Determining taxable corporate income and subsequent taxation is a fundamental aspect of any business’s financial planning. This article is the first in a seven-part series addressing the most important rules of corporate taxation in Hungary. The series covers the basic framework, special tax regimes, extra profit taxes, cross-border implications, anti-avoidance measures, taxation of corporate investments, and penalties for non-compliance.
1. General Tax Structure
Hungary is a unitary state, without a federal tax level. Corporate profits are taxed primarily at the national level via corporate tax (társasági adó) and at the local level through municipal business tax (iparűzési adó).
The standard corporate income tax (CIT) rate remains 9%—the lowest in the EU.
However, for multinational enterprise groups with consolidated global revenues exceeding EUR 750 million, a 15% global minimum effective tax rate applies, in line with OECD/GloBE rules as transposed by the European Union’s 2024 Minimum Tax Directive, effective from 2025.
The municipal business tax is typically 2%, although local municipalities may reduce this rate through their own regulations. There is no differentiation based on the type of income or the size of the taxpayer.
2. Tax Bases Differ
The corporate and municipal taxes are calculated on different tax bases:
Corporate tax is based on net profit or loss as shown in the company’s annual financial statements, adjusted by tax law provisions.
Municipal tax is based on gross turnover derived from local business activities, from which no deduction is allowed for certain significant expenses (such as labour costs). However, a simplified lump-sum tax regime is available for:
Micro-enterprises with turnover below HUF 25 million, and
Small retailers with turnover below HUF 120 million.
3. Tax Residency and Territorial Scope
Hungarian resident companies are subject to CIT on domestic-source income and foreign-source income derived through their foreign branches.
Non-resident entities are taxed only on Hungarian-source income, in particular:
If they carry out business activities through a Hungarian permanent establishment, or
If they earn capital gains from shares in entities owning real estate in Hungary.
4. Treatment of Losses
Tax losses may be carried forward for 5 years and used to offset up to 50% of the tax base in a given tax year.
Real estate investment companies are subject to special rules and may be excluded from the general loss offsetting regime.
Foreign losses (from branches abroad) may be used to offset Hungarian taxable income, respecting the limited worldwide taxation principle.
5. Group Taxation (Corporate Tax Group Regime)
Corporate tax groups are treated as single taxpayers for the purposes of certain tax benefits and loss offsetting.
Only the group representative may submit declarations and claim tax benefits on behalf of the group.
To claim a tax benefit, one group member must meet the eligibility criteria and actually fulfil the relevant obligations.
Group members often support film productions and team sports through targeted tax incentives.
6. Scope of Taxable Entities
In addition to companies, the following entities may also be subject to corporate tax:
Sole entrepreneurs,
Cooperatives, including European cooperatives,
State-owned enterprises,
Law firms and notarial chambers,
Public interest trust foundations (közérdekű vagyonkezelő alapítványok),
Private trusts (e.g. business trusts), if their principal activity is business-related.
—
This article provides a general overview of Hungary’s corporate tax framework as of 2025 and should not be construed as legal or tax advice. For company-specific consultation, please contact our law firm.
Dr. Katona Géza, LL.M. ügyvéd (Rechtsanwalt / attorney at law)
___________________________________
Katona és Társai Ügyvédi Társulás
(Katona & Partner Rechtsanwaltssozietät / Attorneys’ Association)
H-1106 Budapest, Tündérfürt utca 4.
Tel.: +36 1 225 25 30
Mobil: + 36 70 344 0388
Fax: +36 1 700 27 57
2025 Corporate Tax in Hungary (Part 1): Basic Framework
Determining taxable corporate income and subsequent taxation is a fundamental aspect of any business’s financial planning. This article is the first in a seven-part series addressing the most important rules of corporate taxation in Hungary. The series covers the basic framework, special tax regimes, extra profit taxes, cross-border implications, anti-avoidance measures, taxation of corporate investments, and penalties for non-compliance.
1. General Tax Structure
Hungary is a unitary state, without a federal tax level. Corporate profits are taxed primarily at the national level via corporate tax (társasági adó) and at the local level through municipal business tax (iparűzési adó).
The standard corporate income tax (CIT) rate remains 9%—the lowest in the EU.
However, for multinational enterprise groups with consolidated global revenues exceeding EUR 750 million, a 15% global minimum effective tax rate applies, in line with OECD/GloBE rules as transposed by the European Union’s 2024 Minimum Tax Directive, effective from 2025.
The municipal business tax is typically 2%, although local municipalities may reduce this rate through their own regulations. There is no differentiation based on the type of income or the size of the taxpayer.
2. Tax Bases Differ
The corporate and municipal taxes are calculated on different tax bases:
Corporate tax is based on net profit or loss as shown in the company’s annual financial statements, adjusted by tax law provisions.
Municipal tax is based on gross turnover derived from local business activities, from which no deduction is allowed for certain significant expenses (such as labour costs). However, a simplified lump-sum tax regime is available for:
Micro-enterprises with turnover below HUF 25 million, and
Small retailers with turnover below HUF 120 million.
3. Tax Residency and Territorial Scope
Hungarian resident companies are subject to CIT on domestic-source income and foreign-source income derived through their foreign branches.
Non-resident entities are taxed only on Hungarian-source income, in particular:
If they carry out business activities through a Hungarian permanent establishment, or
If they earn capital gains from shares in entities owning real estate in Hungary.
4. Treatment of Losses
Tax losses may be carried forward for 5 years and used to offset up to 50% of the tax base in a given tax year.
Real estate investment companies are subject to special rules and may be excluded from the general loss offsetting regime.
Foreign losses (from branches abroad) may be used to offset Hungarian taxable income, respecting the limited worldwide taxation principle.
5. Group Taxation (Corporate Tax Group Regime)
Corporate tax groups are treated as single taxpayers for the purposes of certain tax benefits and loss offsetting.
Only the group representative may submit declarations and claim tax benefits on behalf of the group.
To claim a tax benefit, one group member must meet the eligibility criteria and actually fulfil the relevant obligations.
Group members often support film productions and team sports through targeted tax incentives.
6. Scope of Taxable Entities
In addition to companies, the following entities may also be subject to corporate tax:
Sole entrepreneurs,
Cooperatives, including European cooperatives,
State-owned enterprises,
Law firms and notarial chambers,
Public interest trust foundations (közérdekű vagyonkezelő alapítványok),
Private trusts (e.g. business trusts), if their principal activity is business-related.
—
This article provides a general overview of Hungary’s corporate tax framework as of 2025 and should not be construed as legal or tax advice. For company-specific consultation, please contact our law firm.
Dr. Katona Géza, LL.M. ügyvéd (Rechtsanwalt / attorney at law)
___________________________________
Katona és Társai Ügyvédi Társulás
(Katona & Partner Rechtsanwaltssozietät / Attorneys’ Association)
H-1106 Budapest, Tündérfürt utca 4.
Tel.: +36 1 225 25 30
Mobil: + 36 70 344 0388
Fax: +36 1 700 27 57