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Business Guide HUNGARY Facts & Figures For Your business 2021
And my company
goes on...
Business Guide
HUNGARY
Facts & Figures
For Your business
Discounted
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interest
2021
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Imprint
PREFACE
© German-Hungarian Chamber of
Industry and Commerce (DUIHK) HUNGARY – AN ATTRACTIVE BUSINESS PARTNER
Budapest, 2020
For centuries, the Hungarian people, the country’s history, culture and
CEO:
economy have been an inseparable part of Central Europe. Today, it is a re-
Gabriel A. Brennauer
spected member of the European Union, with a strong and modern econo-
Editor, project manager: my which is deeply integrated in international production and value chains.
Dirk Wölfer
Editorial and production team: As per Act LXXVI of 2017, DUIHK is subject to regulations
Our brochure provides an overview of relevant information for compa-
Tamás Kelemen on organisations being supported from abroad. nies which intend to purchase, sell or invest in Hungary.
Copy date: December 14, 2020 Coverage includes information on key business related areas such as
the general economic profile,
References: References (e.g. 19) are listed in detail in the Appendix. labour markets,
infrastructure,
taxes and the legal framework,
local market potential.
Legal notice:
All rights reserved. The texts, images, graphics and layout of and in this publication are protected by copyright. The
illicit use, reproduction or dissemination of the publication or any parts of it will be prosecuted in accordance with This publication shall be a first-step navigator to Hungary. If you want to
the applicable criminal and civil laws. learn more about business opportunities in or with Hungary, our experts
Contents may be used free of charge upon providing the reference “Source: German-Hungarian Chamber of Indus- will be happy to provide you with more in-depth information and a wide
try and Commerce (DUIHK)”. range of business-related services, a summary of which you may find at
The information contained in this publication has been obtained from reliable sources with due care and diligence.
the end of this brochure.
However, DUIHK does warrant completeness, accuracy or timeliness of the information. DUIHK accepts no liability
whatsoever for direct or indirect consequences or damages resulting from the use of the information provided. Finally, we appreciate any suggestion on how to improve this publication –
Certain links in this publication refer to websites maintained by third parties over whom DUIHK has no control. DUI-
please feel free to contact us any time.
HK accepts no liability whatsoever for the information contained in those websites.
DUIHK Business Guide Hungary 2021 5
CONTENTS 32 45
PRICES, INTEREST RATES, TAXATION
8 CURRENCY
Value Added Tax 45
Inflation, interest rates 32 Corporate taxes 46
LAND AND PEOPLE
Currency 33 Local taxes 47
Geography 8 Currency-History 34 Sectoral taxes 48
Climate 9 Payment system 34 Social security contributions 48
Population 9 Personal income tax 48
Administration 11
Political system 11
Milestones of history 12 49
LEGAL ENVIRONMENT
13
Corporate law 49
Accounting 50
INFRASTRUCTURE
Jurisdiction and dispute settling 50
Transport and logistics 13 Intellectual property 51
Road tolls 15
Telecommunications 16
Energy 16 35
Research and development 17 52
Hungarian ingenuity 18 FOREIGN TRADE
USEFUL INFORMATION
19
37 Travelling to and staying in Hungary
Working in Hungary
52
52
ECONOMIC PROFILE Public holidays 52
Business demography 19
INVESTING IN HUNGARY
Economic growth 20 Foreign Direct Investment (FDI) 37
Industry 22
Tourism 23
Investment incentives 39
53
DUIHK BUSINESS SERVICES
24 41
LABOUR MARKET
31 SELLING IN HUNGARY 54
Labour costs 24 Retail market, purchasing power 41
Labour regulation, 27 REGIONS Public procurement 42 IMPORTANT ADDRESSES
collective bargaining Fairs and exhibitions 43
Qualifications 28 Competition, consumer protection 44
Payment behaviour 44
6 Business Guide Hungary 2021 DUIHK DUIHK Standort Ungarn 2018 7
CLIMATE
Weather data for Budapest *
°C mm
30 120
25
100
20
80
15
10 60
5
LAND AND PEOPLE
40
0
20
-5
-10 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
With a population of about 10 million people and a national territory of
barely 100,000 km2, Hungary belongs to the small-to-medium-sized precipitation (mm) max. temp. min. temp.
countries of Europe.
temperature: LH scale, precipitation: RH scale
* Based on 1981– 2010 data averages
GEOGRAPHY 2
About 84 Area: 93,023 km²
per cent of the Major rivers:
territory has an Danube (Hungarian: “Duna”) – length of the Hungarian section: 417 km
altitude of less
than 200 m
Tisza – 596 km POPULATION
Largest lake: Balaton – surface area: 596 km²
above mean
Highest mountain: Kékes (Mátra mountains) – height: 1,014 m
sea level.
Total length of state borders: 2,246 km INHABITANTS, HOUSEHOLDS
At the beginning of 2020, Hungary had about 9.77 million inhabitants.
Neighbouring countries (length of common state borders): The population number has been declining consistently since the early
1980’s, when it was larger by about one million persons. The average
Slovakia 679 km population density is 105 people/km², excluding the capital Budapest it is
Romania 453 km only 87 people/km². 3, 4
Austria 356 km
Croatia 355 km There are 4.1 million private households in Hungary; 1.34 million of them are
Serbia 164 km single-person households, and the average number of persons per house-
Ukraine 137 km
hold is 2.4. 5
Slovenia 102 km
1
8 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 9
URBANISATION ADMINISTRATION
About 18% of the population lives in the capital, Budapest, another 52% in
other cities and towns. The smallest village is Debréte in Northern Hungary, There are 346 towns (including the capital) and 2,809 other municipal-
with just ten residents, but 26 flats. 6 ities in Hungary.
Administrative units
Cities with more than 100,000 habitants (as of 1.1.2020)
2019 Capital city Budapest (1.75 million inhabitants) with 23 urban districts
Miskolc 152,901 19 counties (“megye”)
174 rural districts (“járás”) and 23 urban districts of Budapest
Győr 133,946 Budapest 1,750,216
Nyíregyháza 116,814 345 cities and 2,809 municipalities
In the regional statistics of the European Union, Hungary is divided into
seven so-called “NUTS 2” regions.
6
Debrecen 201,112
Kecskemét 110,373
Szeged 160,258 POLITICAL SYSTEM
Pécs 141,843
Hungary is a parliamentary democracy with a single-chamber parliament
(National Assembly – “Országgyűlés”). The head of state is the “President
6 of the Republic”. The President is elected by the Parliament for a five-year
tenure (with the possibility of one re-election). Legislative bodies are elect-
ed on the national level (National Assembly) and at the local level.
NATIONALITIES
The National Assembly has 199 representatives. Regular elections take
In the latest microcensus (2016), 96% of the population claimed to be place every four years; the last poll was held in April 2018. At the local level,
Hungarian by nationality, 3.1% identified as Roma, and 1% as German by mayors and deputies to the local and the regional councils are elected ev-
nationality. 7 ery five years; the last election was held in autumn 2019.
There are larger Hungarian minority groups in several neighbouring
countries: primarily in Romania (ca. 1.4 million, particularly in Transyl- INTERNATIONAL RELATIONS
vania), Slovakia (0.5 m), Serbia (0.3 m, particularly in Vojvodina) and in
Ukraine (0.2 m). 8 Since May 1, 2004, Hungary has been an official member of the European
Union, and accordingly, EU law is fully applicable in Hungary. Hungary is
entitled to 21 out of 705 seats in the European Parliament.
RELIGION
Hungary joined the so-called “Schengen Area” in 2007; border controls
According to the 2011 census, 39% of the population was Catholic, 14% were therefore abolished at the Austrian, Slovenian and Slovakian borders.
belonged to Calvinist or Lutheran churches, and 18% did not affiliate with
any religion, while 27% did not specify their religious affiliation. 9 Hungary joined NATO on March 12, 1999.
10 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 11
Milestones of history
The origins of the Hungarian people still have not been fully ascertained.
Most theories place their roots in the Ural Mountains area. From there,
Hungarian tribes most likely started to migrate westwards, crossing the
Caucasus Mountains, around 1100 BC.
At the end of the 9th century AD, the Hungarians reached the Car-
pathian Basin. 895 is considered the year of “homeland occupation”.
About 100 years later, in 996, tribal chieftain Vajk married the Bavar-
ian Princess Gisela. At the turn of the year in 1000 he was crowned as INFRASTRUCTURE
King Stephen I. This date is considered the foundation of the Christian
state of Hungary.
1526: Hungary suffered a devastating defeat against the Turks in the The quality of Hungarian infrastructure – transport and logistics, energy and
battle of Mohács. Subsequently, major parts of Hungary were ruled by telecommunications – has improved substantially over the last decades and
the Turks and by the Austrians, the Turk occupation lasted for more is being regarded today as supportive for growth and investments.
than 150 years until 1699.
1848, March 15: Outbreak of the Hungarian Revolution against the
Habsburgs. It was broken down by the Austrians with the help of Russia. TRANSPORT AND LOGISTICS
1867: The Austro-Hungarian Compromise (“kiegyezés”) established
the Austrian-Hungarian dual monarchy, Hungary was granted rela- Traffic volume by means of transport*
tively broad autonomy within the Empire. 2019, shares in per cent
1920: Treaty of Trianon (Versailles) – After World War I, Hungary lost
Railway Roads Waterways Pipeline Air
nearly two-thirds of its territory.
Freight traffic 18 63 4 15 ::
1944: Germany seized Hungary, its former ally in World War II.
Inland 10 76 0 14 ::
1949: Establishment of a communist regime.
International 22 57 5 16 ::
1956, October 23: National uprising against the communist regime,
Passenger transport ** 25 45 0 :: 30
brutally defeated with the help of Soviet troops after three weeks.
1989, September 10: Hungary opened its borders to Austria for * based on tonne-kilometres / passenger-kilometres.
** interurban transport, including cross-border traffic, but
East-German refugees. excluding local transport and passenger car traffic.
1989, October 23: Proclamation of the Republic of Hungary.
10
2004, May 1: Hungary joined the European Union.
ROAD TRAFFIC
Hungary has a road network of about 32,000 km in total (excluding mu-
nicipal roads), out of which 8,600 km constitute the main grid. In April
2020, the total length of motorways and expressways amounted to
2,100 km, i.e. the network roughly doubled since Hungary’s EU accession.
11
12 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 13
No major city is farther than 250 kilometers from Budapest, they all can be ROAD TOLLS
reached from the capital by car within no more than 4 hours.
There are 3.8 million registered passenger cars in Hungary (end 2019), up TRUCKS OVER 3.5 TONS
more than 25% over the last 10 years. 12
On approx. 7,000 km of motorways, highways and other main roads, a
distance-based toll has to be paid for trucks over 3.5 tons (so-called “HU-
Motorway network in Hungary
2020
GO-System”). The fee depends on the size-category and the environmen-
tal classification of the vehicle. Payment can be made online through on-
M15 M30 board-units (OBU) or distance-tickets purchased in advance.
M25 M3
M2
M1 M3
M35
M86 Budapest
M0 Road toll fares for commercial vehicles
as of Jan 1, 2021; in HUF per 100 km (fees for express-roads / main roads)
M4 M4
Emission class A (>=Euro V) B (Euro II-IV) C (
TELECOMMUNICATIONS Energy prices: Electricity prices in Hungary are among the lowest in
the EU. For non-household users, prices are about 20% lower than the
EU-average. Natural gas prices for non-household consumers are similar
In 2019, network-providers reported 12.5 million mobile telephone contracts to German price levels.
(131 per 100 residents), but only 3.2 million fixed lines. The number of internet
connections was 10.3 million, 70% of which are mobile connections, while Energy prices in Europe (€/100 KWh)*
30% are provided via high-speed cable (TV or optical fibre cable). 17
Electricity Natural gas
The Hungarian mobile communications network is of high quality in terms
of coverage and reliability. The industry-portal, OpenSignal, regularly ranks 6.6
30.4 6.0
Hungary among the top countries regarding 4G-availability, download
speed and latency experience. 21.3 21.8
3.8
3.4 3.6
15.3 3.2
12.3
10.3
Quality of 4G mobile network systems
May 2020
private industrial private industrial
4G availability average download consumers consumers consumers consumers
speed
Hungary EU-27 Germany
% global ranking* Mbps global ranking*
21 * average prices for typical midrange consumers (first half of 2020)
Japan 98.5 1 49.3 4
South Korea 98.3 2 59.0 2
US 96.1 3 26.7 25
Netherlands 95.9 4 54.8 3 RESEARCH AND DEVELOPMENT
Canada 93.5 12 59.6 1
Hungary 92.8 18 31.7 17
Austria 91.4 23 34.6 12 In 2019, about EUR 2.2 bn were spent on R&D in Hungary, i.e. about 1.5%
Germany 85.8 50 28.7 23 of GDP. The bulk of the R&D expenses (53%) were covered by the private
* of 100 countries
enterprise sector, 33% by the state budget, and another 13% by foreign
18
sources, including the European Union. 22
ENERGY R&D infrastructure in Hungary
2019
by sector
Aside from some lignite fields, Hungary has no major energy sources of
total State Higher education Private enterprises
their own. Therefore, nearly 70 per cent of domestic primary energy con-
R&D-facilities 3,555 142 1,331 2,082
sumption must be covered from net imports. 19
Employees 84,651 12,846 33,600 38,205
Expenses (HUF bn) 702,199 70,216 99,695 527,290
About 69% of the domestic primary energy consumption is covered by
fossil fuels (predominantly natural gas and petroleum), 16% from nucle- 23
ar energy, and 15% from other sources (renewables, electricity imports
and other). 20 For more detailed information on higher education, see chapter “Qualification” (page 28).
16 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 17
Hungarian ingenuity
Hungary has contributed several ground-breaking inventions and dis-
coveries to the world, from vitamin C to holography and vinyl records.
Nobel Prizes have been awarded to 16 scientists and scholars of Hun-
garian origin - though only two of them got it for their research at home,
while the majority achieved their success at institutions abroad. Some
Hungarian inventions are still part of everyday life around the globe.
Various Hungarian inventions are still part of everyday life around the globe.
ECONOMIC PROFILE
Anyone charging his or her smartphone can do so thanks to three
Hungarian engineers: Ottó Bláthy, Miksa Déri and Károly Zipernowsky
who in 1885, invented the power transformer. Without them, none of Hungary is a modern service economy with a strong industrial sector. The
today’s power adapters, or most electric devices, would work. economy is highly export-oriented, even when compared internationally.
Hungary’s most important economic partners are the EU member states,
particularly Germany.
Today, most of us communicate using keyboards or touchscreens.
However, the most frequently used writing tool is still the ballpoint
pen. It was created in 1938 by Hungarian inventor, László József Bíró.
That’s why ball pens are still widely known as “biro” in English speak- BUSINESS DEMOGRAPHY
ing countries.
In Hungary there are about 780,000 firms and corporations, the most
Even after almost 40 years, the “Magic Cube” of Hungarian inven- common legal form of corporations is the limited company (“kft.”). 24
tor Ernő Rubik has not lost any of its fascination to fans around the
world. A Rubik’s Cube World Championship has been held every two 95% of companies employ less than ten employees, while only
years since 2003. Just as a curiosity: the way to calculate the number about 1,000 companies have more than 250 employees. However,
of possible combinations of the cube is (8!×38-1) × (12!×212-1)/2, which the latter generate more than 40% of the economic output.
is more than 4.3 × 1019.
Economic indicators by company size category
2019, shares in per cent
Number of employees
less than 10 10-249 250+
Number of enterprises 95 5 0.1
Number of employees 38 34 28
Gross value added 25 35 40
Sales revenues 20 38 41
Export revenues 6 26 68
25
18 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 19Hungary’s 20 largest private corporations by turnover* Annual growth of Hungarian Gross Domestic Product
2019 Change over previous year in per cent
Company Industry Sales Export sales Employees 6
(HUF bn) (HUF bn) 5
4
Mol Energy 5,267 3,912 26,330
3
Audi Hungária Automotive 2,830 2,817 13,096 2
Bosch Group* Electronics 1,532 1,345 14,864 1
Mercedes-Benz Manufacturing Automotive 1,218 1,216 14,864 0
-1
Wizz Air Aviation 1,006 1,003 4,772
-2
Flextronics International Electronics 966 951 3,896 -3
Magyar Suzuki Automotive 796 683 6,518 -4
Samsung Electronics Electronics 762 580 2,350 -5
-6
Ventas Coffee Hungary Tobacco-trade 696 6 1,521
-7
Information/ -11.9
Magyar Telekom 667 58 2,394 -8
communications
89 90 95 00 05 10 15 19
Magyar Földgázkereskedő Energy 665 229 13,113 19 19 19 20 20 20 20 20
Harman Becker Automotive 611 577 5,603
Tesco-Global Retail 602 3 1,699
Spar Magyarország Retail 576 1 12,906 Key indicators of the Hungarian GDP
2019
Lidl Magyarország Retail 552 1 3,330
Richter Gedeon Pharmaceuticals 508 467 458
BorsodChem Chemicals 467 391 5,975 Nominal value: HUF 47,514 bn (EUR 146,1 bn = 0.9% of EU-28 GDP)
OMV Energy 465 4 263 GDP per capita in Purchasing Power Standards: 74% of EU-28 average
Information/ Share of private business in gross value added (2019): 84%
Cloud Network Technology 455 437 281
communications
E.On Energiakereskedelem Energy 420 0 925 27, 28, 29
* not consolidated, partly estimated data.
26 Gross value added by branches of economy
2019, shares in per cent agriculture 4
Public administration,
education, social services 17
ECONOMIC GROWTH manufacturing 22
other services 25
After the collapse of the socialist regime in 1989/90, Hungary’s economic
performance suffered a dramatic setback. After a few years of consolida- construction,
information, other industries 9
tion, from 1997 on, the economy was growing by approx. 4% annually,
communication 5
except for the period between 2007 and 2012 when the economy was hit
by its own structural shortcomings and the 2008-2009 global financial
crisis. In 2018 and 2019, the GDP growth rate hit about 5% and ranked transport, storage 6 trade, accomodation, food services 13
among the top performers in the European Union.
agriculture industry services public sector
30
20 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 21INDUSTRY INDUSTRIAL PARKS
There are 193 “industrial parks” and 18 “science and technology parks”
Hungary has an advanced and strongly export-oriented industry: 65 in Hungary, which host about 3,400 businesses and cooperate with 63
per cent of industrial goods are sold to foreign customers. For com- R&D partner organizations (June 2019). These parks offer well-developed
parison: this ratio is about 51% in Germany. infrastructure and a wide range of services for companies hosted there. In
order to be eligible for the label “industrial park”, certain minimum stan-
The manufacturing industry is characterised by a strong presence of dards must be met, e.g. regarding infrastructure and services. 32
foreign companies, which generate about two thirds of production,
their share is even higher in exports.
The most important branches are the automotive, construction, TOURISM
chemical, electric and electronic industries.
Tourism is an important economic factor for the country. In 2019,
Key branches of industry Hungary was visited 61 million times by foreign tourists and business
2019 men, 28 per cent of all trips were at least 2 days long. Foreigners
Sector production export export- Employees spent about € 7 billion in Hungary, thus contributing considerably to
value revenues ratio* the current account surplus.
(HUF bn) (HUF bn) (%) ('000)
Industry total 34,512 24,986 69.6 1,006 The most popular destination for foreign guests is Budapest, while
Hungarians prefer the Balaton region the most. 33 Széchenyi bath
Automotive industry 9,541 8,674 90.6 174
in Budapest
Electronical, optical, electrical goods 5,623 5,250 93.5 150
Food, beverages, tobacco 3,545 1,391 39.5 139
Rubber, plastics, ceramic products 2,953 1,759 60.1 89
Basic metals, metal products 2,689 1,561 58.0 121
Chemical industry 2,558 1,822 71.6 47
Machinery and equipment 1,829 1,475 79.2 60
* share of export-revenues in total sales revenues
31
Lake Balaton, view
INDUSTRY 4.0 on Tihany Abbey
In 2016, a “National Platform Industry 4.0” was set up, which follows
objectives and structures of similar initiatives in Germany and other
countries. The DUIHK is one of the founding members. The platform’s
objective is to share and disseminate know-how and the best practices,
while certified “model factories” help domestic SMEs to join the latest
international trends of industrial supply and value chains.
22 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 23Labour costs selected EU countries
2019, euros per hour (business sector)
46.0
45
35.9
35.0
40
35
27.8
30
19.2
25
16.6
13.7
13.6
13.5
20
12.7
11.1
10.7
10.4
10.4
15
9.5
7.3
6.0
10
5
0
LABOUR MARKET
DK
DE
AT
EU28
SI
GR
PT
CZ
EE
SK
HR
HU
LV
PL
LT
RO
BG
35
From the employers’ point of view, favourable labour market conditions MINIMUM WAGE
have largely contributed to the attractiveness of the country as a business
location for many years. Some key advantages of the Hungarian labour In Hungary, minimum wages apply to all employees. The minimum wage
market are the high levels of skills as well as a fair ratio between qualifica- levels are set each year by employers, trade unions and the government.
tions, productivity and costs. A higher rate applies to jobs that require a higher qualification level.
LABOUR COSTS Mandatory minimum wages
General minimum wage Skilled workers‘ minimum wage
HUF EUR HUF EUR
The average labour costs amount to about one third to one fourth of Ger-
2010 73,500 273 89,500 332
man levels, but this may vary widely depending on the industry, the specific
2015
105,000 329 122,000 382
position and the geographical location. During the past few years, the rise
2020
161,000 488 210,600 638
in labour costs increased substantially, which was partly due to a strong
rise in public sector wages and in the compulsory minimum wage, as well 36
as to the shortage of skilled labour in various sectors.
Average monthly wages
Business sector NON-WAGE LABOUR COSTS
Gross
HUF change* EUR** Employers pay a “social contribution tax” on gross wages. In 2016, the
2010 206,863 3.3 751 government agreed with employers and trade unions on a multiannual
2015 262,731 4.0 848 scheme, according to which the social contribution tax would be cut in
2016 276,923 5.4 889 several steps, as long as private sector gross wages would rise at certain
2017 308,994 11.6 969 minimum rates. According to the deal, the rate was lowered in 2017 from
2018 341,540 10.9 1,071 27% of 22%, and in several steps further to 15.5% as of July 1, 2020.
2019 380,996 11.6 1,171
* over previous year, in per cent.
** Conversion HUF-EUR at the average exchange rate of the Central Bank of Hungary (MNB)
34
24 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 25A further element of labour costs is the “vocational training contribution” LABOUR REGULATION,
(1.5% of gross wages), though this may be settled against corporate expens- COLLECTIVE BARGAINING
es on occupational training.
The Hungarian labour code underwent a fundamental reform in 2012. The
Wage related taxes and social charges new Labour Code offers a competitive combination of flexible regulations for
in effect since July 1, 2020 employment, manpower-utilisation and protection of employees’ rights.
Employer Employee Most collective agreements are concluded on a company level; nationwide
gross salary 1,000 gross salary 1,000 binding agreements exist only in a few industries.
+ social tax (15.5%) 155 – unemployment contr. (1.5%) 15
+ Vocational training levy (1.5%) 15 – health insurance contr. (7%) 70 In Hungary the regular working time is 40 hours per week. The minimum
= total labour cost 1,170 – pension contribution (10%) 100 paid leave (holiday) is 20 working days per year, with 1 to 10 additional days
– income tax (15%) 150 added, depending on the employee‘s age. Holidays cannot be compensated
= net salary 665 in cash. In the case of full-time employment, a maximum of 250 hours of
overtime can be ordered per calendar year, another 150 hours can be agreed
GOVERNMENT SUBSIDIES upon between both parties on a voluntary basis. In general, wages and sal-
aries should be set and calculated in Forint.
Social security contributions may be remitted upon request in whole or
in part, for a limited period of time in order to support the employment of In case of sick leave, the employee receives a 70% compensation from the
disadvantaged groups (e.g. underqualified, labour market entrants, elderly employer for a maximum of 15 days per year. From the 16th day on, the em-
employees, women on/after maternity leave). In the case of new invest- ployee is entitled to sick pay from social security bodies. Sick leave must be
ments, special subsidies can be granted under certain conditions, e.g. for attested from the first day by a medic.
training purposes. » See also Section “Subsidies”.
Atypical forms of employment are not widely used in Hungary
(3rd quarter of 2020).
Part-time: Out of 4.5 million employed persons,
only 5.5 per cent work part-time.
Temporary employment: Less than 6% of labour
contracts are temporary.
37
26 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 27QUALIFICATIONS VOCATIONAL TRAINING
Since 2012, the vocational training system is being reshaped along the Service:
The standard of primary and academic education in Hungary is high. In re- principles of the German “dual model”, i.e. a combination of theory-based DUIHK offers an
cent years, stakeholders are seeking further measures which should en- training (in vocational schools) and hands-on training in an enterprise. extensive portfolio
of training solutions
able the education system to better and more flexibly match qualification Regional Chambers of Commerce and Industry play an important role in
for companies in
needs to the market demand. Since 2012, the vocational training system in enabling companies to onboard and train apprentices, and in organising
the field of dual vo-
Hungary is undergoing a shift towards the German “dual model”, while in the examination system. The current focus is on overhauling curriculars in cational training as
tertiary education “dual study courses” are increasingly launched in co-op- order to meet the needs of modern professions and industries, and on en- well as in the fields
eration between universities and the corporate sphere. couraging more companies to engage in dual trainings. of adult education
and further training
Companies may deduct costs of vocational training activities from the for managers.
Population by highest educational degree “vocational training tax”. » see also section “labour costs”
Population of 25+ years, share in per cent
ACADEMIC EDUCATION
no educational degree 3
primary school 21
Hungary has 64 universities and colleges (“főiskola”), out of which
27 are run by the state, 23 by religious institutions and 14 by foun-
dations or other private institutions. The majority of students
tertiary degree 23
(82%) are enrolled in public institutions (2019/20).
Except for medicine and law, most study courses are based on the
secondary degree –
secondary degree – vocational 26
Bologna system, i.e. they offer a Bachelor course of (usually) six
general 26 semesters (BA, BSc), and an additional Master course (MA, MSc) of
four semesters.
In the autumn semester 2019/2020 a total of 285,000 students
38 were enrolled.
Annually, about 50,000 students acquire a university diploma,
a bachelor or a master degree.
Number of graduates *
About 58% of students receive financial support from the state;
2019
42% have to pay tuition fees.
Degree number of graduates
40
Primary school 90,274
Secondary school – high-school 67,072
Secondary school – vocational training 49,190
Tertiary education – university, college 49,132
* including adult education
39
28 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 29Academic degrees by selected fields of studies *
2019 REGIONS
Field of studies Total number of students Number of degrees
Education 28,947 9,129
Humanities and arts 19,648 5,587 Economic activity and power is not evenly spread throughout the country.
Social sciences 21,846 6,438 The capital, Budapest, is by far the most important economic centre of the
Law 11,759 2,975 country. About 37% percent of the country’s total value added is being
Business and administration 41,796 12,916 generated there, including the adjacent county of Pest, this share is 47%.
ITC technologies 20,488 3,077 Other economically important agglomerations are Győr, Miskolc, Szé-
Mathematics, life and physical sciences 6,999 2,330 kesfehérvár, Debrecen and Kecskemét. There are remarkable regional
Engineering 30,930 8,496 differences in economic power per inhabitant too. GDP per inhabitant is
Architecture and building 7,235 739 twice as high in Budapest compared to the national average.
Agriculture 8,658 2,373
Health and welfare 29,648 5,280 However, even economically less developed regions can be of interest to
Services 13,013 2,998 potential investors, since labour and other costs may be lower, and public
Total 248,704 62,715 investment subsidies and grants may be higher in these areas.
* According to ISCED classification
Key economic indicators of Hungarian counties *
41
Jobless Gross
Population GDP rate** salaries
Region County
‘000 EUR min. EUR /capita % EUR /mth
LANGUAGE SKILLS Persons
2020* 2018 2018 2019 2020***
Central Budapest 1,750 48,795 27,867 1.6 1,429
The mother tongue of 97% of the population is Hungarian. About
Hungary Pest 1,297 13,784 10,851 3.0 1,054
55,000 people stated German as their mother tongue. 42
Fejér 419 5,815 13,937 4.1 1,107
Central
Komárom-Esztergom 301 4,071 13,645 3.4 1,127
About 58% of the 25-64 year old population state that they don't speak Transdanubia
Veszprém 341 3,451 10,108 3.9 1,016
any foreign language, while 29% speak one foreign language, 14% Győr-Moson-Sopron 473 7,737 16,665 1.4 1,184
Western
two or more (2016). In the age group 25-34 years, language skill ratios Vas 254 3,149 12,425 3.3 1,025
Transdanubia
are significantly better: 40% speak one, and 20% speak two or more Zala 267 2,798 10,374 5.2 909
foreign languages. About 52% state they are proficient or good in their Southern
Baranya 359 3,338 9,217 8.2 938
best-known language, while 46% have only basic skills. 43 Somogy 300 2,723 9,001 9.9 923
Transdanubia
Tolna 216 2,251 10,305 6.3 1,076
Borsod-Abaúj-Zemplén 637 6,502 10,076 12.5 883
At schools, English and German are the preferred language courses. Northern
Heves 293 3,015 10,214 8.1 1,035
About 75% of all annual language exams are taken in English, German Hungary
Nógrád 188 1,157 6,084 11.9 855
places second with about 20%. An interesting curiosity: at German lan- Hajdú-Bihar 527 5,202 9,828 8.9 938
guage exams in 2018, 41% of the students failed, at English exams only Northern
Jász-Nagykun-Szolnok 367 3,299 8,900 8.3 927
Great Plain
32%. In most languages, the majority reaches a B level (according to ECL Szabolcs-Szatmár-Bereg 549 4,298 7,737 10.5 786
classifications), only about 10% get a C level degree. 44 Bács-Kiskun 502 5,626 11,146 5.3 962
Southern
Békés 331 2,759 8,207 7.2 828
Great Plain
Csongrád 398 4,021 10,064 3.7 965
Hungary Total 9,770 133,791 13,686 5.4 1,144
* Jan. 1. ** registered jobseekers. *** Jan.-June
45, 46, 47
30 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 31Inflation and interest rates
MNB base rate:
12
11 by the end of
10 the month.
9
8 MNB base rate consumer prices:
7
change to the same
6
5 corporate loan rates month of previous
4 year in %.
3
2 corporate loan rates:
1 consumer prices weighted average
0
interest rate
-1
-2 on HUF-loans
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (1-5 years tenure).
49
PRICES, INTEREST
RATES, CURRENCY CURRENCY
The national currency, the Forint, was declared freely convertible in 1996.
In 2001, limitations for capital transactions were repealed too.
INFLATION, INTEREST RATES
The Forint is a “floating” currency, i.e. there is neither a fixed exchange
rate target nor a target corridor. However, in practice, the monetary policy
After several years of subdued price growth, inflation picked up again in
of the Central Bank strives to reduce exchange rate volatility versus the
2017. The central bank targets a consumer price inflation of 2-4 percent
Euro and to ensure an exchange rate path, which is in line with macro-
in the medium term. Low inflation pressure facilitated a step-by-step
economic fundamentals.
reduction of the central bank’s base rate since the end of 2011, from then
7% to currently 0,6% (as of Nov. 12, 2020). This monetary easing resulted
By joining the EU, Hungary committed itself to eventually introducing
in lower financing costs for businesses as well, which contributed to the
the Euro, provided the relevant economic indicators – usually called the
growth of corporate investments.
“Maastricht-criteria” – will be met. Hungary presently already meets
most of them, nonetheless it seems unlikely that it will join the Euro-Zone
Inflation rates within the next few years.
Change over the previous year in per cent
Jan.-June 2016 2017 2018 2019 Currency exchange rates of the Hungarian Forint
2020 Annual average rates
Consumer prices 0.4 2.4 2.8 3.4 3.4 2016 2017 2018 2019 Jan.-June
Producer prices – industry -1.7 3.3 5.5 2.1 3.4 2020
Producer prices – construction 2.8 5.2 9.5 9.7 8.1 EUR-HUF 311.5 309.2 318.9 325.4 345.3
Export prices -1.0 1.5 3.0 1.7 5.0 USD-HUF 281.4 274.3 270.3 290.7 313.6
Import prices -2.5 1.9 4.0 1.2 2.6 CHF-HUF 285.7 278.5 276.2 292.5 324.6
48 50
32 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 33Currency History
Hungary can claim to having undergone the highest ever hyperinflation in
economic history. The disastrous economic situation after the end of World
War II led to an incredible currency depreciation, which was further aggra-
vated by massive monetary financing, i.e. “money printing”, forced by the
government. In May 1946, the daily (!) price in-
crease exceeded 1.000 per cent, and at the end
of July it eventually reached an inconceivable
158.000 per cent. This means that prices were
nearly doubling every two hours.
FOREIGN TRADE
Due to this dramatic devaluation, 1-mil- Hungary is considered one of the most export-oriented economies world-
lion-Pengő banknotes came into circulation wide. The export of goods and services equalled 82% of GDP in 2019 – near-
in November 1945, and four months later the ly twice the ratio of one of the world’s “export champions” Germany.
"One Billion first 1-billion-Pengő banknote followed. Shortly afterwards, a new unit,
Milpengő" the “Milpengő” (1 million Pengő) had to be created. Starting with the 1-mil- Since 2009, Hungary produces considerable trade surpluses, even versus
banknote from
lion-Milpengő banknote, the National Bank even skipped the serial num- Germany. About 75% of the total turnover (exports and imports of goods)
June 1946.
bers on the notes. In June 1946, the B-Pengő (1 trillion) was born, and final- is directed to / from EU member countries. Germany is the most important
ly even “1-billion-B-Pengő” banknotes were printed (=1021 Pengő), though single trading partner, with an outstanding share of more than one quarter
they did not come into circulation anymore. of exports and imports.
On 1 August 1946, the Pengő was replaced by the Forint through currency The commodity structure of foreign trade is dominated by technology-in-
reform. The exchange rate was enormous: 4 × 1029 old Pengős were ex- tensive goods: More than half of exports consist of machinery, cars/automo-
changed into one new Forint. tive components or electronic and electrical goods.
51
Hungarian foreign trade
2019
Imports Exports Balance
value share value share value
PAYMENT SYSTEM World total
in € bn
104.1
in %
100.0
in € bn
108.9
in %
100.0
in € bn
4.9
EU-28 76.8 73.8 88.1 80.9 11.3
Hungary is not a member of the Eurozone, but it applies the standards of the EU-15 54.7 52.5 62.9 57.8 8.2
standardised European payment system, SEPA, for Euro payments in both of which: Germany 26.3 25.3 30.2 27.7 3.9
domestic and international transactions. Bank account numbers are given New member states * 22.1 21.2 25.2 23.1 3.1
in the international IBAN-format. Starting in March 2020, domestic bank Non-EU countries 27.3 26.2 20.8 19.1 -6.5
transfers are being executed within 5 seconds. Europe 8.8 8.4 9.8 9.0 1.0
Asia 15.5 14.9 5.0 4.6 -10.4
America 2.6 2.5 4.6 4.2 2.0
* EU accession countries 2004, 2007, 2013.
52
34 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 35Hungarian foreign trade by commodity groups*
2019, shares in total value (€) in in per cent
Imports Exports
Agriculture, food 6 14 9
21
Chemical products 16
16
Metals, metal products
Automotive industry 23
8 5
Machinery
INVESTING IN HUNGARY
22
Electrical,
electronical goods 11 18
other 16 17
* based on the international Combined Nomenclature of Foreign Trade
FOREIGN DIRECT INVESTMENT (FDI)
53
Foreign companies have brought a considerable volume of investments
to Hungary since the early 1990s. By the end of 2019, the total stock
amounted more than 87 billion euros. This is equivalent to roughly 8,000
euros per capita, and approx. 60% of GDP. Both ratios are extraordinarily
high, even compared internationally. With a share of about 20 per cent
German companies are the largest investors in the country. 54, 56
In the private sector, foreign companies employ about 30% of all employ-
ees, and generate nearly half of the gross value added. In key branches of
the manufacturing sector, e.g. the automotive industry, manufacture of
electronic, electrical or machinery products, foreign-owned companies
account for even 80-95% of the value added; foreign investors also domi-
nate e.g. the telecommunications or the energy sector. 55
Foreign direct investments in Hungary
Stock in 2019 by country of origin, in € bn
other 6
Germany 18
Americas 6
Total:
4 Netherlands 15
Asia
€ 87.4
Europe other 7 bn
EU other 21 Austria 9
56
36 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 37Reinvested earnings of foreign companies in Hungary
€ billion
INVESTMENT INCENTIVES
7
The most important source of investment incentives are the cohesion
6
funds of the EU. Further instruments are case-by-case subsidies for large-
5
scale investments as well as normative incentives, e.g. tax allowances.
4
3
2 EU FUNDING
1
0 The Multiannual Financial Framework (MFF) of the EU for the 2014-2020
-1
period assigned financial grants of 25 billion Euros from the structural
funds to Hungary. This makes Hungary one of the top net beneficiaries of
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
these funds nominally, as well as in relative terms to GDP and population.
Furthermore, Hungarian farmers receive substantial direct payments of
54
more than € 1 billion annually thanks to the common agricultural policy
(CAP) of the EU.
Share of foreign companies in gross value added of the private sector* The use of grants from structural funds is based on national “operative
2018, in per cent programmes”, companies usually have to apply for grants in tenders.
Funding is limited to SMEs with less than 250 employees, therefore it is
not relevant for most foreign investors. In Hungary, on average 85% of
the grants are funded by the EU, the remaining 15% are supplemented
from national sources.
Private Manufacturing
economy total industry
The maximum funding rate (i.e. the maximum share of public grants in
48 67 total investment costs) is regulated by the EU, based on the economic de-
velopment level of the given region. In Hungary, the highest funding rate
(50%) applies to the northern, eastern and southern parts of the country,
Maximum funding rates
2014-2020 Central Hungary 0–35%
Central Transdanubia 35%
Automotive Information,
industry telecomm.
95 59
Western Transdanubia 25% Southern Transdanubia,
Northern Hungary, Northern and
* excluding financial sector Southern Great Plain 50%
55 57
38 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 39the lowest (25%) to the western counties. The quota can be raised by
20 percentage points for small enterprises and by 10 percentage points
for medium-sized enterprises. Projects in Budapest and some regions of
Pest county are not eligible for any EU funding.
INDIVIDUAL CASE-BY-CASE GRANTS
Investment projects of high economic importance which are not eligible
for EU funding may be supported upon individual government decisions
(so-called “EKD”). These subsidies are subject to certain conditions, e.g.
minimum investment volume, number of jobs to be created or scope of
R&D activities. Conditions vary by region. In 2019 – 2020 (up to Oct.), the
government awarded a total of about € 480 m of EKD grants to 74 in-
SELLING IN HUNGARY
vestment projects.
RETAIL MARKET, PURCHASING POWER
EKD-grants are handled primarily by the Hungarian Investment Promo-
tion Agency (HIPA). The agency prepares relevant government funding
decisions and supports investors in practical issues like selecting busi- There are 4.1 million private households in Hungary, 1.3 million of them are
ness sites, finding appropriate suppliers, provision and training of skilled single-person households; the average number of persons per household
staff – both at the governmental and local authority level. is 2.3 (2018). 59
58
The average net income per capita was € 4,950 in 2019, out of that, about
€ 4,100 was spent on consumption. Incomes are not spread evenly: the
decile with the lowest income disposes of just € 1,500, while the upper
TAX ALLOWANCES decile has a net income of € 11,500 per year.
» See Section “Business taxes” (page 46).
Consumption spending of Hungarian households
FREE BUSINESS ZONES 2019, by group of expenditure
Food, beverages 999
In economically less developed regions, the government may classify Housing, energy 757
towns as so-called free business zones (“szabad vállalkozási zónák”). Transport 487
Currently, this refers to about 1,200 municipalities, which i.a. can apply for Culture, leisure, education 337
additional subsidies from the National Employment Fund. Telecommunications 287
altogether:
Health 208
Clothing 195 € 4,094
Restaurants, accomodation 177
Household equipment 172
Alcoholic beverages, tobacco 143
Other 330
61
40 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 41Final consumption expenditure of households 2020 thresholds for compulsory tendering
2019, EUR per capita
Threshold for EU-wide tendering
EU-28 17,090 Subject of Threshold for
procurement central sub-central national tendering
Slovenia 11,940
governments governments
Lithuania 10,540
Supply and € 139,000 € 214,000 HUF 15 m
Estonia 10,050
services (€ 428,000 for (€ 428,000 for (50 m for
Czechia 9,750
public utilities) public utilities) public utilities)
Slovakia 9,550
Latvia 9,330
Works HUF 50 m
Poland 7,860 5,350 Mio. Euro (100 m for
public utilities)
Croatia 7,560
Romania 7,240 62, 63
Hungary 7,050
Montenegro 5,680
Bulgaria
FAIRS AND EXHIBITIONS
5,120
Serbia 4,440
Albania 3,800
Trade fairs in Hungary are primarily tailored to the domestic market, but there
60
are also several fairs of international relevance. Hungary's leading trade fair
organiser is Hungexpo.
PUBLIC PROCUREMENT
Major fairs and exhibitions in Budapest
Thresholds for compulsory EU-wide public tendering are set by EU law, Service:
Trade fair/exhibition Sector Month
lower limits apply to national procurements and are set annually in the DUIHK offers
AGROmashEXPO agricultural machinery / equipment Januar / Februar
budget law. multiple services
Construma construction industry April
to exhibitors and
Industry Days industry May
In 2019, public procurement in Hungary amounted to about € 10 billion. visitors of Hungar-
(every two years complemented
About 75 per cent of this value was tendered EU-wide, about one third ian fairs, and pro-
machinery exhibition “Mach-Tech”)
was funded (at least partially) by EU transfers. vides joint stands
Automotive Hungary automotive industry October at exhibitions
Sirha Budapest food industry, February like “Automotive
Disputes are settled in an arbitration committee at the Hungarian Public
(bi-annually) hotels, catering Hungary” or the
Procurement Authority (“Közbeszerzési Hatóság”).
Utazás (“Travel”) tourism February “Industry Days”.
42 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 43COMPETITION, CONSUMER PROTECTION
By joining the EU in 2004, competition laws and regulations of the European
Community became binding in Hungary as well.
The anti-trust authority is the GVH (“Gazdasági Versenyhivatal” – http:
//gvh.hu). Financial supervision is being executed by the Central Bank (MNB)
since 2013. Supervision of consumer protection is devolved to the Consumer
Protection Authority (“Fogyasztóvédelmi Hatóság” – http://fogyasztove-
delem.kormany.hu/), while food safety is supervised by the National Food
Chain Safety Office (NÉBIH - http://portal.nebih.gov.hu).
Large enterprises with more than 250 employees, e.g. retail chains, public
TAXATION
utility companies, are obliged to appoint consumer protection advisors in
every county in which they pursue business activities. Taxes on private and corporate incomes have been reduced in recent years,
while taxes on consumption remain relatively high. Today, value added tax-
es, excise duties and private income taxes are major revenue sources of the
budget. Social security contributions are treated outside the central budget in
PAYMENT BEHAVIOUR off-budget funds. Local authorities have a limited scope for their own taxes.
Major tax rates as of July 1, 2020
Payment behaviour has been improving significantly during the past few
Corporate Taxes
years. In the 3rd quarter of 2020, the payment deadline on all invoices
Corporate income tax 9.0
averaged about 23 day, while the average time of late payment was 15
Local business tax max. 2.0
days, so on average, the time from invoicing to effective payment was
Vocational training contribution 1.5
approximately 38 days. 64
Consumption taxes
VAT standard rate 27.0
preferential rates 18.0 / 5.0
Private taxes
Private income tax (flat rate) * 15.0
Social security taxes/contributions
employers 15.5
employees 18.5
* applies also to paid dividends
VALUE ADDED TAX
The general rate of value added tax (“általános forgalmi adó” – áfa) is 27%,
for imported goods an import sales tax applies with the same rate. This
general rate is the highest within the EU. Preferential rates of 5% and 18%
apply to a range of medical and food products, books or district heating.
44 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 45VAT REFUNDING Minimum volume of investment for tax rebate eligibility in HUF million
For special invest-
small medium sized large
Service: Foreign companies which are not registered in Hungary and do not process enterprises* enterprises** enterprises ment purposes
DUIHK offers a any business transactions that would be subject to VAT payment are enti- and branches, a
2020 300 400 3,000 (6,000 in the Budapest
wide range of minimum volume of
tled to a VAT refund. Since 2010, VAT refund claims can be submitted direct- 2021 200 300 metropolitan region; 1,000 in
services for VAT HUF 100 applies.
ly to the finance authorities of the company's homeland. However, claims 2022 50 100 underveloped regions)
refunding proce-
dures with German
must still fulfil the requirements of the Hungarian Tax Authority (NAV).
* less than 50 employees and less than € 10 mln sales revenues/assets
and Hungarian ** less than 250 employees and less than € 50 mln sales revenues/assets
authorities.
For more ONLINE INVOICING
information on Donations
online invoicing Since July 1 2020, data of all invoices issued in Hungary must be forward- Companies may donate up to 70% of their corporate income tax to a de-
and the EKÁER ed in real-time directly to the Tax and Tariffs Authority (NAV). The cor- fined list of team sports, arts and to film productions. Since these dona-
system, visit the porate invoicing software must therefore fulfil the respective technical tions may be deducted from the tax base, companies will enjoy a certain
DUIHK website at
requirements set by the NAV. reduction in their net tax payments.
Services > Legal
and Tax Issues.
Special tax schemes
EKÁER SYSTEM FOR ROAD TRANSPORT Under certain conditions, self-employed and small enterprises may opt for
simplified tax schemes. Instead of paying corporate income taxes, social se-
In order to prevent cross-border VAT fraud, as of July 1 2015, every freight curity contributions and other liabilities, they may settle their obligations with
transport on domestic roads must be reported online to the Tax and Tariffs a single tax at a preferential rate or in a lump sum.
Authority (NAV) before departure. Special rules apply to transports with ve-
hicles of less than 3.5 tons. This so-called EKÁER system is also binding for Minimum tax
freights that depart from abroad to a final destination in Hungary. Businesses with a profit margin of less than two percent of their sales
revenue are still bound to pay corporate tax on an “assumed” 2% profit.
However, this can be avoided by presenting a detailed statement of rev-
enues and costs.
CORPORATE TAXES
CORPORATE INCOME TAX LOCAL TAXES
The general corporate tax rate is 9%, which is the lowest in the European Municipalities may levy a local business tax (“hipa”), which is based on net
Union. Under certain conditions, certain tax allowances apply. The most earnings (sales revenue minus purchase of goods/services and R&D ex-
important one is the “investment tax rebate” (“fejlesztési adókedvez- penses). Municipalities may determine the tax rate freely within a range
mény”). This can be granted upon request (or just upon reporting in case between zero and a maximum of two per cent.
of smaller investments) to the Ministry of Finance. The corporate tax to
be paid may be reduced by 10-70% (depending on the regional location) About half of Hungary's approx. 3,100 municipalities, including Budapest,
for a maximum of 12 years after completion of the investment. Thus, in an levy the maximum rate of 2%. Some 40% of municipalities impose a rate
ideal case, the corporate income tax rate can be as low as 1.8%. The tax of 1-1.9%, while about 200 don’t levy this tax at all. 65
rebate is conditional to the size of the investment:
46 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 47Municipalities may impose further taxes, provided they do not collide
with government taxes. Widely used taxes currently in use are:
Buildings tax
Tourism tax
Local community tax
Real estate tax
Municipal tax
65
SECTORAL TAXES
LEGAL ENVIRONMENT
For certain branches or activities, additional taxes apply, which are based
on sales revenues or other indicators, e.g.:
Special tax for energy providers – to be paid by energy providers
CORPORATE LAW
Food chain surveillance tax – food retailers
Public health product tax (“Chips-tax”) – first-time Hungarian corporate law stipulates that businesses must be established Service:
distributors of certain food products in pre-defined company forms. The most common company form is the DUIHK offers
Pipeline and cable tax – Operators of underground complex services
“korlátolt felelősségű társaság” – abbreviated as kft., which is equivalent
to companies for
cables or pipelines to the Anglo-Saxon Ltd. or the German GmbH. Other common forms of
setting up a business
Telecommunications tax – telephone users entities are the “részvénytársaság” – zrt., nyrt. (joint stock company, sim- in Hungary, including
Financial transactions fee – on financial transfers ilar to German AG), the “közkereseti társaság” – kkt. (general partner- assistance in con-
and ATM cash withdrawals ship) or “betéti társaság” – bt. (limited partnership). tractual questions,
Insurance tax – on insurance premiums permissions and
Gambling machine tax – operators employment issues.
Kft.
The founding contract of a kft. must be filed by a lawyer with a permit that
SOCIAL SECURITY CONTRIBUTIONS is valid in Hungary. The share capital must be HUF 3 m or more. For for-
eign legal entities, it is recommended to appoint an authorised recipient.
» See Section “Labour costs” (page 24)
SUBSIDIARY, BRANCH OFFICE, REPRESENTATION OFFICE
PERSONAL INCOME TAX Foreign companies might pursue their economic activities in Hungary in
the form of an independent subsidiary, a branch office (“fióktelep”) or a
representation office (“képviselet”). A branch office may conductall busi-
Private incomes (wages, capital incomes and other kinds of personal ness activities, however, it is not a legal entity. A representation office is
incomes) are taxed with a single-rate 15 per cent personal income tax neither a legal entity, nor economically independent, hence the scope of
(“flat rate”). Tax benefits apply, i.a. for families with children. permissible activities is strongly limited.
48 Business Guide Hungary 2021 DUIHK DUIHK Business Guide Hungary 2021 49You can also read
