What makes Hungary’s corporate tax so attractive?
The 9% corporate income tax is one of the lowest in the EU, and the rules to reach the tax base are straightforward. You start from accounting profit and apply clear adjustments, which keeps planning smooth as you grow.
- Rate: 9% flat
- Base: accounting profit adjusted by law (e.g., depreciation, provisions)
- Minimum base: if profit looks unusually low vs revenue, a 2% of revenue “minimum base” can apply unless you file a justified declaration
How are founders and employees taxed personally?
Hungary uses a flat 15% personal income tax. That predictability helps founders attract and retain talent while keeping their own take-home planning clear.
Is there a simple regime for freelancers and micro-entrepreneurs?
Yes—KATA is a lump-sum regime for eligible small entrepreneurs. You pay a fixed monthly amount covering income tax and social charges, which keeps paperwork light while you test and scale your services.
- Typical monthly: HUF 50,000 or HUF 75,000
- Threshold: above HUF 18,000,000 per year, a 40% surcharge may apply on the excess
- Use cases: solo consultants, creatives, micro-agencies, tech freelancers
Do municipalities add a local tax on top?
They can. Most companies pay a Local Business Tax (LBT) of up to 2% of adjusted net sales depending on the municipality. It’s well known, predictable, and often balanced by access to talent and transport.
Which incentives should growth-minded teams know?
Hungary rewards productive investment and innovation. If you build, hire, and file properly, the system supports you with enhanced R&D deductions, development credits, participation exemptions, and helpful IP rules.
- R&D: enhanced deduction commonly expressed as up to 200% for eligible spend
- Development incentives: credits for qualifying equipment, energy efficiency, or regional projects
- Participation exemption: potential capital gains relief on qualifying share disposals after minimum holding and timely registration
- IP income: up to 50% royalty deduction for qualifying IP
Are cross-border distributions efficient for investors?
Often yes. Dividends can be paid without withholding tax to foreign investors under Hungary’s rules and treaties, and treaty relief commonly reduces friction on interest and royalties.
What makes setup and compliance founder-friendly?
Company registration is fast, EU VAT numbers are typically issued promptly, and related domestic companies can opt for VAT grouping. That reduces friction, especially for groups and shared-services models.
Where are the main cities, business streets, and growth zones?
Start in Budapest (metro ~3.3M), then look to Debrecen, Győr, and Szeged for industry and university-linked talent. In Budapest, Váci Street and Andrássy Avenue anchor retail and commercial energy, while riverfront and inner districts mix finance, tech, and hospitality.
- Population: ~9.6 million nationwide
- Growth sectors: fintech, software, SSC/BPO, batteries/EV, logistics, tourism
- Real estate: logistics and light-industrial parks along motorway corridors, build-to-rent in strong districts, and selective office repositioning
| Tax / Feature | Hungary | Notes |
|---|---|---|
| Corporate income tax | 9% flat | One of the lowest in the EU |
| Personal income tax | 15% flat | Founder-friendly and predictable |
| Local business tax | 0–2% | Municipality-based |
| KATA regime | Fixed monthly | 40% surcharge above HUF 18M |
| R&D incentive | Enhanced deduction | Strong for product teams |
How to register a company in Hungary: simple 6-step plan
- Choose your vehicle (Kft. works for most founders).
- Secure company name, registered office, and a bank account plan.
- Prepare documents with a Hungarian lawyer and countersign.
- File at the Court of Registration and request an EU VAT number.
- Register for national taxes and local business tax in your municipality.
- Set up payroll, invoicing, and bookkeeping from day one.
Helpful official resources: Hungarian Tax Authority (NAV) • Hungarian Central Statistical Office (KSH)
Get started with Damalion: Hungary company formation overview • How to open a company in Hungary • Main types of corporations in Hungary • Open a branch or subsidiary in Hungary • Open a bank account with Damalion • Damalion insights for investors
FAQs: Hungary for Entrepreneurs and Investors
1) What is Hungary’s corporate income tax rate?
Hungary’s corporate income tax is a flat 9%.
2) How is the corporate tax base calculated?
The tax base starts from accounting profit and is adjusted by statutory increases and decreases.
3) Does Hungary have a minimum tax base?
Yes. If profit is low relative to revenue, a 2% of revenue minimum base may apply unless justified.
4) What is the personal income tax rate?
The personal income tax rate is a flat 15%.
5) Who should consider the KATA regime?
Freelancers and micro-entrepreneurs who want fixed monthly taxation and light admin.
6) What happens if KATA revenue exceeds HUF 18 million?
Income above HUF 18 million may be subject to a 40% surcharge.
7) How high is the local business tax?
Local business tax can be up to 2% depending on the municipality.
8) Are there R&D incentives?
Yes. Eligible R&D costs can receive enhanced deductions.
9) Is there a participation exemption on share disposals?
Yes. Capital gains on qualifying shareholdings may be exempt after a minimum holding period and timely registration.
10) Is IP income treated favorably?
Yes. Up to 50% of qualifying royalty income may be deducted from the tax base.
11) Are dividends usually subject to withholding tax?
Often no, especially under Hungary’s domestic rules and treaties.
12) How fast is company registration?
In most cases, registration takes a few business days.
13) Can related companies form a VAT group?
Yes. Related domestic entities can opt for VAT grouping.
14) Which sectors are growing?
Tech, shared services, logistics, advanced manufacturing, tourism, and retail.
15) Where are Budapest’s main business streets?
Váci Street and Andrássy Avenue are the flagship commercial corridors.
10 best things to do in Hungary during a 24-hour business trip
- Start at the Parliament panorama on the Országház riverfront at sunrise.
- Walk Andrássy Avenue to feel Budapest’s grand business boulevard.
- Grab coffee at historic Gerbeaud on Vörösmarty Square.
- Stroll the retail core on Váci Street and meet contacts nearby.
- Tour the Buda Castle District for a quick culture reset.
- Lunch with a Danube view along the Pest riverbank terraces.
- Recharge at the Széchenyi Thermal Bath.
- Drop by innovation hubs near universities for ecosystem meetings.
- Dine in District VII for lively restaurants.
- Close with a Danube night cruise to see the skyline.
