From 1 January 2017, the standard rate of corporate income tax for Hungarian, and in some cases foreign, companies decreased to 9%.
As Hungary is a member of the European Union, companies can tap into various financial resources for investment or development that are supported by the EU. Certain tax credits are available as well.
Tax benefits and incentives
One of the most important tax incentives for companies is the development tax allowance, which can be deducted from the amount of corporate income tax (up to 80 percent of the tax calculated). This type of allowance can be claimed depending on the amount of the investment, the industry and the region in which the investment is performed. Besides the development tax allowance, there are additional tax allowances or tax credits for companies providing support for cultural, sport and film-making purposes. Tax bases can also be reduced by investing in start-up companies, up to the amount of direct research and development costs.
Advantages of investing in Hungary
Hungary occupies a central position in Europe with well-developed infrastructure and excellent transportation connections to each neighbouring country. Hungary is well-known for its highly-skilled workforce and its long education traditions in technical universities. The relatively cheap and educated labour force guarantees investors receive the best value for money. The multilingual workforce makes communication easier for foreign investors.
Costs of setting up a company
The costs of setting-up a business vary depending on the type of business established. The most common forms are limited partnerships, limited-liability companies and companies limited by shares.
Costs include administrative charges and the minimum capital contribution. The administrative charges are similar for each type of business, however, the minimum capital requirements differ significantly. For a limited partnership, there is no minimum initial capital, while a limited-liability company can be established with minimum capital of HUF 3 million. A company limited by shares can be unquoted, requiring minimum capital of HUF 5 million, or it can be quoted, which necessitates capital of at least HUF 20 million.
The minimum administrative charges incurred when establishing a business consist of the registration application duty (HUF 100,000, or approximately EUR 330), the duty payable on a simplified registration application (HUF 50,000, or roughly EUR 165), the disclosure fee for publication in the Company Gazette (HUF 5,000, or roughly EUR 17) and the registration at the Chamber of Commerce and Industry (HUF 5,000, or approximately EUR 17). There can also be other charges for specimen signatures, official translations, etc., but these out-of-pocket costs vary case-by-case.