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Investing in Hungary 2021

Updated: Jul 5, 2023

Favorable location

The easy accessibility of Hungary is often cited as one of its main advantages: it is at the crossroads of three major European transport corridors. Hungary has one of the highest motorway densities in Europe and has three international-, and four regional business airports. The country’s location enables companies to have morning calls with Asian countries and afternoon calls with the USA, which makes Hungary a preferred location for shared service centers as well. The climate of the country lacks extremes and can be considered a typical continental climate.

investing in Hungarian market, economy and real estate

Attractive human capital

Hungary provides a well-qualified workforce at an advantageous cost. The labor force consists of 4.5 million individuals (in July-September 2020), and the unemployment rate is 4.4% (in July-September 2020).

The minimum wage in Hungary is around EUR 470, the guaranteed minimum wage for skilled workers is around EUR 610, while the average gross salary is around EUR 1,110 (in January-November 2020). The rate of personal income tax is 15% and the rate of employees contributions is 18.5%. The employer’s contribution rate is 17% (vocational training contribution 1.5% and social contribution tax 15.5%). Employers can apply several social tax allowances for employing certain classes of individuals, such as jobseekers, jobseeker mothers with three or more young children, individuals with reduced ability to work, researchers, etc. (only one type of allowance can be applied for a given employee).


Hungary has a favorable corporate income tax regime

The Hungarian corporate income tax (‘CIT’) rate is a flat rate of 9%. There is no withholding tax, based on Hungarian domestic law, on any outbound payments (including dividends, interest, royalties, management fees) made to foreign business entities. Dividend received is exempt from CIT unless it is received from a CFC. In addition, Hungary operates a participation exemption regime for capital gain taxation purposes resulting in Hungary being a favorable holding location for company groups. Furthermore, a favorable group taxation regime is available for Hungarian taxpayers operating within the same company group as from 2019. In a nutshell, by opting for group taxation, group members’ positive tax bases can be offset up to 50% by other group members negative tax bases (or previous group tax losses) and group members can benefit from tax incentives together.


The main tax rates in Hungary are as follows:

■ Maximum 2% local business tax;

■ 0.3% innovation contribution;

■ 27% as general VAT rate;

■ 18% reduced VAT rate applies to certain products, for example bread and certain types of dairy products;

■ 5% reduced VAT rate applies to certain products and services, for example journals, books, internet services, medicines, chicken, pork, fish, central heating, accommodation services and the selling of newly built flats.


Investor-friendly legal environment

As a member of the European Union, Hungary has harmonized its legal system with European law. New business associations may be established in several forms, however, the most common company form is the limited liability company (Kft.). In a simplified procedure, the registration of a Hungarian company can take place in 1-2 days, and the costs of company registration in Hungary are considered low in the European Union.


One of Hungary’s economic advantages is the wide range of available incentives the Government offers to increase competitiveness.

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