Significant changes in the corporate car market – How vehicle taxes and fees are changing

Starting January 1, 2025, the government significantly increased the corporate car tax, which is paid monthly for company vehicles. The new tax rate will vary based on the vehicle’s performance and environmental classification. According to the published information, this tax rise by an average of 20%, resulting in a minimum additional cost of HUF 3,000 per month, but for higher-performance vehicles, businesses may face an increase of up to HUF 8,000 per month.

Under the new legislation, which applies to all car owners, both the registration tax (paid upon vehicle purchase) and the annual vehicle tax will increase in line with inflation. For 2025, the tax rates will be determined based on the official figures published by the National Tax and Customs Administration (NAV) and will vary depending on the vehicle’s performance and environmental classification.

Starting from October 31 of each year, NAV will publish the applicable tax rates for the following year, covering registration tax, vehicle tax, and corporate car tax. These rates will be calculated based on the inflation data from July, as provided by the Hungarian Central Statistical Office (KSH). Previously, no such annual tax correction existed for any of these taxes, but this new approach is expected to become a standard adjustment across multiple tax types.

Additionally, registration-related fees will also increase according to the table below:

From January 1, 2025, plug-in hybrid (PHEV) vehicles registered after December 31, 2024, will lose their exemption from corporate car tax. However, vehicles registered before the end of 2024 will still benefit from the exemption until the end of 2026, giving businesses time to optimize their fleet strategy.

In addition, tax advantages for plug-in hybrids have already been restricted in autumn 2024. As of September 1, 2024, newly registered plug-in hybrid cars are no longer eligible for green license plates, meaning they no longer qualify for free parking benefits. For vehicles that already have a green license plate, it must be replaced with a standard plate no later than November 30, 2026.

One positive development is the extension of the VAT refund option for corporate vehicles, originally introduced on January 1, 2019. This regulation allows businesses to reclaim 50% of the VAT on monthly lease fees without the need to maintain detailed mileage logs to separate business and private use. According to a proposal published by the European Commission on October 24, 2024, this VAT regulation is expected to remain in effect in Hungary until the end of 2027. This provides a significant administrative and financial advantage for businesses that use company vehicles. Companies wishing to reclaim VAT based on actual business use may still do so, but they must maintain detailed documentation of the vehicle’s business usage ratio.