Understanding corporate taxes for your Hungarian business

Published: March 27 2023

Contents

TAO is the primary tax regime for companies in Hungary, defining not only corporate tax, but also other types of taxation. TAO doesn't come with any specific conditions for entry and is the default tax regime for Hungarian companies.

On the other hand, the KIVA tax regime benefits small and medium-sized businesses that provide services.

Corporate tax in Hungary amounts to 9% of your profit. It is calculated yearly, with advance payments made monthly or quarterly. If the TAO was less than HUF 5 million the previous year, it is possible to pay quarterly.

The exact amount of corporate tax is calculated by May 31st the following year. If you paid too little, you must top up. If you paid too much, you can reclaim or include it in funds for the following year.

In Hungary, it's necessary to pay other types of tax including the 15% dividend tax on income used for personal use, 13% payroll tax for employees and the local business tax of up to 2% of revenue paid to the local municipality.

Additionally, the value-added tax (VAT) of 27% is charged on net product prices to be paid by clients and forwarded by businesses to the tax authority.

To pay your corporate tax in Hungary, you'll need to have an overview of your revenues and expenses for the year. An expert accountant can assist with calculating the exact tax payable.

Payment is made via advance payments year-round, and the exact tax amount is due by May 31st of the following year.