Hungary
Hungary is a middle power in international affairs, owing mostly to its cultural and economic influence. It is considered a developed country with a high-income economy and ranks 40th in the Human Development Index, with citizens enjoying universal health care and free-tuition secondary education. Hungary has a long history of significant contributions to arts, music, literature, sports, science and technology. It is the thirteenth-most popular tourist destination in Europe. It is a member of numerous international organisations, including the EU, the Council of Europe, NATO, United Nations, WHO, WTO, World Bank, IIB, the AIIB, and the Visegrád Group.
The sectoral structure of the Hungarian economy is mostly compatible with other countries at the same level of development. The service sector accounts for slightly less than two-thirds of GDP. Within the service sector, the private services (trade, tourism, finance and other economic services) are highly developed. Services, especially economic services, represent a sizeable portion of the country’s exports. The transportation sector (with some companies owned by the state and others by private corporations) offers optimum conditions for transit traffic due to Hungary’s favourable geographical location. The state-run service sectors (health, education, public administration) are considered to have failed to keep pace with the other service sectors and their fundamental transformation is therefore high on the political agenda.
The volume of Hungarian direct investment abroad is more than EUR 11 520 million, also one of the highest per capita figures in the Central and Eastern European region. The majority of such investment comes from the service sector and the crude-oil and processing industries.
53% of Hungarian foreign direct investment is located elsewhere in Central and Eastern Europe.
The Budapest Stock Exchange is one of the most active and vital in the Central European region. Its market capitalisation amounts to 63% compared to GDP, the highest in Central Europe, and its average daily turnover reaches HUF 64 000 million. Major Hungarian securities are also traded in important stock exchanges such as Frankfurt, London or New York.
The Budapest Stock Exchange is a fully fledged member of a number of international professional alliances and organisations.
The financial system in Hungary is basically privately owned: public-sector participation in the banking system is less than 20%, and in the insurance field is even less. The development and modernisation of the Hungarian financial system through the last decade took place with significant foreign participation. The presence of foreign financial institutions in the system is outstanding by all standards. Participation of international banks in the Hungarian system, taking into account its capital base, is more than 65%. Major European Union banking institutions as well as certain American banks are playing an active role in the Hungarian market, which consists of 42 different banks altogether.
The main national taxes are:
• Corporate income tax
• Personal income tax
• Local business tax
• Value added tax
• A special surtax on certain companies
• Excise duties
• Immovable property tax
Hungary’s corporate tax rate is competitive in the region, although the relatively low corporate rate is balanced by high local business taxes levied by local authorities. Other taxes include transfer tax. A minimum tax can apply in certain circumstances. There is no branch profits tax, excess profits tax or wealth tax. No withholding tax is levied on dividends, interest or royalty payments made to foreign entities. The absence of withholding tax, combined with the participation exemption available for capital gains on qualifying shareholdings and the 50% exemption for royalty income, makes Hungary an attractive location for holding and licensing companies.
Hungary has fully implemented the EU Parent-Subsidiary, Interest and Royalties, Merger and Savings directives into domestic law.
Tax laws in Hungary are passed by the parliament and apply uniformly throughout the country, although the Local Taxes Act empowers local governments to levy certain taxes within their jurisdiction.
The KATA tax system reduces tax payments for small startups. The KATA tax system means small taxpayers. This policy started in 2015 and ensures that small business startups receive the equivalent opportunity for development. A low taxation system captivates more marketers and investors to invest in the business sector and industry.
The corporate tax is flat at 9%. There is no residential tax or to any non-citizen individual. This policy brings more foreign investors and currency to the country.
One of the most important benefits offered by Hungary is its location in the heart of Europe, which makes the country a natural logistics centre. Hungary can serve as a basis for further expansion to investors who are looking further afield and are planning large-scale business developments, including those coming from distant countries and wishing to seize European markets.
Hungary is an excellent low-tax environment for doing business in Central Europe. Businesspeople who want to minimise the corporate tax leakage should definitely consider Hungary as a business location in Europe. Hungary is excellent for companies who want to minimise their taxes and who are active in international trade or in the development and commercialisation of Intellectual Property.
As a booming economy in the middle of Europe, and a member of the European Union, Hungary offers great opportunities for foreign companies to invest in the country. Hungary has the lowest corporate tax rate in the EU which makes it a very attractive country to invest in.
The automotive industry is currently booming in Hungary. More and more producers open factories and attract the additional suppliers as well.
Hungary is moving towards the digital administration. More and more functions are available via internet and online platforms. It is compulsory to register every company for digital administration. Therefore it is strongly recommended for the owners and/or managers to register personally in order to access the online systems. It is a short process and makes the digital life much easier than giving proxies to accountants, employees etc.
Hungary, in line with most other countries, offers protection to intellectual property, although in some cases certain steps need to be taken to benefit from that protection. Hungary is a signatory to the most of international Intellectual Property conventions and is a member of WIPO. Following the re-regulation of Hungarian Intellectual Property law in the '90s and the continuous legislative developments, it is in compliance with the latest developments, in particular the relevant EU requirements.
The judicial system of Hungary is a civil law system divided between courts with regular civil and criminal jurisdiction and administrative courts with jurisdiction over litigation between individuals and the public administration. Hungarian law is codified and based on German law and in a wider sense, civil law or Roman law. The court system for civil and criminal jurisdiction consists of local courts, regional appellate courts, and the supreme court. Hungary's highest courts are located in Budapest.
Our law firm VLO provides legal services for corporate and private clients in Hungary. These services include mergers and acquisitions, business and debt restructuring, tax and tax disputes, corporate disputes, investments, bankruptcy, litigation and arbitration.
If you have questions, please us right now.
E-mail: vlolawfirm@gmail.com
The sectoral structure of the Hungarian economy is mostly compatible with other countries at the same level of development. The service sector accounts for slightly less than two-thirds of GDP. Within the service sector, the private services (trade, tourism, finance and other economic services) are highly developed. Services, especially economic services, represent a sizeable portion of the country’s exports. The transportation sector (with some companies owned by the state and others by private corporations) offers optimum conditions for transit traffic due to Hungary’s favourable geographical location. The state-run service sectors (health, education, public administration) are considered to have failed to keep pace with the other service sectors and their fundamental transformation is therefore high on the political agenda.
The volume of Hungarian direct investment abroad is more than EUR 11 520 million, also one of the highest per capita figures in the Central and Eastern European region. The majority of such investment comes from the service sector and the crude-oil and processing industries.
53% of Hungarian foreign direct investment is located elsewhere in Central and Eastern Europe.
The Budapest Stock Exchange is one of the most active and vital in the Central European region. Its market capitalisation amounts to 63% compared to GDP, the highest in Central Europe, and its average daily turnover reaches HUF 64 000 million. Major Hungarian securities are also traded in important stock exchanges such as Frankfurt, London or New York.
The Budapest Stock Exchange is a fully fledged member of a number of international professional alliances and organisations.
The financial system in Hungary is basically privately owned: public-sector participation in the banking system is less than 20%, and in the insurance field is even less. The development and modernisation of the Hungarian financial system through the last decade took place with significant foreign participation. The presence of foreign financial institutions in the system is outstanding by all standards. Participation of international banks in the Hungarian system, taking into account its capital base, is more than 65%. Major European Union banking institutions as well as certain American banks are playing an active role in the Hungarian market, which consists of 42 different banks altogether.
The main national taxes are:
• Corporate income tax
• Personal income tax
• Local business tax
• Value added tax
• A special surtax on certain companies
• Excise duties
• Immovable property tax
Hungary’s corporate tax rate is competitive in the region, although the relatively low corporate rate is balanced by high local business taxes levied by local authorities. Other taxes include transfer tax. A minimum tax can apply in certain circumstances. There is no branch profits tax, excess profits tax or wealth tax. No withholding tax is levied on dividends, interest or royalty payments made to foreign entities. The absence of withholding tax, combined with the participation exemption available for capital gains on qualifying shareholdings and the 50% exemption for royalty income, makes Hungary an attractive location for holding and licensing companies.
Hungary has fully implemented the EU Parent-Subsidiary, Interest and Royalties, Merger and Savings directives into domestic law.
Tax laws in Hungary are passed by the parliament and apply uniformly throughout the country, although the Local Taxes Act empowers local governments to levy certain taxes within their jurisdiction.
The KATA tax system reduces tax payments for small startups. The KATA tax system means small taxpayers. This policy started in 2015 and ensures that small business startups receive the equivalent opportunity for development. A low taxation system captivates more marketers and investors to invest in the business sector and industry.
The corporate tax is flat at 9%. There is no residential tax or to any non-citizen individual. This policy brings more foreign investors and currency to the country.
One of the most important benefits offered by Hungary is its location in the heart of Europe, which makes the country a natural logistics centre. Hungary can serve as a basis for further expansion to investors who are looking further afield and are planning large-scale business developments, including those coming from distant countries and wishing to seize European markets.
Hungary is an excellent low-tax environment for doing business in Central Europe. Businesspeople who want to minimise the corporate tax leakage should definitely consider Hungary as a business location in Europe. Hungary is excellent for companies who want to minimise their taxes and who are active in international trade or in the development and commercialisation of Intellectual Property.
As a booming economy in the middle of Europe, and a member of the European Union, Hungary offers great opportunities for foreign companies to invest in the country. Hungary has the lowest corporate tax rate in the EU which makes it a very attractive country to invest in.
The automotive industry is currently booming in Hungary. More and more producers open factories and attract the additional suppliers as well.
Hungary is moving towards the digital administration. More and more functions are available via internet and online platforms. It is compulsory to register every company for digital administration. Therefore it is strongly recommended for the owners and/or managers to register personally in order to access the online systems. It is a short process and makes the digital life much easier than giving proxies to accountants, employees etc.
Hungary, in line with most other countries, offers protection to intellectual property, although in some cases certain steps need to be taken to benefit from that protection. Hungary is a signatory to the most of international Intellectual Property conventions and is a member of WIPO. Following the re-regulation of Hungarian Intellectual Property law in the '90s and the continuous legislative developments, it is in compliance with the latest developments, in particular the relevant EU requirements.
The judicial system of Hungary is a civil law system divided between courts with regular civil and criminal jurisdiction and administrative courts with jurisdiction over litigation between individuals and the public administration. Hungarian law is codified and based on German law and in a wider sense, civil law or Roman law. The court system for civil and criminal jurisdiction consists of local courts, regional appellate courts, and the supreme court. Hungary's highest courts are located in Budapest.
Our law firm VLO provides legal services for corporate and private clients in Hungary. These services include mergers and acquisitions, business and debt restructuring, tax and tax disputes, corporate disputes, investments, bankruptcy, litigation and arbitration.
If you have questions, please us right now.
E-mail: vlolawfirm@gmail.com
