Why Hungary Still Has the Lowest Corporate Tax in the EU
Hungary’s corporate tax rate is a flat statutory rate of 9%, which is still the lowest in the EU in 2025. This low rate is attractive to those who want to do business in Hungary and especially draws attention from tax experts and Brussels. There are several reasons Hungary has not increased its tax rate since 2017. The country’s tax policy and economic strategy allow it to keep the rate as low as possible while accounting for global shifts.
Hungary’s Tax Rate Is a Long-Standing Strategy
The tax rate has been part of Hungary’s broader economic strategy for many years to keep the country competitive for both domestic and foreign investment. The political situation in Hungary is still stable, which continues to support the low corporate tax rate (and a personal income tax rate of 15%). Stable politics also make it unlikely that the rate will change anytime soon.
It Is Not Just the Corporate Tax Rate
It is important to note that companies still face levies, despite a low headline corporate tax rate. Local businesses must deal with local taxes, payroll, and industry-specific regulations. Combined, these factors affect the cost of doing business in Hungary.
Therefore, Hungary’s tax burden on firms depends on these charges and tax code allowances. According to the European Commission’s reviews, the corporate income tax revenue remains relatively low as a share of GDP. This is also despite the low statutory rate.
Additional Levies Explained
The additional levies faced by businesses operating in Hungary include the following:
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LBT/HIPA. According to PwC, local business tax is deductible for corporate income tax purposes. But it does add to the cost base.
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Surtaxes or Innovation Contributions. Hungary designates certain levies, such as the innovation contribution, under Pillar Two rules.
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Retail Tax. There is also a surtax on retail revenue, which can see the effective tax burden increase in specific sectors.
When looking at these levies, it is clear that the 9% is attractive, but businesses cannot assume this is the only tax to pay.
Implementation of Global Minimum Tax (Pillar Two)
Hungary’s OECD-inspired Pillar Two global minimum tax regime ensures that large multinational companies pay a minimum effective tax rate. The key elements of Pillar Two are:
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Income Inclusion Rule. As of January 1, 2024, this requires parent companies to top up the effective tax rate if their Hungarian subsidiaries pay too little tax.
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Qualified Domestic Minimum Top-Up Tax. The country also introduced a domestic top-up tax on the same day.
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Undertaxed Profits Rule: As of January 1, 2025, this rule targets companies where the IIR cannot fully collect the minimum tax.
In Hungary, the ‘covered taxes’ used to calculate the top-up include corporate income tax, local business tax, the innovation contribution, and a tax on energy suppliers.
By maintaining the 9% rate and layering the QDMTT and other rules on top of it, Hungary ensures compliance with international standards. At the same time, it also preserves its low-rate appeal.
Hungary’s 9% Rate Still Matters
Hungary’s 9% tax rate shows it will remain open to investment while playing a stable role in the wider tax system. The coming years will continue to test how well this balance holds up.
https://www.marlowbray.com/resource-articles/residency-by-investment-programs-across-europe
https://taxfoundation.org/data/all/eu/corporate-income-tax-rates-europe/
https://tradingeconomics.com/country-list/corporate-tax-rate?continent=europe&utm/
https://www.state.gov/reports/2025-investment-climate-statements/hungary/
https://immigrantinvest.com/blog/hungary-tax-optimisation/
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