Hungary offers several tax advantages that make it an attractive destination for international businesses. Here are some of the key tax benefits for companies operating in the country:
1. Low Corporate Tax Rate (9%)
Hungary has one of the lowest corporate tax rates in Europe, set at just 9%. This makes the country particularly favorable for businesses, as it significantly reduces the tax burden compared to many other EU countries.
2. Incentives for Foreign Investments
The Hungarian government provides tax incentives to attract foreign investments, including partial or full tax exemptions for companies investing in specific regions or strategic sectors. Companies that create new jobs or develop innovative projects can benefit from these incentives.
3. Favorable Tax Treatment for Start-ups
Start-ups in certain sectors (such as technology, renewable energy, and other innovative industries) can receive tax support in the form of subsidies, tax breaks, and incentives. There are also benefits for start-ups in growth phases or involved in research and development.
4. Research and Development Tax Credit
Companies investing in research and development (R&D) activities can benefit from significant tax credits. This encourages businesses to innovate and invest in new technologies, allowing them to deduct related costs from their tax obligations.
5. Small and Medium-Sized Enterprise (SME) Benefits
SMEs can take advantage of tax benefits that help support their growth. These include reductions in income tax, tax deductions, and other administrative simplifications that make them more competitive both locally and internationally.
6. Double Taxation Treaties
Hungary has signed bilateral treaties with numerous countries to avoid double taxation. This means foreign companies operating in Hungary can reduce the risk of paying taxes in two countries on the same income.
7. Competitive VAT Rate (27%) with Special Regimes
The standard VAT rate in Hungary is 27%, one of the highest in Europe. However, there are special regimes for certain sectors and activities that can reduce the tax burden for businesses. For example, some small businesses can benefit from a simplified VAT regime.
8. Incentives for Investment in Renewable Energy
Companies investing in green technologies or operating in the renewable energy sector can receive tax incentives for their activities, helping to reduce their tax burden while promoting sustainability.
9. Transfer Pricing Agreements
Hungary offers transfer pricing agreements for multinational corporations with the tax authority. These agreements allow companies to plan international cash flows more efficiently, reducing the risk of tax disputes.
10. Tax Stability
Hungary provides a stable tax environment with predictable fiscal policies, offering long-term security for investors. For example, the corporate tax rate of 9% has remained stable for several years, reflecting consistency in fiscal policy.
In summary, Hungary offers a combination of low corporate taxes, incentives for investment, tax breaks for R&D, and other favorable measures for businesses. This makes it one of the most attractive destinations in Europe for business investments and international expansion.