Hungary Corporate Tax Guide 2026

Overview — Corporate Tax in Hungary (Társasági Adó)

Hungary's flat 9% corporate income tax rate (társasági adó, TAO) applies to all resident companies and to foreign companies' Hungarian permanent establishments. Since 2017, the rate has been reduced progressively from 19% to 10% (2017-2018) and then to 9% from 2019 onward. The rate is applied to the entire taxable base; there are no brackets or progressive elements. The corporate tax year generally follows the calendar year, but companies may adopt a different financial year.

Resident companies are taxed on worldwide income. Non-resident companies are taxed only on Hungarian-source income. A company is considered tax resident if it is incorporated in Hungary or has its place of effective management in Hungary.

Corporate Tax Rate — 9%

The flat 9% corporate income tax rate applies to the entire taxable base, calculated as the accounting profit before tax adjusted for tax-deductible items, non-deductible expenses, and special allowances. There is no minimum tax or alternative minimum tax. Key features:

• The 9% rate applies to all companies regardless of size — SMEs and large corporations alike
• No surtax, no top-up, no progressive brackets
• No branch profit remittance tax
• Withholding tax on dividends is 0% for Hungarian resident shareholders (both corporate and individual)

Hungary's 9% rate has made it a popular jurisdiction for holding companies, IP companies, and regional headquarters within the EU.

Local Business Tax (HIPA / Helyi Iparűzési Adó)

In addition to corporate income tax, companies carrying out business activities in Hungary are subject to the local business tax (HIPA, helyi iparűzési adó). This is a municipal tax levied by the local government where the company is established or operates. Key points:

• Rate: Up to 2% of net sales revenue minus cost of goods sold, material costs, and subcontractor costs (the tax base is essentially gross margin, not profit)
• The rate is set by each municipality, typically at the maximum 2% in larger cities (e.g., Budapest)
• HIPA is deductible for corporate income tax purposes
• Companies with net sales revenue below HUF 12 million are exempt
• Start-ups may qualify for a HIPA exemption for up to 2 years in certain municipalities

HIPA can represent a significant additional tax burden, effectively increasing the combined rate to approximately 10-11% depending on margins.

Innovation Contribution (Innovációs Járulék)

Companies subject to corporate income tax must also pay an innovation contribution (innovációs járulék) of 0.3% on the net sales revenue base (similar to the HIPA base but with certain adjustments). The innovation contribution funds the National Research, Development and Innovation Fund. Exemptions apply for small companies with net sales revenue below HUF 50 million.

Small Business Tax (KIVA)

Small businesses may elect to be taxed under the KIVA (kisvállalati adó) regime instead of the standard corporate tax plus personal income tax and social contributions on salaries. KIVA is a simplified tax at 10% on a base that includes adjusted profit plus personnel costs (salaries, benefits, etc.). Eligibility criteria:

• Annual revenue not exceeding HUF 3 billion
• Average headcount not exceeding 50 employees
• No more than HUF 3 billion in total assets

Under KIVA, the 10% rate replaces the 15% personal income tax (SZJA), the 13% social contribution tax (szocho), and the 9% corporate income tax on profits. For many small businesses, KIVA can result in a lower overall tax burden and simpler compliance.

Royalty and IP Regime

Hungary offers a favourable IP tax regime. For qualifying IP income (royalties, capital gains from IP sales), a 50% deduction is available on the gross income from the IP, reducing the effective corporate tax rate to 4.5% (50% of 9%). Qualifying IP includes patents, software copyrights, and certain other IP rights. The regime is compliant with the OECD's modified nexus approach (BEPS Action 5).

Dividend Withholding Tax

Dividends paid by a Hungarian company to shareholders are generally not subject to Hungarian withholding tax:

• To individuals (SZJA): 15% withholding tax on dividends
• To Hungarian corporate shareholders: 0% (dividends are tax-exempt)
• To EU/EEA corporate shareholders: 0% under the Parent-Subsidiary Directive
• To third-country corporate shareholders: 0% under domestic law

Transfer Pricing and BEPS Compliance

Hungary has full transfer pricing rules aligned with OECD guidelines. All related-party transactions must be at arm's length. Documentation requirements apply for transactions exceeding HUF 100 million (or HUF 50 million for certain services). Hungary also implements country-by-country reporting (CbCR) for groups with consolidated revenue exceeding €750 million.

FAQs

Is the 9% rate really the lowest in the EU?

Yes, as of 2026, Hungary's 9% statutory corporate income tax rate is the lowest among EU member states. Bulgaria has 10%, and Ireland has 12.5%. However, when HIPA (up to 2%) and the innovation contribution (0.3%) are included, the effective combined rate can be around 11-12%.

Can a foreign company set up a Hungarian subsidiary easily?

Yes, incorporating a Kft. (limited liability company) in Hungary typically takes 1-2 weeks and requires a minimum share capital of HUF 3 million (approximately €8,000). Company registration is done through the Court of Registration electronically.

What is the tax treatment of losses?

Tax losses can be carried forward indefinitely but the offset is limited to 50% of the taxable base in any given year (or 100% for the first year of loss utilisation). There is no carryback of losses.

Disclaimer

This guide provides general information about Hungarian corporate tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Hungarian tax advisor (adótanácsadó) or NAV directly for advice specific to your business. InvestmentKit does not provide tax advice.