Market overview

Hungary has a reputation as a country with a developed and stable tax code but also as a country where new taxes and taxation requirements can arise with little warning, generating uncertainty for taxpayers in the jurisdiction and those looking to invest there. This is exemplified in its transfer pricing requirements, which have been in place since 1992, however are set to change with a suite of BEPS-inspired legislation at an unconfirmed date.

"It's one of the major hurdles to investing in Hungary, from the point of view of multinationals. The core of the tax system is relatively stable, and from the point of view of Hungary as a place to do business, it is improving. Although every new tax is maybe a step backwards, as it does cause some headaches for investors," said Gergely Riszter of Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie.

Hungary is expected to implement BEPS in full. "What we are expecting is that as a result of BEPS, the Hungarian government will within the next year, maybe two years, try to fully adapt to the BEPS regulations," said Riszter.

The approach of the Hungarian revenue authority has been characterised by taxpayers as aggressive. This perceived aggression is based on a principle of anti-abuse, but advisers said that outside of anti-abuse, the authorities have increasingly begun to adopt a co-operative, rather than aggressive approach to taxpayers' structures.

Taxpayers who do not adopt artificial or overtly aggressive transfer pricing stances can receive fair treatment from the authorities increasingly with good dialogue, despite their bureaucratic reputation.

Tax authorities

National Tax and Customs Administration
Large Tax Payers' Directorate
1077 Budapest, Dob utca 75-81
Postal Address: 1410 Budapest, Post Box 137
Tel: +36 1 461 3300

Tax rates at a glance

(As of April 2016)

Corporate tax 10/19% (a)
Capital gains 10/19%
Branch tax 10/19% (b)
Withholding tax
Dividends 0%
Interest 0%
Royalties 0%
Net operating losses (years)
Carryback 0
Carryforward 5 (c)

  1. The 19% rate is the standard rate of corporate income tax. The 10% rate applies to the first Ft500 million ($1.85 million) of taxable income. All taxpayers must pay tax on the alternative minimum tax base if this base is more than taxable income calculated under the general rules.
  2. Permanent establishments of foreign companies are subject to special rules for the computation of the tax base.
  3. Losses incurred before the 2015 tax year can be carried forward until 2025. Losses incurred in the 2015 tax year or subsequent years can be carried forward for five years.

Source: EY 2016 Worldwide Corporate Tax Guide

Firm contact details

WTS Klient Group