Hungary
Corporate taxes and other direct taxes
In Hungary, a corporate income tax rate of 9% is applicable, which is the lowest rate in the EU. The tax base is the pre-tax profit modified by several increasing and decreasing items. Losses can be carried forward for 5 years and may be used to reduce the tax base up to a maximum of 50% of the tax base. Loss carryback is generally not possible. Special limitations are applicable in the case of M&A transactions.
From 2019, the previous thin capitalization rules have been replaced by the interest-limitation rules set out by ATAD (30% of EBITDA or approx. EUR 2.5 million). Exit tax and hybrid mismatch regulations are also applied.
Group taxation is available in Hungary for CIT purposes, which allows related parties to avoid some of the transfer pricing documentation obligations.
IFRS accounting is optional for larger companies (above approx. EUR 0.8 million of revenue or 50 employees) and is obligatory for financial institutions and listed companies.
There is a wide range of tax allowances for new investments (for example, for energy-efficiency investments and for investment in start-up companies), as well as for R&D facilities.
Hungary provides a tax exemption for holding structures: capital gains on shares and intellectual property under certain conditions are tax free, and a 50% tax allowance is applicable on royalty incomes.
There is no withholding tax on dividends, interest, and royalties paid by a Hungarian company to a foreign company. Hungary has a wide international treaty network with more than 80 treaties on the avoidance of double taxation. However, the United States-Hungary tax treaty has been terminated as of 2024.
The local business tax of maximum 2% is payable on gross margin (sales revenue minus COGS, mediated services, material costs and R&D costs).
Transfer tax is applied in Hungary to a limited range of transactions. The general transfer tax rate applied to real property transactions is 4%, including the acquisition of real estate or 75% of the shares of a real property holding company. There are some exceptions regarding intra-group transactions. The transfer tax is 18% on gifts and inheritance, 9% in the case of residential real estate; gifts and inheritance within a family are tax-exempt.
A number of windfall taxes have been introduced for the financial years of 2022-2024, for example in the banking and insurance sectors, but energy suppliers and producers of pharmaceutical drugs are also affected.
Level of attention paid by Tax Authority:
VAT and other indirect taxes
The standard VAT rate is 27%, while the reduced rates are 18% (e.g. bread) and 5% (e.g. milk, eggs, newspapers, books, medicines, certain meat products, new residential real estate, internet access services, accommodation services and restaurant services). Due to limited voluntary compliance in certain sectors (e.g. retail business and certain services), Hungary introduced a number of measures aimed at enforcing the law, such as the online checking of cash registers and domestic sales reports. Taxpayers are required to use billing software capable of automatically providing the tax authority with real-time invoice data. Thus, from 2021, each invoice is essentially reported to the tax authority in real-time. The so called e-VAT system has been introduced in 2024 with the aim of making VAT administration easier. Under the new regime, the Tax Authority provides taxpayers with draft VAT statements based on online invoice reporting data.
Other indirect tax types in Hungary include excise duty on energy products, alcohol and tobacco products, financial transactional tax (payable by banks completing such transactions), insurance tax, “chips tax” (levied on unhealthy foods and drinks), and retail tax. The previous environmental protection charges on products heavily polluting the environment (e.g. all kinds of electric equipment, accumulators and batteries, packaging materials, etc.) have been replaced by EPR (Extended Producer Responsibility) fees.
| VAT options in Hungary |
Applicable / limits |
| Distance selling |
From July 1, 2021, the OSS system is applicable. |
| Call-off stock |
 |
| VAT group registration |
|
| Cash accounting - yearly amount in EUR (approx.)* |
Approx. EUR 320,000/year |
| Import VAT deferment |
|
| Local reverse charge |
Sale of waste, agricultural products, greenhouse gas emission quotas, collaterals. Also, the provision of certain construction services, turn-key construction projects. |
| Option for taxation |
| - letting of real estate |
|
| - supply of used real estate |
|
| VAT registration threshold* |
 |
Personal income tax / Social security system
There is a flat-rate PIT of 15%, and it is generally applicable both to active (e.g. employment, assignment fee) and passive incomes (e.g. capital gains, dividend, and interest). Tax payable on active income is reduced by a family tax allowance. The family tax allowance amounts to HUF 20,000 (approx. EUR 50)/month/child for up to 2 children; and HUF 33,000 (EUR 84)/child) from 3 children. As of January 1, 2020, a lifelong personal income tax exemption for employment income was introduced for mothers raising or having raised four or more children. From 2022, employees of 25 years of age or under also enjoy tax exemption. Benefits-in-kind are taxed at two rates, depending on the type of benefit: PIT plus social tax calculated on a special tax base altogether amounting to 33.04% or 28%, respectively, which is to be paid only by the employer. However, as of 2019, most types of benefits-in-kind are taxed as normal employment income.
Active income falls under the scope of the SSC system: the social security contribution payable by the individuals concerned is 18.5%; the employer’s social tax was reduced to 13% from January 2022. Some passive incomes are also subject to 13% social tax; however, there is an upper limit in the case of dividends. Other types of passive income (e.g. capital gains on shares in stock exchange companies, or interest) are exempt from social tax.
Wage related taxes
in Hungary |
Minimum wage
|
Average wage
in private sector |
| Exchange rate HUF/ EUR |
in EUR |
in HUF |
in EUR |
in HUF |
| 389 |
686 |
266,800 |
1,597 |
621,200 |
| Total wage cost |
775 |
113.00% |
1,805 |
113.00% |
| Social contribution tax |
89 |
13.00% |
208 |
13.00% |
| Gross salary |
686 |
100.00% |
1,597 |
100.00% |
| Personal income tax |
103 |
15.00% |
240 |
15.00% |
| Employees' contributions |
127 |
18.50% |
295 |
18.50% |
| Net salary |
456 |
66.50% |
1062 |
66.50% |