Hungary corporate tax - guide for international expansion

Are you considering expanding your business operations to Hungary? Understanding the country's corporate tax landscape is essential for making informed decisions about your international business strategy.

Hungary offers a competitive corporate tax environment within the European Union, with rates that can be attractive for businesses looking to establish operations in Central Europe. Whether you're planning to set up a subsidiary, acquire a local company, or simply need to understand your tax obligations, getting familiar with Hungary's corporate tax system is crucial for successful business operations.

If you're looking for efficient ways to manage your international finances and handle cross-border payments, Wise Business can help streamline your financial operations with local account details and competitive exchange rates for your Hungarian business activities.

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This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Wise Payments Limited, its subsidiaries or affiliates, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

Hungary Corporate tax rate in 2025

Hungary maintains a corporate income tax rate of 9% for 2025, which is one of the lowest rates in the European Union and globally.¹ However, due to the implementation of the OECD's Pillar Two global minimum tax rules, large multinational corporations with annual revenues exceeding €750 million are subject to an effective minimum tax rate of 15% through the Qualified Domestic Minimum Top-up Tax (QDMTT).²

This dual-rate system means that smaller and medium-sized enterprises continue to benefit from Hungary's highly competitive 9% rate, while larger corporations face the 15% minimum rate to comply with international tax standards.² Hungary's standard rate remains significantly below the EU average of approximately 21.5%.³

Read more about Corporate Tax Planning best practices

How to pay corporate tax in Hungary

Corporate tax payments in Hungary are managed through the National Tax and Customs Administration (NAV), which requires businesses to file annual tax returns and make payments in Hungarian Forints (HUF).⁵ The corporate tax return and the final tax payment for a given tax year are due by the 31st of May of the following year.⁴

In addition to the annual filing, Hungarian companies are required to make advance tax payments throughout the year. The frequency of these payments depends on the previous year's tax liability. Businesses with a corporate tax liability over HUF 5 million are obligated to make monthly advance payments, while those with a liability of HUF 5 million or less are required to make quarterly payments.⁴

Compliance is essential, as the penalties for late payments have been updated for 2025. The late payment interest is calculated daily at a rate of the central bank's base rate plus five percentage points. This interest is now applied on a monthly basis to the taxpayer's account, emphasizing the importance of timely tax management.⁶

Let's consider a practical example: if your company has an annual turnover of HUF 585 million (approximately €1.5 million at current exchange rates) and operates with a 10% profit margin, your taxable profit would be HUF 58.5 million. At Hungary's standard corporate tax rate of 9%, the annual tax liability would be:

HUF 58.5 million × 9% = HUF 5.265 million (approximately €13,500)

This calculation assumes the company qualifies for the standard 9% rate and doesn't fall under the Pillar Two minimum tax requirements.

When expanding your business to Hungary, the right financial tools will make the process smoother. Using a platform like Wise Business makes it easy to expand internationally with local HUF account details. A multi-currency account allows businesses to pay for incorporation costs, registration fees, and government taxes in local currency without paying high exchange rate fees.

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Tax Compliance in Hungary

The tips to keep your company fully compliant with Hungary’s tax regulations:

• Register for taxes early: Obtain a tax number when incorporating your company through the Court of Registration. This ensures you can legally operate and meet obligations such as paying CIT, VAT, payroll, and local taxes.
• Submit corporate income tax returns on time: Businesses must complete their corporate tax submission annually, using self-assessment to determine the tax payable. Returns may be filed electronically, making the process more efficient.
• Stay on top of instalments and reporting: Corporate income tax instalments are usually paid quarterly or monthly, depending on your company's size. Employers must also register employees with the tax authority before they begin work.
• Leverage corporate tax credits and incentives: Hungary offers certain tax relief measures that can reduce the effective tax burden. Working with advisors ensures you maximize available benefits and maintain accurate records.
• Prepare for audits: The tax authority regularly audits compliance to check whether companies meet their legal and reporting obligations. Keeping documentation organized can help you avoid delays or penalties.

International Expansion to Hungary

Expanding companies can benefit from Hungary’s markets and simple tax setup. As a member of the European Union, it offers access to over 500 million consumers in the EU common market. A 1,000 km radius around Hungary covers around 250 million people.⁷ The country’s population of 9.6 million ensures a sizable domestic consumer base, supporting demand for goods and services.⁸

The Hungarian workforce is highly competitive. Their average wages are about 60% lower than the EU average, and nearly 90% of students speak English.⁹ Its labor force of roughly 4.7 million includes a well-qualified talent pool,⁸ with close to 100,000 professionals in shared service centers (SSCs) and nearly 300,000 students in higher education.¹⁰ This makes Hungary an attractive location for high-value-added roles.

Strategically located at the crossroads of three major European transport corridors, Hungary offers excellent accessibility. Its high motorway density, three international airports, and four regional business airports enable companies to operate efficiently across Europe, Asia, and the USA, making it a preferred hub for shared service centers.⁸

Furthermore, its corporate tax regime is highly favourable. For instance, Hungary’s corporate tax rate is a flat 9%, lower than that of most EU countries.⁸ Under domestic law, outbound payments, including dividends, interest, royalties, and management fees, are exempt from withholding tax. GDP growth is projected at 0.8% in 2025 and expected to rise to 2.5% in 2026, supported by consumption, investments, and exports.¹¹

The steps for establishing a business in Hungary are as follows:¹²

1. Conduct market research and plan your business.
2. Choose a company type.
3. Draft legal documents (articles of association, founder IDs, lease agreements).
4. Register the company with the Hungarian Court of Registry.
5. Open a local bank account.
6. Obtain a tax number and register for VAT if needed.
7. Hire corporate tax accountants, attorneys, or filing services to handle corporate tax returns.

Do your homework before setting foot in Hungary. Check out its top banks, success markers, and how to stand on a competitive edge to ensure your business survives the corporate climate there.

Discover the top 5 best Corporate Tax softwares

Incorporation of Business in Hungary

To set up a company in Hungary, businesses must register with the Hungarian Court of Registry, which serves as a one-stop shop and issues the company’s tax number. The incorporation process requires submitting several documents, including:¹³

• An instrument of the constitution outlining company rules and dispute resolution.
• Declaration to the Tax Authority to obtain a tax number.
• Authorisations of the legal representative or proof of representation rights.
• Certificate of payment for administrative and disclosure fees.
• List of members or shareholders with personal details.
• Declarations from the CEO confirming eligibility, capital contributions in cash or in-kind, and related assessments.

These requirements ensure the business is registered correctly, positioned for growth, and ready to meet compliance obligations, such as being mindful of the corporate tax due date and accurate tax filings.

Business Entities in Hungary

Hungarian company law, primarily defined by Act 4 of 2006 on Business Associations,¹³ allows for several types of entities:¹⁴

• Partnerships (KKT and Bt.): Partnerships suit businesses with multiple owners. In general partnerships (KKT), all partners share unlimited liability. Only general partners carry full liability in limited partnerships (Bt.). These are affordable to establish but offer limited growth potential.
• Limited Liability Company (LLC/Kft.): Hungary's most popular entity type, LLCs protect owners with limited liability and feature flexible management. They are cost-effective compared to joint-stock companies, though they are subject to more complex tax obligations than sole proprietorships or partnerships. LLCs are widely used for small to mid-sized enterprises.
• Sole Proprietorship: This structure is best for individuals starting small businesses. It offers quick and simple registration with no minimum capital required. However, owners face unlimited liability, as debts are tied directly to personal assets. Profits are taxed through personal income tax instead of corporate tax brackets.

By choosing the correct entity and seeking support from corporate tax attorneys or accountants, your venture can build a solid foundation for growth in Hungary while staying compliant with regulations.

International corporate tax best practices

Managing corporate tax obligations across multiple jurisdictions requires a strategic approach that balances compliance with efficiency. International businesses should prioritise staying current with local tax laws and filing requirements in each country where they operate, as tax regulations can change frequently and penalties for non-compliance can be substantial.

Understanding and leveraging double taxation treaties is crucial for multinational operations. Hungary has an extensive network of double taxation agreements with over 80 countries, which can help prevent the same income from being taxed twice and may provide reduced withholding tax rates on dividends, royalties, and interest payments between treaty countries.

Maintaining comprehensive and transparent financial records is essential not only for accurate tax reporting but also for demonstrating compliance during potential audits. Modern businesses should consider implementing integrated accounting systems that can handle multi-currency transactions and provide real-time visibility into tax obligations across different jurisdictions.

Companies should also stay informed about international tax developments, particularly the OECD's Base Erosion and Profit Shifting (BEPS) initiatives and Pillar Two global minimum tax rules, which are reshaping the international tax landscape and may affect transfer pricing, substance requirements, and minimum tax obligations.

Take the complexity out of international expansion with Wise Business

Researching corporate tax is a crucial step when expanding your business into a new country. The next step is setting up the financial infrastructure to handle the complexities of operating across borders, from managing multi-currency cash flow to mitigating FX risk.

The Wise Business account provides the financial tools to make your international expansion to Hungary efficient and simple. It's the one account for managing your money globally.

With a Wise Business account, you can:

• Pay suppliers and initial fees: Pay suppliers, global payroll, and one-off incorporation costs in the local currency.

• Get paid like a local: Use local account details for 8+ major currencies to easily receive payments from customers or investors.

• Manage your money across borders: Hold and exchange 40+ currencies in one account, always with the mid-market exchange rate and low, transparent fees.

• Streamline your accounting: Integrate with tools like Xero or QuickBooks to simplify tracking your company's international finances.

• Empower your team: Provide multi-user access for your finance team and issue expense cards for international spending.

Wise is designed to support every step of your journey, from paying your first registration fee to receiving international payments and managing your global treasury.

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FAQs - Corporate tax in Hungary

Who is liable for corporate tax in Hungary?

Hungarian resident companies and permanent establishments of non-resident companies are liable for corporate tax in Hungary. A company is considered a Hungarian tax resident if it is incorporated under Hungarian law or has its place of effective management in Hungary. Resident companies are taxed on their worldwide income, while non-resident companies are only taxed on their Hungarian-source income through their permanent establishment.

Are there any tax incentives for businesses in Hungary?

Yes, Hungary offers several tax incentives to attract investment. These include development tax allowances for qualifying investments, research and development tax credits, and special economic zones with reduced tax rates. The country also provides incentives for job creation in disadvantaged regions and supports for certain industries like automotive manufacturing and information technology services.

What is the tax treatment of dividends in Hungary?

Dividends paid by Hungarian companies to resident shareholders are generally subject to withholding tax, though the rate may be reduced or eliminated under double taxation treaties. Dividends received by Hungarian companies from other EU companies may qualify for the participation exemption, meaning they could be exempt from corporate tax under certain conditions.

What is the process for registering for corporate tax in Hungary?

Companies must register for corporate tax purposes with the National Tax and Customs Administration (NAV) within 15 days of incorporation or commencing business activities in Hungary. The registration process involves submitting the required forms along with supporting documentation, such as articles of incorporation, and obtaining a Hungarian tax number, which is essential for all business operations.

What are the common pitfalls to avoid regarding corporate tax in Hungary?

Common mistakes include failing to make required advance tax payments on time, incorrectly calculating the tax base due to transfer pricing issues, not properly documenting business expenses, and missing filing deadlines. International companies should also be careful about permanent establishment rules and ensure they understand when their activities in Hungary create a taxable presence requiring local tax registration and compliance.

Sources used in this article:

1. PwC Tax Summaries: Hungary Corporate Income Taxes
2. EY: Hungary Pillar Two Tax Legislation
3. Tax Foundation: Corporate Income Tax Rates in Europe
4. PwC Tax Summaries: Hungary Tax Administration
5. National Tax and Customs Administration of Hungary (NAV)
6. RSM: Changes to Late Payment Penalty 2025
7. Hungary Government: Invest in Hungary
8. PwC: Investing in Hungary 2024 (PDF)
9. Hungary Government: High-Quality Labor Pool
10. KPMG: Establish a Shared Service Center
11. European Commission: Economic Forecast Hungary
12. Gurcan Partners: Starting a Business in Hungary
13. Ministry of Foreign Affairs and Trade: Guide for Getting Started in Hungary
14. Ondemandint: Legal Entity in Hungary

Sources last checked 23/09/2025