Last updated: October 2026
With its low corporate income tax rate and wide range of tax incentives, Hungary aims to attract as much foreign direct investment as possible. Tax rates are not the only factor in investment decisions, but a country’s tax competitiveness is still an important one.
Tax rate, tax year and deadlines
Since 2017, the corporate income tax rate has been a flat 9%. The tax year is the calendar year, unless the company has chosen a different financial year. Companies pay tax advances during the year. The annual return is due by the last day of the fifth month after the end of the tax year (31 May for calendar-year taxpayers).
Minimum income (presumed profit)
If a company’s pre-tax profit and its tax base are both lower than the statutory minimum income (2% of total revenue, as adjusted), the company can choose one of the following:
- pay corporate income tax on the minimum income, or
- pay tax on its actual tax base and file a statement explaining why it was loss-making or had low profits. This can increase the risk of a tax audit.
Adjustments to the tax base
The tax base is the accounting pre-tax profit, adjusted by items that increase or decrease the tax base. The most important ones are listed below.
Items increasing the tax base
- provisions for expected liabilities and future costs (released provisions reduce the tax base)
- impairment of receivables (bad debts may be deductible under certain conditions)
- fines and late-payment penalties imposed by authorities
- net borrowing costs above the interest limitation threshold. Since 2019, the EBITDA-based rule has replaced the former thin capitalisation rule: net borrowing costs are deductible up to 30% of EBITDA or HUF 939.81 million, whichever is higher.
- certain payments to controlled foreign companies (CFCs)
- costs not incurred in the interest of the business or not properly documented
- transfer pricing adjustments if prices with related parties are not at arm’s length
Items decreasing the tax base
- Tax losses: may be carried forward for up to five years and used to reduce up to 50% of the tax base.
- Dividends received: exempt, except dividends from CFCs.
- Capital gains on reported shareholdings: exempt (participation exemption). The shareholding must be reported to NAV within 75 days of acquisition and held for at least one year.
- Royalties: 50% of the royalty income from qualifying intellectual property can be deducted (IP box in line with the OECD modified nexus approach).
- Development reserve: up to 50% of pre-tax profit (max. HUF 10 billion per year). The reserve must be used for investments within four years.
- R&D: the direct costs of research and development can be deducted again.
- SMEs: the cost of new investments can be deducted, up to the amount of the pre-tax profit (max. HUF 30 million).
- Donations: an additional deduction is available for donations to public-benefit organisations. The draft 2027 tax package would abolish the allowance for donations to public-interest trust foundations (KEKVA).
Tax credits and incentives
The development tax allowance can reduce corporate income tax by up to 80% for qualifying investments (e.g. large investments, job creation, R&D, environmental protection). Larger investments may also be eligible for government cash grants. Since 2019, related companies with the same financial year, the same functional currency and the same accounting framework (Hungarian GAAP or IFRS) can opt for group taxation.
Small business tax (KIVA)
Eligible small and medium-sized enterprises can opt for KIVA instead of corporate income tax. KIVA is levied at 10% on a cash-flow-based tax base that includes personnel costs, and it also replaces the 13% social contribution tax.
Other company taxes
- local business tax (max. 2%), see Local Taxes
- innovation contribution: 0.3% of the local business tax base (micro and small enterprises are exempt)
- sector-specific special taxes, e.g. in banking, retail, energy and telecommunications
Global minimum tax (Pillar Two)
Hungary has implemented the EU Minimum Tax Directive. Multinational groups with consolidated revenue of at least EUR 750 million in at least two of the last four years are subject to an effective tax rate of at least 15%. The Income Inclusion Rule (IIR) and the qualified domestic minimum top-up tax (QDMTT) have applied since 2024, and the Undertaxed Profits Rule (UTPR) since 2025. See our Global Minimum Tax Advisory.
Transfer pricing
Transactions between related parties must be priced at arm’s length. Related parties include companies under common management, regardless of ownership. Accepted methods:
- comparable uncontrolled price (CUP) method
- resale price method
- cost plus method
- transactional net margin method (TNMM)
- profit split method
- other methods, where justified
A new transfer pricing decree applies from the 2026 tax year (it could optionally be applied for 2025). Under this decree:
- a master file and a local file are required for transactions above HUF 150 million (similar transactions must be aggregated)
- simplified rules apply to low value-adding intra-group services
- companies must also report transfer pricing data in their corporate income tax return
Missing or incomplete documentation can be penalised with up to HUF 5 million per document, and up to HUF 10 million for repeated failures. Advance pricing agreements (APAs) are available. See our transfer pricing services.
Country-by-country reporting (CbCR)
Hungary has required country-by-country reporting since the 2016 financial year for multinational groups with consolidated revenue of at least EUR 750 million. The report is filed by a Hungarian ultimate parent company or, in certain cases, by a Hungarian group member. Hungarian group members must notify NAV which group entity files the report. Failure to report can be penalised with up to HUF 20 million. The EU public CbCR rules (Directive (EU) 2021/2101) have also been transposed into Hungarian law.