According to a draft legislation on digital companies issued at the end of 2023, “digital companies” would be exempt from paying public burdens and local business tax. Employees in employment relationships and the executives of companies could fulfil their tax payment obligations after their income through special public burden contributions.
According to the bill, only companies in which the majority of employees come from third countries can enter the new system, and access to the incentive would require companies to have appropriate qualifications. The certification would be organised by the government in a foundation circle, with a decree designating the foundation to issue and evaluate the tender, while the digital company would be able to contract with the designated authority once certified.
Companies with at least HUF 20 million in capital can become a digital company by contracting with the competent authority. This may be applicable to companies whose business activities are based on information technology development activities, applicability of smart contracts, cybersecurity, information and communication research, and development and innovation activities that make them available to the market, industry, and science. The proposal also identifies possible areas of activity, adding that any other activities may only be aimed at supporting the main activity, and the revenue derived from it cannot exceed 20%.
The discussion of the draft legislation is expected in the coming months.
By Lilla Majoros, Attorney at law, KCG Partners Law Firm