The Hungarian flat tax

Hungary's flat tax is one of the main reasons why Hungary has become an attractive destination for international entrepreneurs and investors. Here are the key points: 

Flat rate of 9%

• Hungary applies a flat tax of 9% on corporate profits, the lowest in the European Union.
• This is a flat rate, regardless of turnover or profit generated.
• 2. 

Dividends

• Dividends distributed to individuals resident in Hungary are taxed at 15%.
• If dividends are distributed to foreign entities, taxation may be reduced or eliminated under double tax treaties (DTAs).

3. 

VAT (AFA)

• The standard VAT rate is 27%, but there are reduced rates of 18% and 5% for specific goods and services.

4. 

Social and personal contributions

• Although the flat tax applies to businesses, resident employees and managing partners may be subject to social security contributions.
• However, labour costs remain lower than the European average.

5. 

Holding-friendly system

• Hungary is widely used for holding structures, due to the absence of taxation on capital gains from qualified participations (with minimum holding of 1 year and participation ≥10%).