Szerző: Ügyvédi Iroda
As of January 1, 2025, significant changes have come into effect regarding the taxation of intellectual property contributions to business entities in Hungary. Through the amendment of Act CXVII of 1995 (Personal Income Tax Act), more favorable conditions have been established for individuals to contribute their intellectual creations to businesses. This change is particularly important for startups and innovative enterprises, as it facilitates the utilization of intellectual property and capital raising.
What qualifies as intellectual property under the Personal Income Tax Act?
The concept of intellectual property is broadly defined under the Personal Income Tax Act, including the following:
- Contribution of creations under industrial property protection: inventions, patents, industrial designs, trademarks.
- Contribution of works under copyright protection: literary, scientific, artistic works, software.
- Contribution of assets monopolized through confidentiality: for example, know-how, manufacturing processes.
- Contribution of other innovative intellectual creations: innovations, technological developments, other valuable intellectual creations.
It is important to emphasize that the scope of intellectual property contribution as defined by the Personal Income Tax Act is broader than the general concept of intellectual creations. As a result, in addition to copyright and industrial property protection, many creations and solutions that may not have formal legal protection but are economically valuable may also fall into this category.
2025 Tax Change: Tax Exemption for Intellectual Property Contribution
According to the amendments that came into effect on January 1, 2025, the contribution of intellectual property to business entities has become tax-exempt. This means that individuals do not incur an immediate tax liability at the time of contribution. Previously, personal income tax (15%) and social contribution tax (13%) had to be paid on the value of the contribution, which represented a significant burden for creators. The new regulation eliminates this burden, thereby encouraging the contribution of intellectual property to businesses.
Conditions for Tax-Exempt Contribution
The following conditions must be met to benefit from tax exemption:
- Original rights holder: Only the individual who created the intellectual property can benefit from the tax exemption.
- Method of contribution: The intellectual property must be contributed to the business entity as a non-cash contribution (apport). Simple sales or licensing agreements do not qualify for tax exemption.
Tax Liability on Subsequent Sale
It is important to note that when business shares or stocks acquired through contribution are subsequently sold, a tax liability arises. However, this only represents capital gains tax payable on the actually realized profit, during which documented costs can be deducted from the tax base, resulting in more equitable taxation.
Advantages of the New Regulation for Businesses
The introduction of tax exemption offers numerous advantages for businesses:
- Facilitation of capital raising: The tax exemption for intellectual property contributions makes businesses more attractive to investors, as intellectual property can be directly transferred to company ownership.
- Encouragement of innovation: More favorable conditions for creators to utilize their intellectual property stimulate innovation and creativity.
- Tax planning and improved liquidity: Deferring tax liabilities improves business liquidity and provides opportunities for long-term tax planning.
Practical Steps for Implementing Intellectual Property Contribution
Preparation of the Contribution
Before implementing intellectual property contribution, it is necessary to:
- Precisely identify and evaluate the intellectual propert
- Examine the legality of the contribution
- Prepare appropriate modifications to company documents
The Contribution Process
During intellectual property contribution:
- Adopt a company resolution accepting the contribution
- Determine the value of the contribution
- Initiate registration with the Court of Registration
- Document the fulfillment of the contribution
Summary: Tax Optimization and Support for Innovation
The new regulations effective from 2025 offer significant opportunities for both creators and business entities. The tax exemption for intellectual property contributions encourages innovation and provides a strategic opportunity for long-term tax planning.