Hungary Corporate Tax 2026: Is It Really Only 9%?

Insights / Doing Business in Hungary / Taxation

Hungary is well known for its 9% corporate income tax rate. For a foreign company looking for a place to establish an EU subsidiary or start business operations in Central Europe, this can certainly make Hungary attractive.

But the 9% corporate tax rate is only one part of the picture.

The actual tax and operating costs of a Hungarian company depend on its business activity, revenue, cost structure, employees, ownership structure and international transactions. For some sectors, special taxes may also apply.

For this reason, before establishing a company in Hungary, it is worth looking beyond the corporate tax rate and considering how the Hungarian company will actually operate.

Corporate income tax: 9%

The general corporate income tax rate in Hungary is 9%.

The tax is not calculated directly on the company's revenue. The starting point is the company's profit before tax, which is then adjusted according to the Hungarian corporate income tax rules.

This distinction can be important when comparing Hungary with other countries. A low corporate tax rate may be attractive, but the tax rate alone does not show the full tax cost of running a company.

Other Hungarian taxes and costs should also be considered.

Local business tax

One of the most important is local business tax, commonly known in Hungary as HIPA.

The applicable rate depends on the municipality where the company carries out its business activity. The maximum rate is generally 2%.

However, HIPA is not a traditional profit tax. 

Its calculation starts from the company's net sales revenue, which can be reduced by certain items defined by law. As a result, the actual HIPA burden can be very different for companies with different business models.

This can be especially important for companies with high turnover but relatively low margins.

For example, a trading company with significant annual revenue may have a very different cost structure from a consulting or software company with the same revenue. Their local business tax position may therefore also be different.

For foreign investors, HIPA should be considered when planning the Hungarian business model, rather than only after the company has already been established.

VAT and international transactions

The general VAT rate in Hungary is 27%, but this number alone does not explain how VAT will affect a particular company.

The correct VAT treatment depends on the company's actual activities and transactions.

It may matter whether the company sells goods or services, whether its customers are businesses or private consumers, where the customers are located and whether the transaction takes place within the EU or involves a third country.

A Hungarian B2B service company, an international trading company and a business selling directly to Hungarian consumers may therefore have very different VAT positions.

For companies operating internationally, VAT should be considered when the invoicing and contractual structure is being prepared. This is particularly important where the Hungarian company will have customers, suppliers or other group companies in several countries.

Employing people in Hungary

If the Hungarian company employs people, employment taxes and social security costs should also be included in the business plan.

As a general rule, 15% personal income tax and 18.5% social security contribution are deducted from the employee's gross salary.

In addition, the employer generally pays 13% social contribution tax on top of the gross salary.

For example, if an employee has a gross monthly salary of HUF 1,000,000, the employer's total salary cost is approximately HUF 1,130,000, without taking into account possible tax benefits or additional employee benefits.

The employee's net salary is naturally lower than the gross salary because of the deductions made from it.

In 2026, the general statutory minimum wage for full-time employment is HUF 322,800 gross per month. Other minimum salary requirements may apply to certain positions, while the actual salary will normally depend on the role, experience and market conditions.

Employment also has a legal side.

A Hungarian employer needs employment documentation that complies with Hungarian law. This normally includes an employment agreement and the mandatory written information for the employee. Depending on the size and activities of the company, further internal employment documents may also be required.

What happens to the profit?

For a foreign-owned Hungarian company, another important question is what happens to the profit generated in Hungary.

After the applicable taxes have been paid, profit may be distributed to the shareholder as a dividend if the relevant corporate and accounting requirements are met.

Under the general Hungarian rules, Hungary does not impose withholding tax on dividends paid to a foreign corporate shareholder.

However, this does not mean that the complete tax position ends in Hungary.

The rules of the shareholder's country, the ownership structure and any applicable double taxation treaty should also be considered. For international corporate groups, other international tax rules may also be relevant.

The situation is different if the shareholder is a private individual rather than a company, so the ownership structure should always be reviewed separately.

International groups and transfer pricing

If the Hungarian company is part of an international corporate group, transactions with related companies may require additional attention.

This can include, for example, services provided between the Hungarian subsidiary and its foreign parent company, the sale or purchase of goods within the group, intercompany loans, management fees or licence fees.

Transactions between related companies must generally follow the arm's length principle.

Depending on the company and the transactions involved, transfer pricing documentation and reporting obligations may also apply.

This means that a Hungarian Kft. owned by one foreign individual may have a very different tax profile from a Hungarian subsidiary that is part of a large international group, even if both companies are subject to the same 9% corporate income tax rate.

Large corporate groups and Pillar Two

For large multinational groups, the Pillar Two global minimum tax rules may also need to be considered.

For companies within the scope of these rules, the Hungarian 9% corporate income tax rate does not necessarily represent the final effective tax burden of the group.

This will not be a central issue for most small or medium-sized foreign investors. For larger international groups, however, it may become an important part of the planning before establishing a Hungarian subsidiary.

Some sectors may have additional taxes

The 9% corporate income tax rate also does not mean that every type of business has the same tax profile in Hungary.

Special taxes and specific tax rules apply to certain sectors and activities.

A financial business, an energy company, a retail company and a software company may therefore face different tax questions even if they all operate through a Hungarian limited liability company.

For this reason, the exact business activity should be clear before the tax structure is assessed.

When is a statutory auditor required?

The expected size of the Hungarian company may also create additional accounting requirements.

One of these is the possible requirement to appoint a statutory auditor.

Whether an audit is required depends, among other things, on the company's revenue and average number of employees. Special rules also apply when assessing newly established companies.

This can be particularly relevant for foreign-owned businesses that operate in Hungary with only a small number of employees but generate significant turnover.

A company may therefore have only one or two employees in Hungary and still require a different level of accounting and audit support because of the size of its business.

Is Hungary attractive for foreign companies?

In many cases, yes.

The 9% corporate income tax rate, access to the EU single market and Hungary's location in Central Europe can make the country attractive for foreign businesses.

But the 9% rate should not be the only basis for an investment decision.

The actual tax and operating position of a Hungarian company should be considered together with its business model.

What will the Hungarian company do? Where will its revenue come from? Will it have Hungarian employees? Will it sell in Hungary or mainly abroad? Will it be part of an international corporate group? Will it have transactions with its foreign shareholder or other related companies?

The answers to these questions may affect both the tax position and the legal structure of the Hungarian business.

For this reason, when establishing a Hungarian company or subsidiary, it is useful to plan the legal structure, taxation, accounting and expected operations together from the beginning.

For more complex international structures, this usually requires cooperation between the lawyer, accountant and, where necessary, a tax advisor.

Planning to establish a company in Hungary?

LilLaw provides legal support to foreign companies entering the Hungarian market.

We assist with the legal structure and company formation, as well as employment documentation, commercial agreements and corporate matters arising during the operation of the Hungarian company.

Where the planned business model requires a detailed tax analysis, the legal structure can also be coordinated with the company's accountant and tax advisor.

Important notice

This article is based on the Hungarian rules in force at the time of writing, in September 2026. It provides general information only and does not constitute legal, tax or accounting advice.

The actual legal and tax position of a Hungarian company depends on its individual circumstances, including its business activity, ownership and group structure, financial data, contractual relationships and cross-border transactions. Special rules or additional taxes may also apply to certain activities, transactions or industries.

Hungarian and international tax rules may change, and their application may depend on facts that cannot be assessed in a general article.

Before establishing a company, making an investment or setting up a business structure in Hungary, the specific circumstances should always be reviewed from a legal, tax and accounting perspective.

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