Date de publication : 06-10-1907
The following information are for the sole purpose of providing a general overview of the local taxation of the Corporate tax aspects of the country. In any case, it can not replace a tax advice, or be considered as an official information.
Yes we tax in Hungary
New tax reform: No specific information
New tax treaties:
- Tax treaty between Hungary and Luxembourg enters into force.
- Tax treaty between Hungary and Iran enters into force.
- Tax treaty between Hungary and Oman ratified by Oman and by Hungary.
- Tax treaty between Hungary and Iraq is signed.
- Tax treaty between Hungary and Luxembourg ratified by Luxembourg.
Local tax advisors
No specific information on the local tax advisors.
Resident companies are taxed on their worldwide income. However, non-resident companies are only taxed on their revenues derived from Hungary sources.
The definition of resident company for tax purposes, corresponds to the definition of the OECD Model Convention.
Entities are considered to be resident for tax purposes in Hungary if their place of management & control is in Hungary.
However, the place of residence is subject to the relevant provisions of any applicable double tax treaty, if any.
Corporate Income Tax
The general CIT tax rate is 9%.
Note: there is a minimum taxable basis even if the company do not make profit.
Non-taxable income includes the following:
- Dividends (participation exemption)
Non-deductible expenses includes the following:
- Dividends benefiting from the participation exemption
- Interest in excess of the thin-capitalization threshold
- Fines and penalties
Carry forward: Yes, 5 years but some restrictions may apply
Carry back: No
Companies should submit the tax return annually before the 31 May of the following year.
Annual tax returns are established by the company on a self-assessment system.
Companies shall pay 12 advance payments.
Whithholding Taxes (payment to foreign companies)
The local tax rates in Hungary are the following, subject to the provisions of an applicable double tax treaty, if any.
There is no WHT on the profits paid from a branch to its foreign head office
There is no WHT on dividends.
There is no WHT on interest.
There is no WHT on Royalties.
There is no WHT on management fees.
There is no WHT on technical services.
Capital gains are taxed as general income under the regular CIT.
Note: in many cases capital gains are not taxable (i.e. sale of shares in qualifying subsidiary – detention 10% and 1 year)
Standard VAT tax rate is 27%
Reduced tax rates are:
- 18% ( among other, basic food stuff, hotel, certain events, …)
- 5%% (among others, essential child nutrition, selected pharmaceutical products, books, certain newspapers and magazines, and certain agricultural products)
Zero-rated supplies include, subject to certain conditions:
- Supply, lease, repair and maintenance of vessels and aircraft engaged in commercial international traffic
Exempt supplies include, subject to certain conditions:
- intra-Community supplies of goods
- Financial services
- Insurance services
- Postal services
EU taxable companies may claim a VAT refund to their own tax authorities through on the basis of the 13th EU Directive.
No other specific information of VAT in Hungary.
The general statute of limitation is 5 years starting at the end of the year in which the tax return had to be filed.
Note: the statute of limitation is unlimited for criminal tax fraud.
There is no foreign exchange control in Hungary.
There are thin capitalization rules in Hungary. The interests derived from loans between related parties may not be deductible in case where interest exceeds some ratios (three times the taxpayer’s net equity).
Do not hesitate to share your experience in Hungary with us in the comments below. Any comments are welcome !