Hungary Issues a Draft Regulation for the OECD Safe Harbours

On November 14, 2025, Hungary issued a Draft Regulation (for consultation) to provide for the detailed application of the Pillar 2 Safe Harbours. By default it applies from January 1, 2025, however, MNEs can opt to apply the provisions from January 1, 2024. 

Whilst the Hungarian Minimum Tax Law provides for high-level safe harbour provisions, further details were to be provided in a Ministerial Regulation.

Section 32(1) of the law provides for the safe harbour provisions. It states that, subject to an election of the MNE group, the top-up tax will be deemed to be nil where the conditions are met as set out a recognized international agreement.

Section 32(2) specifically applies the Transitional CbC Safe Harbour.

Section 32 of the Minimum Tax Act provides for the basic rules for the safe harbour for Hungarian tax purposes. In particular, Section 32(2) provides for the three key tests (De-minimis test, ETR test and the Routine profits test).  However, Section 32(4) provides that the detailed rules will be determined by a ministerial decree.

The November Draft Regulation expands on the application of the Safe Harbours. 

Transitional CbCR Safe Harbour

The November Draft Regulation includes a number of aspects not included in the Minimum Tax Law, including:

– Transition Period (OECD Safe Harbour Guidance)

– Special Rule for Joint Ventures (OECD Safe Harbour Guidance)

– Special Rules for Investment Entities and their Constituent Entity-owners (OECD Safe Harbour Guidance)

– Special Rule for Net Unrealised Fair Value Loss (OECD Safe Harbour Guidance)

– Purchase Accounting Adjustments(consistent reporting condition, goodwill impairment adjustment) (December 2023 OECD Administrative Guidance)

– Qualified Financial Statements for PEs (December 2023 OECD Administrative Guidance)

It should be noted that the 2025 Autumn Tax Package also included some amendments to the application of the Transitional CbCR Safe Harbour, which overlap with the November Draft Regulation. For instance, it provides that the detailed rules for the application to Hybrid Arbitrage arrangements are to be provided by Ministerial Decree.

The following is included in the November Draft Regulation, which overlaps with the 2025 Autumn Tax Package:

-MNEs not required to file CbC Reports (December 2023 OECD Administrative Guidance)

-Detailed rules for the treatment of hybrid arbitrage arrangements (December 2023 OECD Administrative Guidance)

QDMTT Safe Harbour

Section 32(3) of the Minimum Tax Law applies the QDMTT Safe Harbour where the requirements of the OECD Model Rules (which include the Administrative Guidance) are met.

Section 7(1) of the November Draft Regulation provides that the QDMTT Safe Harbour applies where a foreign QDMTT is approved by the OECD and has qualifying status. The State Tax and Customs Authority is to publish qualifying jurisdictions by the last day of the second month of the calendar year.

The November Draft Regulation also applies the ‘Switch-Off Rule’ that prevents an MNE Group from applying the safe harbour to all or some Constituent Entities located or created in the QDMTT jurisdiction and requires the MNE Group to switch to the general credit method for the offset of the QDMTT.

This applies where:

 – A QDMTT jurisdiction decides not to impose a QDMTT on Flow-through Entities created in its jurisdiction;

 – A QDMTT jurisdiction decides not to impose a QDMTT on Investment Entities subject to Articles 7.4, 7.5, and 7.6 of the GloBE Rules (Provisions for the Effective Tax Rate Computation for Investment Entities, Investment Entity Tax Transparency Election, or the Taxable Distribution Method Election);

 – A QDMTT jurisdiction includes members of a JV Group (which includes Joint Ventures) within the scope of the QDMTT but imposes the liability on Constituent Entities of the main group instead of directly on the members of the JV Group.

 – A QDMTT jurisdiction decides to adopt the UTPR exclusion for MNEs in their initial phase of international activity without any restriction; or 

Note that the additional Switch-Off rule in the January 2025 OECD Administrative Guidance is not included (jurisdictions that allow certain DTA reversals arising from tax benefits provided by General Government to be taken into account for adjusted covered taxes (or for Transitional CbCR Safe Harbour purposes)). 

NMCE Simplified Calculations Safe Harbour

Section 8 of the November Draft Regulation provides for the Simplified Calculations Safe Harbour for Non-Material Constituent Entities (NMCEs). The aim being to reduce or simplify the number of computations and adjustments an MNE is required to make under the GloBE Rules.

NMCEs are constituent entities of an MNE Group that are not consolidated on a line-by-line basis in the MNE Group’s audited consolidated financial statements solely for size or materiality grounds. It also includes any permanent establishments of these entities (providing the Main Entity is itself an NMCE.)

Transitional UTPR Safe Harbour

Section 9 of the November Draft Regulation provides for the Transitional UTPR Safe Harbour. This deems the UTPR Top-up Tax amount for a UPE Jurisdiction to be zero if the UPE Jurisdiction has a corporate income tax rate of at least 20 percent.

It applies for Fiscal Years which begin on or before December 31, 2025 and end before December 31, 2026.