| Tax | Tax rate |
| Corporate income tax | 9% |
| Personal income tax | 15% |
| VAT | Standard rate: 27% Special rates: 18% or 5% |
| Building tax | Varied |
| Land tax | Varied |
| Real estate transfer tax | 4% up to HUF 1bn and 2% for the rest (of the gross market value of the real estate) |
| Withholding tax | - |
| Inheritance and gift tax | Standard rate: 18% Preferential rate: 9% |
| Type of insurance | Employer | Employee |
| Social security contribution | n/a | 18,5% |
| Personal income tax | n/a | 15% |
| Vocational training contribution | 1.5% | n/a |
| Social contribution | 15,5% | n/a |
| TOTAL | 32.25% | 45% |
Foreign companies may register for VAT in Hungary without establishing a local company or branch, in what is known as non-resident VAT trading. In that case, the company receives a Hungarian VAT tax number, which must be obtained before the commencement of taxable transactions. There is no VAT threshold for registration of non-resident VAT trading.
VAT registration is required in certain situations, including:
• Buying and selling goods/services in Hungary
• Importing goods/services into Hungary from outside the EU
• Acquiring goods/services from other EU member states into Hungary
• Organizing events, conferences, etc in Hungary where attendees must pay admission
• Holding inventory in Hungary as stock for resale
• Distance selling to consumers (threshold within Hungary is EUR 35,000 per year).
Foreign companies can register not only for VAT but for all taxes. Hungarian tax authorities will require submission of registration forms and proper documentation (in Hungarian), including:
• Articles of association
• Excerpt from the company’s national trade register
• Copy of VAT certificate if the company is registered for VAT in another EU member state
• Statement regarding the company’s business
• Power of attorney
• Original specimen signature of the company’s representatives
Many investment incentives are offered to both Hungarian and foreign investors, including:
The Electronic Trade and Transport System (EKAER) is an electronic system operated by the state tax and customs authorities aimed at monitoring compliance with tax obligations, making circulation of goods more transparent, and eliminating VAT fraud. The system monitors goods trafficking inside Hungary and transported to other EU member states via public roads. Before starting the transport, the cargo details, such as name and quantity of goods, consignee, consignor, vehicle registration number, etc, have to be entered in the system. This obligation applies to any road transport of goods performed using vehicles subject to road toll payment, i.e. vehicles exceeding 3.5 tonnes of maximum gross weight. Every transport has an EKAER number, which is valid for 15 days.
Hungarian law recognizes two types of regular employment contracts:
Besides these two types of contracts, there is also the assignment contract (vállalkozói szerződés), where the person acts as a sole trader and invoices the company.
Real estate can be acquired in two ways:
In the case of an asset deal, transfer tax is equal to 4% of the real estate’s market value. Above HUF 1 billion, the reduced rate of 2% is applied. The total payable transfer tax cannot exceed HUF 200 million per property. If the buyer is a property dealer who purchases the property for resale, or a finance lease provider, then the real estate transfer tax is 2%, on condition that the property is sold or leased within two years. A 2% rate is applied when the property is purchased by a Hungarian real estate fund. This rate is also applicable in the case of real estate investment trusts (REITs) and special-purpose vehicles (SPVs).
In the case of a share deal, acquisition of 75% or more of the shares in a company that is in possession of Hungarian real property, where the property exceeds 75% of the company’s total value, is subject to the general transfer tax of 4%. The same rules and reduced rates as in asset deals are applicable.
A limited-liability company, limited partnership, general partnership, or private limited company can be established by a simplified electronic filing, in which the companies must use a standardized template for the articles of association. Within one working day from submission of the application, the registry court shall issue a decision on incorporation. Incorporation is usually accomplished within two to eight business days, as the tax number required for registration must be issued by the tax authorities.
Companies may also be incorporated by a standard electronic filing within 15 business days.
Simultaneously with submission of the registration application, the court will register the company with the State Tax Authority (for income tax and VAT purposes) and the Statistical Office.
