Taxation in Hungary In 2024: Rules, Rates And Regulations

Hungary, located in Central Europe, has the lowest corporate taxes in the EU, making it an attractive option for businesses. With strong infrastructure and a skilled, affordable workforce, it is no surprise that companies are drawn to the country. In this article, we will break down how taxation in Hungary works and what makes it so appealing for businesses.

Taxation in Hungary in 2024

Taxation in Hungary is a complex issue, which is why we have covered various aspects of it, including:

• The tax benefits of forming a Hungarian company
• Offshore opportunities in Hungary
• A tax guide for expats and investors
• Rules for tax and company registration numbers

To simplify this complex topic, this article will clarify how the taxation system in Hungary operates. We will focus on the tax rates and regulations that are most important for businesses operating in the country.

Corporate income tax (társasági jövedelemadó, TAO)

Hungary has a corporate income tax (társasági jövedelemadó, TAO) rate of 9%, which is the lowest in the EU. This rate is applied to a tax base that can be adjusted by factors such as losses, depreciation, and provisions.

Hungarian companies are taxed on their global income, while foreign companies only pay tax on income generated from Hungarian operations.

Businesses can also take advantage of tax credits for activities such as:

• Research and development
• Energy-saving investments
• Film production
• Sports sponsorship

Personal income tax (személyi jövedelemadó, SZJA)

Personal income tax (személyi jövedelemadó, SZJA) is a flat rate of 15%, with additional contributions. Employees pay an 18.5% social security contribution, while employers contribute 13% in social taxes. As a result, the overall tax burden on a standard salary is 33.5%, meaning employees receive approximately 66.5% of their gross salary as net income.

Property tax (ingatlanadó)

Real estate investment in Hungary is becoming increasingly popular, as third-country nationals can obtain a guest investor residence permit, often called a “golden visa,” allowing them to remain in Hungary for an extended period for investment purposes.

There is no property tax in Hungary (ingatlanadó), so individuals and businesses are not required to pay an annual or semiannual charge after their properties.

There are other taxes that you need to take into account. One is the property transfer tax, a one-time fee paid when you purchase real estate. This tax ranges from 2% to 4%, depending on the property’s value, with a maximum of 200 million HUF per transaction. Properties valued up to 1 billion HUF are taxed at 4%, while those exceeding this amount are taxed at 2%.

New properties are subject to a 27% VAT, which is usually included in the purchase price.

Value-added tax / VAT (általános forgalmi adó, ÁFA)

The standard VAT (általános forgalmi adó, ÁFA) rate is 27% in Hungary, the highest in the European Union. Reduced VAT rates of 18% and 5% apply to certain goods and services, such as specific food products, pharmaceuticals, and residential properties.

FAQ

What is the corporate tax rate in Hungary?

The corporate tax rate in Hungary is 9%, the lowest in the EU.

How much is VAT in Hungary?

VAT in Hungary is generally 27%. However, reduced VAT rates of 18% and 5% apply to specific goods and services.

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