The corporate tax in Hungary applies to all of the companies incorporated here. The corporate tax has a standard value of 19% and special rates apply according to the amount of taxable income.
Companies subject to corporate tax in Hungary
All companies incorporated in Hungary must pay the standard corporate income tax on their worldwide profits. Foreign companies that are not incorporated in Hungary but have their management located in Hungary are still perceived as local residents and are subject to the corporate tax.
However, in order to prevent double taxation, Hungary has signed treaties with more than 60 countries. Foreign companies that carry out taxable activities in Hungary and have a permanent office in the country are subject to corporate tax only on their net profits produced via Hungarian sources.
Investors should consider the taxes applied to the types of companies that can be incorporated in Hungary. Our lawyers in Hungary can help you with more information about the tax laws in Hungary.
Corporate tax rates in Hungary
The standard value of the corporate tax in Hungary is 19%. However, the first 500 million HUF (approximately 1,600,000 euros in August 2014) are taxed at a rate of 10%. Permanent establishments of non-resident companies are taxes at the same rate. In general, branches in Hungary are taxed in the same manner as subsidiaries.
In Hungary, dividends are exempt from corporate tax, except for dividends distributed by a controlled foreign company. Capital gains in Hungary are taxed as part of the accounting profit, at the aforementioned rates of 10% and 19%.
An alternative minimum tax may apply in certain optional conditions. The alternative minimum tax in Hungary is calculated according to the general corporate tax rates of 19% and 10% which apply to the alternative minimum tax rate base of 2% (applied on total revenues, with some exceptions).
If you want to know more about how the alternative minimum tax is calculated in Hungary, please contact our Hungarian lawyers.