Accounting and legal

Accounting and tax

    accounting and legal regulations in Hungary

  1. Corporate tax Hungary is levied at a flat rate of 10% for earnings below HUF500 million (US$1.8 million). All companies with higher tax base are subject to the standard corporate tax rate of 19%;
  2. Foreign companies holding shares of a non-real estate Hungary company are not subject to capital gains tax. Resident companies selling shares representing over 10% of the share capital of a local company are also exempted from capital gains tax, provided the acquisition had been reported to the tax authority. In all other cases, capital gains are subject to tax at a 19% rate;
  3. Annual tax returns must be filed and fully paid by May the 31st. Failure or underpayment to do so will incur 50% penalty on the total tax base;
  4. VAT rate is high at 27% for most goods with lower rates for certain products of 18% and 5%. There is no registration threshold imposed;
  5. Losses generated before 2015 may be carried forward for up to 2025. However the annual deduction may not exceed 50% of the loss incurred. Carryback of losses in Hungary is not permitted;
  6. Dividends paid to a resident are tax exempt, unless they are received from a controlled foreign corporation (CFC). A CFC is a foreign company in which i) a Hungary resident owns a 10% stake and ii) the effective foreign tax is less than 10%;
  7. Hungarian employees are required to pay social security contributions of 18.5% withheld from their employment income by the employers;
  8. Hungary does not impose capital duty payments, nor net wealth tax;
  9. Hungary has signed double taxation avoidance agreements with 79 countries including: United Kingdom, Singapore, New Zealand, Oman and the Philippines;
  10. Healy Consultants will assist our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparing financial accounting records and iv) preparing forecasts, budgets and performing sensitivity analysis;
  11. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.

Legal and compliance

Company regulation

  • Hungary’s Business Register allows residents to view i) company’s name, local Hungarian address and business registration number; ii) names and addresses of the company directors; iii) the total amount of paid up share capital;
  • The minimum share capital requirements in Hungary are i) €10,000 for a limited liability company and ii) €63,850 for a stock company;
  • All Hungary registered business must maintain a registered office address in the country at all times;
  • Stock companies in Hungary require a supervisory board of at least three members;
  • There is no requirement for appointment of company auditor.

Staff regulations

  • In accordance to the Labour Code Act I of 2012, trial periods in Hungary may not exceed three month period;
  • Employment contracts must be translated into Hungarian. Non Hungary speaking employees must also be provided with a contract copy in a language they understand;
  • The minimum wage is fixed at €425 per month;
  • The standard work week typically is i) fixed at maximum 40 hours of work and ii) five hour work week;
  • Night work received 15% premium over average salary payments;
  • All employees in Hungary are entitled to i) up to 23 days of paid annual leave ii) 23 days of national holidays iii) 15 days of sick leave and iv) 24 weeks of paid maternity leave at 70% of the standard wage;
  • Labor conflicts are handled by standard municipal courts which enforce and handle the mediation and settlements;
  • In accordance to the Labour Code Act I of 2012 all employees must receive standard termination notice for at least 30 days;
  • Immediate termination of employee contract may be applied in case of serious breach of employment contract by carelessness or voluntarily.

Other business regulations

  • Hungary is part of the European Union since 2004. Consequently, multiple business laws follow the European Union guidelines;
  • The country is part of the Schengen Area since 21 December 2007 allowing border-free travel of up to 400 million citizens;
  • Along with Czech Republic, Slovakia and Poland, Hungary is part of the Visegrad Group, working together in a number of fields of common economic and cultural interests;
  • Since 1999, Hungary is an active member of the North-Atlantic Treaty Organization;
  • Hungary is a member of the World Intellectual Property Organization, which allows i) all foreign companies to apply for either patent or a trademark and ii) foreigners the same intellectual property protection conferred to Hungary nationals;
  • Hungary has acceded to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the New York Convention). Therefore, arbitration awards made in countries that are party to this convention should be enforceable in Hungary according to the provisions of the convention.

External readings

External videos

Contact us

For additional information on our accounting and legal services in Hungary, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Petar Chakarov, directly:
client relationship officer - Petar