Capital Budapest
Official language Hungarian
Official currency Hungarian forint (HUF)
Population (January 2019 est.) 9,773,000
Area 93,028 km2
Political system Parliamentary democracy
Double tax treaties 90 (incl. modifications)
GDP per capita (2017) EUR 11,800
GDP growth (2018) 4,9%
Inflation (2018) 2,8%
Member of the European Union Since 2004
CORPORATE INCOME TAX
Corporate income tax (CIT) rate 9%
Taxable income
Hungarian tax residents (including companies not incorporated in Hungary but
having place of effective management there) are taxed on worldwide income
non-residents carrying out taxable activities through a PE are taxed on Hungarian-source
income
CIT base pretax profit (determined in accordance with local GAAP) with certain adjustments
Passive income
dividend received by a Hungarian company is exempt, except for dividends from
controlled foreign corporations (CFCs)
interest received is taxable under general rules
Loss carry back no
Loss carry forward yes (losses can be carried forward for 5 years and are deductible up to 50% of the tax
base, change-of-control restrictions, special rules for pre-2015 losses)
Tax incentives
A 50% deduction for royalties from patents, property rights and software copyrights
(marketing related intellectual properties, such as trademark are excluded)
tax credits for small and medium businesses
tax deferral for fast growing companies
tax credit for energy efficiency investments
development reserve / accelerated depreciation before investment
tax base allowance for investments in startup companies
double/triple deductibility of R&D costs
13-year development tax allowance for asset and job creation investments (effective
tax rate can be reduced to 1.8%)
Group taxation group taxation is available to Hungarian affiliated companies having at least 75% common control
Foreign tax credit double tax treaties provide either exemption for foreign-source income, or foreign
tax paid can be credited in Hungary. In lack of double tax treaty, foreign taxes may be
credited against Hungarian tax based on domestic rules.
Anti-avoidance provisions
transfer pricing rules in line with OECD guidelines
thin capitalization rules – excess financing costs my be deducted up to the higher of either 30% of EBITDA of HUF 939,810,000
CFC rules
BEPS actions are being
implemented
general anti-avoidance rules
Alternative minimum tax loss-making and low profit earning companies may opt for either paying minimum
tax (2% of total adjusted revenues) or report certain data to the tax authority.
Capital gains 9% (included in the tax base, taxed at standard rate)
Exemptions from capital gains taxation
gains realized by non-residents (except for shares in Hungarian real estate companies )
gains realized on the sale of shares in Hungarian real estate companies by non-residents
are taxable at 9% (double tax treaties may overwrite this provision)
gains on the sale of reported shares (participation exemption) – without
ownership limit, but 1-year holding requirement (not applicable for shares in CFCs)
gains on the sale of royalty-generating intangibles
gains on the sale of unreported intangibles if they are used to purchase another royalty-generating intangible within 5 years
Deferral of capital gains taxation
preferential transformation rules
preferential transfer of assets rules
WITHHOLDING TAX
Withholding tax rates
dividends 0%
interests 0%
royalties 0%
Fully implemented EU directives
parent-subsidiary directive
mergers and cross-border mergers directives
DAC2 (directive on administrative cooperation)
directives against tax avoidance practices and as regards hybrid mismatches with third countries
interest and royalties directive
ACCOUNTING
Applicable GAAP Hungarian GAAP, but certain companies may or must convert to IFRS
Submission of financial statements electronically by the last day of the 5th month following the end of the year
Foreign currency bookkeeping
in EUR, USD without limitation
in other convertible currencies if thresholds are met
TAX COMPLIANCE
Tax year generally calendar year, but different business year may be chosen
Filing of corporate income tax (CIT) returns by the last day of the 5th month following the end of the tax year
CbC reporting Country-by country reporting obligation for multinational companies
CIT payment
monthly/quarterly advance payments based on previous year liability
Any remaining by the due date of CIT return
VAT returns quarterly/monthly
Rulings
non-binding ruling
binding ruling
super ruling (binding for 3 years even if CIT law changes)
advance pricing agreement (APA)
Binding or non-binding rulings of the Hungarian Intellectual Property Office on R&D
classification
Foreign exchange control no
Restriction on the % of foreign ownership no (except for farmland)
Double tax treaty network 90 treaties
PERSONAL INCOME TAX
Personal income tax (PIT) rate flat 15%
Tax base
Hungarian residents are subject to tax on worldwide income
non-residents are taxed on Hungarian-source income
PIT base gross income
Withholding tax rates (double tax treaties may overwrite)
dividends 15%
interest 15%
royalties 15%
Capital gains tax rate 15%
Social security contribution
employees 18.5%
employers 19%
VAT
Fully harmonized with EU VAT directive
VAT registration
call-of stock simplifitication
Electronic Public Road Trade Control System
standard rate 27%
preferential rates rate 18%/5%
VAT grouping
Online data supply obligation
domestic reverse charge mechanism
special rules for financial institutions
refund period 30/45/75 days from filing of tax return
Local business tax
on adjusted turnover (net sales revenues)
rate is determined by local municipalities (max. 2%)
Other taxes (among others)
‘Robin Hood’ tax (on energy suppliers)
Energy tax
Special tax on financial sector
Special tax on insurance companies
Telecom tax
Building tax/land tax
Transfer tax (real estate property, motor vehicle)
Inheritance/gift tax
Advertisement tax (suspended until 31 December 2022)
Innovation contribution
Customs duties
Stamp duty
Excise duty
Financial transaction tax
Public health product tax
Tourism development contribution
Green tax
Public utility tax
Food chain supervision fee
Vehicle tax, company car tax