New OECD Safe Harbours and Hungarian Rules

OECD Administrative Guidance

The AG extends the Transitional CbCR Safe Harbour (TCSH) by one additional year, so taxpayers may elect to apply TCSH to to fiscal years beginning on or before 31 December 2027 but not including a fiscal year that ends after 30 June 2029. Under the TCSH Simplified ETR test, the threshold for this additional year is 17%.

The AG introduces a permanent Simplified ETR Safe Harbour designed to provide enduring simplifications, distinct from both the full-scope GloBE calculation and the Simplified ETR test under TCSH. This safe harbour may be elected for fiscal years commencing on or after 31 December 2026, with an optional earlier application in specific cases. The Simplified ETR Safe Harbour may be beneficial for taxpayers, but we strongly recommend detailed upfront modelling to evaluate potential application, given the differences compared to the full‑scope and TCSH rules.

In addition, the AG establishes a Substance‑based Tax Incentive Safe Harbour, permitting certain qualified, generally available incentives to be treated as an addition to Covered Taxes, subject to a threshold related to the predefined substance of the group in the jurisdiction concerned. Some Hungarian corporate income tax incentives may meet these requirements and could potentially qualify as qualified incentive for this purpose, however, the qualification requires detailed review.

Finally, the AG introduces the Side‑by‑Side (SbS) Safe Harbour system. Under this system, if the Group’s Ultimate Parent Entity (UPE) is located in a jurisdiction with a qualified domestic and worldwide tax regime, IIR/UTPR top‑up tax can be deemed to be zero. SbS Safe Harbour may be elected for fiscal years commencing on or after 1 January 2026, provided that the respective conditions are met. However, note that Qualified Domestic Minimum Top‑up Tax (QDMTT) continue to apply unchanged in the respective jurisdictions. Based on the central record of the OECD, currently only the tax system of the USA is considered as an eligible side-by-side regime.

Given the relevance of these newly introduced schemes to a wide range of taxpayers, we plan to communicate further details on this administrative guidance.

Transitional CbCR Safe Harbour in Hungary

Turning to Hungary, the Ministry of National Economy implemented detailed rules on TCSH in late December. In essence, for jurisdictions meeting the TCSH conditions, top‑up taxes (including QDMTT, IIR and UTPR) are deemed to be zero for the applicable tax year, and the detailed, full-scope Pillar Two ETR calculation for that year is not required when the election is made.

The Decree requires an annual election to be made in accordance with the Minimum Tax Act’s filing rules, and relies on specific CbCR data with integrity‑preserving adjustments. Based on our review, the Hungarian implementation appears generally aligned with the OECD framework, with no intended deviations from the TCSH design.

Regarding timing, the Decree enters into force on 19 January 2026 and is generally applicable for tax years beginning in 2025. Meanwhile, for tax years started in 2024, application of these rules is at the taxpayer’s election. Although the above-mentioned extension of TCSH has not yet been implemented in Hungarian law, we expect that it will be adopted soon.

We would be pleased to assist with any questions related to the above or further global minimum tax obligations. If you are interested, our experts would be delighted to schedule a call to discuss the next steps.