Hungary Tax Deductions
Hungary Tax Deductions
Hungary Tax Deductions for Foreign Investors 2025Hungary offers several tax deductions and allowances to foreign investors operating in the country.
These incentives aim to support business growth, innovation, and job creation.
1. Corporate Tax Rate and Deductions
- Hungary has a flat corporate tax rate of 9%, the lowest in the European Union.
- Companies can apply various deductions to reduce their taxable income.
2. Development Tax Allowance
- Companies investing at least HUF 3 billion (approx. EUR 7.5 million) in general regions, or HUF 1 billion (approx. EUR 2.5 million) in specific areas, may receive a corporate tax allowance of up to 80% of their tax liability.
- The tax allowance can be used for up to 13 years.
3. R&D Tax Deduction
- 100% of direct R&D costs can be deducted from the corporate tax base.
- Additional 50% deduction for R&D activities carried out in collaboration with universities or research institutions.
4. Tax Deduction for Investments in Startups
- Investors in qualified Hungarian startups can deduct up to 20% of their investment from their taxable income.
5. Tax Relief for Job Creation
- Employers hiring in certain disadvantaged regions or for specific roles (e.g., young workers, long-term unemployed) may receive social contribution tax (SZOCHO) reductions.
6. Tax Incentives for Energy Efficiency and Green Investments
- Companies investing in energy-efficient projects can deduct up to 70% of their tax liability under specific conditions.
- Tax reductions apply to investments in renewable energy, green technology, and environmental protection projects.
7. Film and Audiovisual Production Tax Deduction
- Investors financing film and audiovisual productions in Hungary can deduct up to 30% of eligible costs from their corporate tax base.
8. Tax Benefits for Holding Companies
- Capital gains on share sales are tax-exempt if the shares are held for at least one year.
- Dividends received from foreign subsidiaries are exempt from corporate tax, except from offshore jurisdictions.
Conclusion
- Hungary provides multiple tax deductions to encourage foreign investment, particularly in R&D, job creation, energy efficiency, and strategic industries. These deductions significantly reduce the tax burden on eligible companies.