Government Decree No. 10/2026 – published in Issue 12 of the Hungarian Gazette – amended certain provisions of the personal income tax and social contribution tax acts as of 1 February 2026. The key change is that, under specific conditions, representation benefits provided in the form of restaurant catering have become tax‑exempt. Although the preferential rule is effective from February, it may be applied to the entire 2026 tax year.
When does restaurant consumption qualify as tax‑exempt?Tax‑exempt status applies only if the consumption occurs as part of a representation benefit.
What counts as a representation benefit?Under the current regulations, representation refers to hospitality (providing food, drinks, and related services) that:
- is linked to a business, official, professional, diplomatic, or religious event, or
- forms part of an event connected to a state or church holiday.
According to Article 3, point 26 of the Personal Income Tax Act, a benefit does not qualify as representation if documentation or circumstances indicate improper or abusive use of the rules.
Where must the consumption take place to qualify as tax‑exempt representation?Another condition is that the consumption must occur within restaurant services. Under Article 2(2)(a) of Government Decree 10/2026, a restaurant is exclusively a catering establishment defined in point 1 of Annex 4 of Government Decree 210/2009. Such an establishment may be:
- operating year‑round or seasonally,
- traditional or self‑service,
but in all cases the food must be prepared on site.
The following do not qualify and therefore are not tax‑exempt: buffets, confectioneries, cafés, bars, or pubs, as these are not legally classified as restaurants.
What if the consumption does not take place at the restaurant but via delivery?
Does alcohol consumed at the restaurant count?
Does it matter if only company employees attend, or clients as well?
(These questions are raised but not clarified in the original text.)
Value limits and thresholds for 2026The decree sets two important caps:
- Up to 1% of the company’s total annual revenue can be accounted for as tax‑exempt restaurant representation.
- The tax‑exempt amount may not exceed 100 million HUF.
Businesses starting or ceasing activity during the year may apply these limits proportionally.
Total revenue includes all items appearing as total income of the business — from net sales revenue to other income and financial income.
When does a tax payment obligation arise?If a business spends more than 100 million HUF on restaurant representation during the tax year, it must pay an advance tax on the portion exceeding 100 million HUF. The tax rates are the same as for other representation benefits:
- based on 118% of the market value,
- 15% personal income tax and 13% social contribution tax;
- for small business tax (KIVA) payers, the market value is subject to 10% KIVA instead of szocho.
The tax advance must be determined in the quarter when the total exceeds 100 million HUF and must be declared and paid by the 12th day of the following month. There is no advance payment obligation for businesses starting their activity during the year, nor if the benefits do not reach 100 million HUF.
Annual settlement rulesThe tax advance paid is deductible when determining the final tax liability at year‑end. Every business must examine whether the value of restaurant representation benefits exceeded 1% of total revenue in the year.
The deadline for final revenue determination:
- for businesses subject to the Accounting Act: the last day of the fifth month following the tax year.
Thus, for the 2026 tax year, most corporations must fulfill their payment and reporting obligations by 12 July 2027.
