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Hungary U.S. New DTA February 2010 Hungary and the U.S. signed on 4.2.2010 a new double taxation treaty replacung the previous DTA from 1979. For additional info visit www.ustreas.gov. Hungary V.A.T. Update July 2009 As mentioned in our May update the standard V.A.T. rate was raised from 20% to 25%, effective from 1.7.2009. A new reduced 18% rate , relating to hotels and basic food , was introduced too. From 1.7.2009 social security contribution was reduced from 29% to 26% , up to a ceiling, twice the minimum salary. Hungary V.A.T. Update May 2009 The Hungarian prime minister presented on April 19, 2009 the new tax amendments. The standard V.A.T. rate will be raised from the current 20% to 25%, effective 1.7.2009. A new reduced 18% V.A.T. rate would be introduced for certain basic foodstuff. The current reduced 5% V.A.T rate relating to books newspapers and medicines would remain unchanged. From 2010 the corporate tax rate will be raised from the current 16% to 19%, while the 4% solidarity tax for companies would be canceled. A new real estate wealth tax would be imposed from 2010. Hungary Income Tax September 2008 The Hungarian government proposed some tax changes, effective from 1.1.2009, if confirmed. The corporate income tax rate is expected to rise from the current 16% to 18%, while the current 4% solidarity tax would be abolished, in total a 18% corporate income tax rate, compared to the present effective rate of 20% (including solidarity tax). Other proposals include, inter-alia, full tax deduction for interest expense paid between related parties, compared to the current limitations relating to thin capitalisation and 50% tax deduction for interest between related parties. The proposals have yet to be confirmed by the parliment.. Hungary Tax Rates 2008 January 2008 Hungary tax rates for 2008 are similar to 2007 rates. Hungary's corporate tax rate is 16%. Personal income tax rates are 18% and 36%, with slight changes in the tax brackets, compared to 2007. The standard VAT rate in 2008 is 20%. there is also a reduced rated of 5%. Hungary Taxes JANUARY 2006 From 1.1.2006 there are some major tax changes in Hungary. The top V.A.T. rate is 20%(previous rate-25%). The top marginal personal income tax rate is 36%(previous rate-38%). Corporate income tax for the first HUF 5 million taxable income is 10%, 16% for taxable income in excess. From 2008 the local business tax would be abolished. Hungary Income Tax 2005 OCTOBER 2005 The Hungarian government proposed some tax amendments to be effective from 1.1.2006 The amendments have not been confirmed yet by the parliment. The major amendments include:   -Lowering the top marginal tax rate for individuals from 38% to 36%.   -Taxation of individual capital gains from securities at a rate of 25%.   -Increasing of tax credits and family allowances. Hungary Taxes 2004 JANUARY 2004 From 1.1.2004 the new corporate income tax rate in Hungary is 16%(previous rate-18%). Offshore Companies:   -The new tax rate for offshore companies is 4%(previous rate-3%).   -The offshore companies in Hungary will end after 2005.

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