Taxation in Hungary

Hungary quick tax facts for Business (2017), Source: Deloitte.
Corporate income tax rate	9%
Branch tax rate	9%
Minimum tax	Applied to 2% of adjusted gross profit
Capital gains tax rate	9%
Tax basis	Worldwide income
Participation exemption	Yes
Loss relief	Carryforward: Indefinite, but limitations apply Carryback: Generally not available
Double taxation relief	Yes
Tax consolidation	For VAT purposes
Transfer pricing rules	Yes
Thin capitalization rules	Yes (ratio 3:1)
Controlled foreign corp. rules	Yes
Tax year	Calendar year, but different fiscal year may be elected
Advance payment of tax	Monthly/quarterly
Return due date	Last day of the fifth month following of the end of the fiscal year
Withholding tax	Dividends: 0% Interest: 0% Royalties: 0% Branch remittance tax: 0%
Social security contributions	22% of gross wages for the employer (20% from 2018)
Capital tax	No
Building tax/land tax	May apply at municipal level
Real estate transfer tax	4% up to a value of HUF 1bn (€3.3 million) and 2% on the excess, capped at HUF 200 million (€0.65 million)
Local business tax	maximum 2% of net sales revenue
Innovation contribution	0.3%
Financial transaction tax	0.3% of transferred amount
VAT	27% (standard), 18%, 5%
Hungary quick tax facts for Individuals (2017), Source: Deloitte.
Income tax rate	15%
Capital gains tax rate	15%
Tax basis	Worldwide income
Double taxation relief	Yes
Tax year	Calendar year
Return due date	20 May (Tax authority prepares it electronically to everyone automatically)
Withholding tax	Dividends: 15% Interest: 15% Royalties: 15%
Healthcare contribution	14% or 22% on some income maximum annual HUF 450 000 (€1460)
Social security contributions	18.5% of gross wages for the employee
Net wealth tax	No
Inheritance and gift tax	9% or 18%
Real estate tax	May apply at municipal level
VAT	27% (standard), 18%, 5%

Taxation
An aspect of fiscal policy
Policies Government revenue Tax revenue Non-tax revenue Tax law Tax bracket Tax threshold Exemption Credit Deduction Tax shift Tax cut Tax holiday Tax advantage Tax incentive Tax reform Tax harmonization Tax competition Double taxation Representation Unions Medical savings account Tax, tariff and trade
Economics Price effect Excess burden Tax incidence Laffer curve Optimal tax Theory Optimal capital income taxation
Collection Revenue service Revenue stamp Tax assessment Taxable income Tax lien Tax refund Tax shield Tax residence Tax preparation Tax investigation Tax shelter Private tax collection Tax farming
Noncompliance Tax avoidance Tax evasion Tax resistance Tax haven Smuggling Black market Transfer mispricing Unreported employment Tax shelter
Distribution Tax rate Progressive Regressive Proportional
Types Direct Indirect Per unit Ad valorem In rem Capital gains Carbon Consumption Dividend Ecotax Excise Fuel Georgist Gift Gross receipts Income Inheritance (estate) Land value Payroll Pigovian Property Sales Sin Single Stamp Steering Turnover Value-added (VAT) Corporate profit Excess profits Windfall profits Negative (income) Flat Wealth
International Financial transaction tax Currency transaction tax Tobin tax Spahn tax Tax equalization Tax treaty Permanent establishment Transfer pricing European Union FTT
Trade Custom Duty Tariff Import Export Tariff war Free trade Free trade zone Trade agreement
Religious Church tax Eight per thousand Teind Tithe Fiscus Judaicus Leibzoll Temple tax Tolerance tax Jizya Kharaj Khums Nisab Zakat
By country List of countries by tax rates Tax revenues as %GDP Albania Algeria Argentina Australia Azerbaijan Bangladesh Bhutan Bulgaria Canada China Colombia Denmark France Germany Greece Iceland India Indonesia Iran Ireland Israel Italy Japan Kazakhstan Lithuania Malta Namibia Netherlands New Zealand Norway Pakistan Palestine Peru Philippines Poland Russia Singapore South Africa Sweden Switzerland Tanzania United Kingdom United States Uruguay

Taxation in Hungary is levied by both federal and local governments. Tax revenue in Hungary stood at 39.3% of GDP. The most important revenue sources include the income tax, Social security, corporate tax and the value added tax, which are all applied on the federal level. Among the total tax income the ratio of local taxes is solely 5% while the EU average is 30%.

Income tax in Hungary is levied at a flat rate of 15%. A tax allowance is given through a family allowance (családi adókedvezmény), which is equal to the allowance multiplied by the number of “beneficiary dependent children”. For the first children the allowance is HUF 66,670, while the second dependent children the allowance is HUF 100,000, in case of 3 or more children the allowance is HUF 220,000 per beneficiary dependent child. The amount of tax allowance can be split between spouses or life partners.

The rate of value added tax in Hungary is 27% as standard rate, the highest in Europe, since 1 of January, 2012. There is a reduced rate of 5 percent for the sale of most medicines and some food products. A reduced rate of 18 percent is applicable to internet connections, restaurants and catering, dairy and bakery products and hotel services and admission to short-term open-air events.

From January 2017, under the new Corporate income tax regime, the corporate tax in Hungary is unified at a tax rate of 9% – the lowest within the European Union. Dividends received are not subject to taxation, provided that are not received from a Controlled Foreign Company (CFC), capital gains are included in corporate tax, with certain exemptions.

Employment income is subject to social security contributions, for the employer at a flat rate of 22% Further more employers pay 1.5% into a training fund. Capital gains is taxed at a flat rate of 15%

History

Taxation in Hungary has varied over historical governments. After the Ottoman conquest of central parts of Hungary, the most common tax was the Ottoman administration's levy on Christians the dhimmi. During the time of Austria-Hungary, taxes was most of the time levied by the Austrian authorizes, but Hungary was later given more authority over its finances. This was largerly granted to Hungary in the compromise in 1867 with the Habsburgs. In 1988 under the soviet Kádár governments liberalization under, a reform of taxes introduced a comprehensive tax system which mainly consists of central and local taxes, including a personal income tax, a corporate income tax and a value added tax.