Corporate Tax in Hungary
- Tax Base For Resident and Foreign Companies
- For information on tax consumption for resident and non residents access the Report of the European Commission on VAT in Hungary.
|Resident companies are subject to taxation on their worldwide income.||The standard rate is 19%. For income below HUF 250 million, rate is 10%.|
|Resident companies||Domestic and foreign dividends are exempt from corporate tax unless the dividend comes from a controlled foreign company.|
|Non-resident companies||Taxed on all income derived through activities in Hungary.|
- Tax Rate For Foreign Companies
- Companies investing in Hungary can apply for tax incentives. A developmental tax allowance (is available to companies investing above certain thresholds in Hungary, if their investment is in line with the purpose defined in the government’s decree and other conditions are met. For additional information, consult The Hungarian Tax and Financial Control Administration.
- Capital Gains Taxation
- Capital gains are included in the corporate tax base and taxed at a rate of 19%; capital gains of foreign companies with no PE in Hungary are tax-exempt.
- Main Allowable Deductions and Tax Credit
All expenses incurred in deriving taxable business income generally may be deducted.
Corporate taxpayers can deduct 50% of total capital gains derived from any official markets (for instance stock and commodity exchanges), royalties, net intra-group interest income, and 50% of net trading income on greenhouse gas emission units from their tax base. Dividends received (except for dividends from controlled foreign corporations), revenue derived due to cancelled receivables and debts, and subsidies provided by foreign entities are tax-exempt.
- Other Corporate Taxes
- Simplified regime available for small businesses: Self-employed entrepreneurs and small enterprises that have been in business for at least two years and have annual revenue of less than HUF 25m can choose to be taxed under the Simplified Entrepreneur Tax (EVA).
Local business tax: The local municipalities may levy business taxes up to 2% on gross sales revenue, less the cost of goods acquired for resale, subcontractors’ fees and the cost of materials.
Solidarity tax (surtax): levied at a rate of 4% on company profits. The tax does not apply to foreign-source dividend and interest income.
Crisis tax: tax on the energy, retail and telecommunications companies.
Country Comparison For Corporate Taxation
|Hungary||Eastern Europe & Central Asia||United States||Germany|
|Number of Payments of Taxes per Year||14.0||41.7||11.0||16.0|
|Time Taken For Administrative Formalities (Hours)||277.0||313.9||187.0||215.0|
|Total Share of Taxes (% of Profit)||53.3||41.2||46.8||48.2|
Source: Doing Business
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
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