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Corporate income tax
Corporate income tax (CIT) is payable by resident companies and non-residents carrying out business activities in Hungary through a permanent establishment. From 1 January 2006, under ceratin circumstances, CIT is charged at 10% on taxable profits of up to HUF5 million (previously 16%), and at 16% on any taxable profits in excess of this level. The tax is reportable to the tax authorities on an accounting year basis. Local business tax (see below) increases the effective rate of CIT.
A further business tax may be charged by local authorities of up to 2% of:
- total sales revenue from the supply of products and services; plus
- 50% of interests received; less
- the original costs of goods sold, the value of intermediated services and all material costs.
It is payable by residents and non-residents carrying out business activities in Hungary through a permanent establishment.
Capital gains
Capital gains realised by residents and non-residents operating in Hungary through a permanent establishment on the disposal of property and shares in property holding companies are chargeable to CIT at the standard rate. Capital gains on disposal of property and shares in property holding companies by non-residents are not taxable in Hungary, unless otherwise provided by a double tax treaty.
Property tax
Building tax may be charged by local authorities at up to HUF 900/m2 or at an effective rate of 1.5% on the market value of the property.
Land tax may be charged by local authorities at up to HUF 200/m2 or at an effective rate of 1.5% on the market value of the property.
Transfer tax
The transfer of property is subject to stamp duty at the standard rate of 10% and is payable by the purchaser. Acquisition of real estate by companies which are engaged in the resale or financial leasing of real estate as their main activity may be subject to stamp duty at a reduced rate of 2% in certain conditions.
The purchase of shares in Hungary is not subject to stamp duty.
VAT
The sale of non-residential property and the connected land is subject to VAT at the standard rate of 20% (previously 25%). The sale of residential property and the connected land is generally VAT exempt. However, the sale of a residential property before its completion and the first sale after completion are subject to VAT at the standard rate of 20% (previously 25%).
The leasing of both residential property and the connected land and non-residential property is VAT exempt. However, in some cases, the lessor can exercise the option to tax.
The above is for general information purposes only. It is not intended to be comprehensive or to provide any specific tax advice.
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