TKEG Expat™ (Test) Hungary Corporate Tax Guide

In Hungary, VAT is charged on the sale of goods and the provision of services, as well as on the importation of goods and intra-Community acquisitions. The standard VAT rate is 27%, making it one of the highest in Europe. A reduced rate of 18% applies to some goods and services, such as milk and certain dairy products. An even lower rate of 5% is applied to items like books, certain foods, and district heating services. New residential properties benefit from a reduced 5% VAT rate, although this will expire in 2024 for most cases, with some exceptions for delayed projects. Furthermore, a new 0% VAT rate has been introduced for frequently published journals.

In Hungary, stamp duties are generally imposed on gifts and property transfers. Gift duty arises when there is a contract or a gift is exchanged without consideration. The duty varies, with 9% levied on residential property gifts and 18% on other assets. Exemptions may apply in certain circumstances, especially when movable assets are transferred without consideration. Property transfers for consideration, including real estate and company shares, attract a 4% duty on the fair market value, with additional amounts for high-value transactions. Companies holding significant real estate holdings in Hungary are subject to a higher rate of duty on acquisitions.

[b]Corporate Income Tax Rate: [/b]
Hungary has a flat CIT rate of 9% on the positive CIT base, effective from 1 January 2017. Companies must file CIT returns by the last day of the fifth month after the fiscal year-end.

[b]Minimum Tax Base: [/b]
A minimum tax base rule applies (2% of total revenue with adjustments), under which companies may either pay based on the minimum base or submit a statement with the tax authority to initiate an audit.

[b]Pillar Two – Global Minimum Tax: [/b]
Hungary promulgated the GloBE law on 1 December 2023, transposing EU Directive 2022/2523. IIR effective from 1 January 2024; UTPR from 1 January 2025; QDMTT from 1 January 2024.

Hungary levies a personal income tax (PIT) at a flat rate of 15% on most types of individual income. Taxpayers must file their PIT returns by May 20 following the year of income earning, with final payments also due by the same date. For those earning income from multiple sources or from abroad, tax is estimated and paid quarterly. Additionally, a supplementary social tax of 15.5% may apply in certain cases, raising the overall tax burden on higher earners.

Capital gains in Hungary are generally taxed at the same rates as regular corporate and personal income. For corporations, capital gains are subject to the normal 9% CIT rate, while individuals are taxed at a 15% PIT rate. Under certain conditions, a 15.5% social tax may also apply to individuals' capital gains, particularly if specific tax relief conditions are not met. This tax structure means that capital gains can represent a significant part of taxable income for both corporations and individuals in Hungary.