2024, this amount increased further: HUF 1,075 billion, of which HUF 800 billion was related to corporate R&D activities.
Thanks to the legislative changes effective from 2024, companies can now claim up to 10% of their R&D expenditures in the form of a tax deduction or tax base reduction item (compared to the previous 9%).
All this clearly shows that Hungarian companies leave a significant amount of R&D allowance unused year after year.
It's time for us to change this together!
R&D tax breaks from 2024
More favorable, predictable conditions
New R&D tax relief in brief
Kedvezőbb és kiszámíthatóbb
From 2024, R&D costs can no longer be used only for tax base reduction: the taxpayer can also choose a direct corporate tax credit. The amount of this is 10% of the eligible costs. If the credit exceeds the tax payable, the unused part can be refunded at the end of the 4th tax year, i.e. it turns into a quasi-cash grant. The choice is valid for 5 tax years, and no other parallel credit can be used for the given costs.
Why is this important for businesses?
Better usability
More flexible financing for R&D: direct tax credit can reduce TAO up to 0.
Cash refund option for unused portion (4+1 year structure).
The new credit is an alternative to the tax base reduction – they cannot be applied together to the same costs over the 5-year period.
Limitations of use
Fear of the old system
In the pre-2024 system, the recognition of costs as R&D activities posed a significant tax risk. This is now a transparent, predictable process. The tax authority also fully accepts the R&D qualification.
Recognizing costs/activities as R&D activities requires significant innovation expertise.
R&D tax credit and tax base reduction
In summary
1) R&D tax base reduction item
Legal title: reduction of tax base.
What it can be used for: basic research, applied/industrial research, experimental development.
Eligible costs: direct costs of R&D in the year of occurrence; in the case of capitalized experimental development, up to the amount of depreciation.
Size / impact: savings can be achieved through multiple taxes; total impact typically up to ~11.3% (TAO/HIPA/innovation contribution).
Time frame: no explicit upper limit; it is adapted to the duration of the projects and can be applied retrospectively with self-monitoring.
Concurrent applicability: cannot be combined with the other incentive for the same costs (see below).
2) R&D tax credit (with refund option)
Title: direct corporate tax credit; unused portion can be refunded later.
What it can be used for: the same R&D activities (basic, applied research, experimental development according to TAO).
Eligible costs (examples):
Depreciation of assets used in R&D for the duration of the project,
Personnel expenses of R&D workers (excluding indirect costs),
used patent,
operational/operational items directly related to the project.
Rate / impact: 10% of the eligible R&D costs in the TAO; does not reduce the HIPA/innovation contribution base.
Time frame: limited 4 tax year period; unused credit can be refunded in the 5th year – subject to conditions.
Concurrent applicability: cannot be applied to the same costs with other R&D allowances and cannot be combined with the tax base reduction; the election is valid for 5 tax years.
Why Neuron Labs?
20+ years of innovation project experience
Predictable process
Complete document compilation and process management
R&D qualification
Ha érdekel , hogy mennyi adókedvezményre lehetsz jogosult, akkor végigviszünk a teljes folyamaton, hogy megalapozott döntést tudj hozni a felhasználásról!
Misconception!
Determining eligibility for R&D tax relief/tax base reduction is not a matter of accounting, but of compliance with the R&D Act.
In other words, how much someone can claim back depends on whether the task they think of as R&D actually meets the legal criteria. If there is a professionally correct answer to this question, then it is possible to estimate the amount that can be claimed as an actual tax deduction/tax base reduction factor and in what categories.
The accountant/finance officer can therefore say in advance how much the company expects to pay in each tax category, which is the theoretical maximum of the refundable discount. However, the actual amount of this amount depends on whether the activity behind the discount qualifies as R&D activity under the R&D Act. This cannot be decided by the accountant/finance officer, and can be answered at the end of an R&D qualification process.
