Company taxes in Hungary explained (2025)

But beyond this headline figure lies a complex web of taxes, incentives, and compliance requirements that businesses must navigate. Whether you’re a startup eyeing Budapest or a multinational expanding into Central Europe, understanding Hungary’s tax system is key to success. In this blog post, we’ll break down the different company taxes, their rates, how they’re calculated, reported, and paid—drawing from the latest data up to April 2025. Let’s dive in.

Corporate Income Tax (CIT): The 9% Star Attraction

What It Is and Who Pays

Hungary’s corporate income tax (CIT) is the cornerstone of its business tax system. Set at a flat 9% since January 1, 2017, it applies to:

• Resident companies: Taxed on their worldwide income.

• Non-residents: Taxed only on income from Hungarian permanent establishments, like branches.

This low rate has made Hungary a magnet for investment, but the simplicity stops at the rate itself—calculating the tax base is where the real work begins.

How It’s Calculated

The CIT starts with your accounting pre-tax profit, as shown in your financial statements. From there, it’s adjusted under the Act on Corporate Tax and Dividend Tax (CDTA) with:

• Tax base increases: Items like non-deductible expenses or penalties.

• Tax base decreases: Think tax depreciation, provisions, or loss carry-forwards.

Here’s a curveball: if your profit before tax (or adjusted CIT base) is too low, you might face a minimum tax base—set at 2% of total revenue, adjusted for certain EU Merger Directive transactions. This ensures even low-profit companies contribute, but it can complicate planning.

Filing and Payment

You’ll need to file your CIT return by May 31st of the year following your tax year (or the last day of the fifth month if your tax year differs). It’s all electronic, submitted via Hungary’s tax authority portal. Payment aligns with the return, but watch out—declaring a minimum tax base might flag you for an audit. For more details, check Accace’s 2025 Tax Guideline for Hungary.

Value Added Tax (VAT): The 27% Heavy Hitter

Rates and Scope

VAT is a big deal in Hungary, with a standard rate of 27%—one of the highest in Europe. It applies to sales of goods, services, imports, and intra-Community acquisitions. But there are reliefs:

• 18%: For food products like milk and cereals, plus services like live music events.

• 5%: Covers new residential properties (until December 31, 2024, with extensions for some projects), books, and pharmaceuticals.

• 0%: Exports and intra-Community supplies.

Curious about specifics? Avalara’s Hungarian VAT guide has the full list.

Registration and Compliance

Unlike some countries, Hungary has no turnover threshold for VAT registration—every business must sign up. Non-residents need a fiscal representative, and you’ll file form T201 to get started. Compliance is strict: all B2B invoices have been reportable via XML since July 1, 2020, and the reverse charge kicks in for services tied to immovable property or certain goods.

Reporting and Refunds

VAT returns are filed electronically, either monthly or quarterly, depending on your turnover. Deadlines are tight—monthly filers pay by the 20th of the next month. Refunds are possible if your VAT balance goes negative (e.g., HUF 1 million threshold for monthly filers), with processing times of 75 days generally or 30 days if all invoices are settled. Since 2020, bad debt deductions via self-revision add flexibility.

Special Schemes

• VAT Groups: Related companies can file under one VAT number.

• E-commerce: The OSS (One-Stop Shop) and IOSS (Import One-Stop Shop) simplify intra-EU sales and low-value imports, with platforms acting as quasi-taxpayers since July 2021.

Other Direct Taxes: Beyond CIT and VAT

Hungary layers on several other taxes, each with its own quirks. Here’s a rundown:

Local Business Tax (LBT)

• Rate: Up to 2% (max 1% for micro/small/medium businesses until 2022, no deduction from 2023).

• Base: Net sales revenue minus costs like goods sold, subcontractors, and R&D. It’s allocated across municipalities based on asset value and payroll.

• Reporting: Annual for small businesses (income ≤ HUF 25 million or HUF 120 million for retailers), with a HUF 50,000 minimum tax. Since 2023, payments can be in USD/EUR via the National Tax and Customs Office.

Energy Suppliers’ Income Tax

• Rate: 41%.

• Base: Similar to CIT but with fewer adjustments; deductions up to 50% for development or HUF 1.5 billion for mining royalties.

• Notes: Covered by double tax treaties but non-deductible for CIT.

Extra-Profit Tax (Petroleum)

• Rate: 95%.

• Base: Calculated as the price difference between Russian crude and Brent oil, adjusted per barrel and converted using the National Bank of Hungary’s rate.

• Reporting: Monthly self-assessment, due by the 20th of the next month, running through 2025.

Advertisement Tax

• Rate: 0% (from July 1, 2019, to December 31, 2025).

• Base: Applies to ad services on Hungarian websites—currently dormant but worth watching.

Surtax on Retail Tax

• Rate: Progressive, up to ~5%, based on gross retail revenue (higher rates above HUF 100 billion since 2024).

• Base: Aimed at large retailers, adding a sector-specific burden.

Innovation Contribution

• Rate: 0.3%.

• Base: Matches the LBT base, hitting larger companies and foreign PEs since August 2022.

For a deeper look, see PwC’s overview of other corporate taxes in Hungary.

Transfer Pricing and Global Tax Rules

Arm’s Length Pricing

Hungary follows OECD Guidelines, enforcing the arm’s length principle for related-party transactions. You’ll need master and local files for documentation (mandatory since 2018), and since 2023, these details must be disclosed in your CIT return. Penalties for slip-ups? Up to HUF 5 million for a first offense, doubling for repeats.

Country-by-Country Reporting (CbC)

Since 2017, multinationals report CbC data for transparency, starting with FY 2016.

Global Minimum Tax (GLOBE)

A surprise addition since 2023, the GLOBE ensures multinationals pay a minimum tax rate, aligning Hungary with global anti-avoidance efforts. It’s a reporting headache for big players but reinforces Hungary’s international tax credibility.

Investment Incentives: Sweetening the Deal

Hungary offsets its tax burden with generous incentives:

• SME Allowance: Reduces the CIT base for new asset investments.

• Development Reserve: Retain earnings for future projects (cap removed in 2021).

• Historical Buildings: Double deductions for renovations, up to EUR 100 million equivalent.

• Energy Efficiency: Up to 45% deductions (EUR 30 million cap).

• Development Tax Credit: For investments over HUF 3 billion (or HUF 1 billion in certain areas), spread over 13 years.

• R&D Incentive: Double dip—reduce your tax base or claim an allowance, with refunds for low-profit firms.

These perks, detailed in Accace’s 2025 guide, make Hungary a hotspot for innovation-driven businesses.

How to Report and Pay: Deadlines and Processes

CIT

• Deadline: May 31st post-tax year.

• Process: Electronic filing, payment based on the return. Minimum tax base filers brace for audits.

VAT

• Deadline: Monthly (20th of next month) or quarterly.

• Process: E-filing, with refund timelines of 75 or 30 days depending on invoice status.

LBT

• Deadline: Annual for small businesses, with advances for larger ones.

• Process: Paid in HUF or USD/EUR since 2023, via the National Tax and Customs Office.

Extra-Profit Tax

• Deadline: 20th of the following month.

• Process: Monthly self-assessment, tied to oil price volatility.

Compliance Tips and Pitfalls

Hungary’s tax system rewards preparation but punishes errors. Keep transfer pricing docs tight, file on time, and leverage incentives wisely. Penalties—like HUF 5-10 million for transfer pricing mistakes—sting, and audits are common for minimum tax base filers. Stay sharp, and consult a local tax expert if you’re unsure.

Final Thoughts

Hungary’s tax landscape blends low rates with intricate rules, offering both opportunity and challenge. The 9% CIT shines, but VAT, LBT, and sector-specific taxes like the petroleum extra-profit levy demand attention. Add in global rules like GLOBE and a suite of investment incentives, and you’ve got a system that’s as dynamic as it is detailed. Whether you’re setting up shop or scaling up, mastering these taxes is your ticket to thriving in Hungary’s business-friendly climate.