Hungary Corporate Tax Rate: The Lowest in the OECD
10th February 2025
Hungary’s corporate tax rate of 9% is the lowest in the OECD, making it an attractive option for businesses seeking tax savings and a foothold in the European Union. This article explores the advantages of Hungary’s tax system and why it appeals to companies of all sizes.
How much is Hungary’s corporate tax rate?
In Hungary, all business entities, except sole proprietors, are subject to corporate tax (társasági adó, TAO) unless they opt for or qualify under a different tax regime.
Hungary’s corporate tax rate is 9% of the taxable base, which is the lowest among OECD nations. Interestingly, the European average corporate tax rate is 21.5%, helping to explain why so many international companies choose to establish a presence in Hungary.
It is calculated by adjusting pre-tax accounting profits in accordance with tax laws. Adjustments may increase or decrease the base depending on factors such as allowable deductions or non-deductible expenses.
If a company’s taxable base falls below the required profit minimum (2% of revenue), it must pay tax on the minimum unless it justifies the lower result.
Hungary Corporate Tax Rate: The Lowest in the OECD
10th February 2025
Hungary’s corporate tax rate of 9% is the lowest in the OECD, making it an attractive option for businesses seeking tax savings and a foothold in the European Union. This article explores the advantages of Hungary’s tax system and why it appeals to companies of all sizes.
How much is Hungary’s corporate tax rate?
In Hungary, all business entities, except sole proprietors, are subject to corporate tax (társasági adó, TAO) unless they opt for or qualify under a different tax regime.
Hungary’s corporate tax rate is 9% of the taxable base, which is the lowest among OECD nations. Interestingly, the European average corporate tax rate is 21.5%, helping to explain why so many international companies choose to establish a presence in Hungary.
It is calculated by adjusting pre-tax accounting profits in accordance with tax laws. Adjustments may increase or decrease the base depending on factors such as allowable deductions or non-deductible expenses.
If a company’s taxable base falls below the required profit minimum (2% of revenue), it must pay tax on the minimum unless it justifies the lower result.
If you would like to learn more about the Hungarian tax system, check out our detailed guides:
The tax benefits of forming a Hungarian company
Offshore opportunities in Hungary
A tax guide for expats and investors
Rules for tax and company registration numbers
How can corporate tax be further reduced?
While Hungary’s tax rate of 9% is already remarkably low, effective tax planning can often further reduce the taxable base, cutting costs even more.
According to the National Tax and Customs Administration (Nemzeti Adó- és Vámhivatal, NAV) guide, the following qualify as tax benefits:
“5.1 Development tax allowances
Among others, development tax allowances can be obtained with regard to the following investments:
(1) investments started and operated within the administrative jurisdiction of a preferential local self-government of a value of HUF 1 billion or more;
(2) environmental protection investments of HUF 100 million or more;
(3) investments of HUF 100 million or more related to the production of films and videos;
(4) investments promoting the creation of jobs.
5.2 Tax allowance of sponsoring spectator team sports
By applying the tax allowance granted by legislation, taxpayers may achieve a tax saving if they support organisations with an approved sport development programme conducting activities in any of the following six sports.
Spectator team sports include:
1) football;
(2) handball;
(3) basketball;
(4) water polo;
(5) ice-hockey;
(6) volleyball
5.3 Additional tax allowances
In addition to the above, the assessed tax may be reduced with the following tax allowances:
(1) Tax allowance for supporting film making,
(2) Tax allowance for supporting cooperatives to create community funds,
(3) Tax allowance for the SMEs investment credit interest,
(4) Tax allowance for supporting energy efficiency investment, renovation,
(5) Tax allowance for supporting live music service,
(6) Tax allowance for research and development activities,
(7) Tax allowance for investment in the construction of an electricity storage facility”