Personal income tax (PIT)

Tax liability affects the total revenues of resident taxpayers, the revenues obtained in Hungary by foreign individuals or other incomes that are taxable by law, in Hungary.

Taxpayers could be both residents (Hungarian citizens with exception of dual citizens without Hungarian residence, EEC member state citizens with more than 183 days of staying, third country citizens with residence permit and persons only with Hungarian residence) and non-residents (if they earn income from Hungary or according to an international convention, they earn income that is taxable in Hungary).

Hungary has a personal income tax rate of 15% of the tax base. For resident taxpayers, the tax base is their whole income, while in the case of non-resident taxpayers it represents their locally taxable incomes.

Simplified contribution to public revenues

This tax exempts from the personal income tax, social security contribution and social contribution tax excluding taxes and contributions on the minimum wage. Its tax base is the individual’s revenue reduced (if the private person is liable to pay it) with the value added tax.

The applicable tax rate in this case is 15% for private individual and 9.5% for pensioner.

For private individuals covered by social security in an EU member state, the EKHO rate is 9.5%. The payer is no longer obliged to pay EKHO.

General information

The VAT general tax rate in Hungary is 27%. Nonetheless, there are three reduced VAT rates in use: 0%, 5% and 18%.

VAT returns are required to be submitted monthly, quarterly or yearly. Deadline for filing the return is the 20^th day of the month following the given period.

Intrastat: in case a taxable person has EU transactions, Intrastat statistical reports must be submitted as well. The threshold for arrivals is HUF 400 million, while the threshold for dispatches is HUF 160 million in 2025.

With the beginning of 2024, the eVAT system has been introduced, which means that the tax authority offers draft VAT returns and administrative benefits for the taxpayers on an optional basis from this year forward.

The OSS system and its application has been extended since 2021 with distance selling and all the services provided for non-taxpayers where the place of performance is in the Member State where the consumption took place. Taxpayers involved in distance selling may register in the one-stop shop system and settle their tax liabilities in respect of several Member States simultaneously. Tax returns must be filed electronically in the EU and non-EU one-stop shop system on quarterly basis.

For B2C distance sales of goods from outside the EU, the Import One-Stop-Shop (IOSS) scheme is applicable.

In line with EU provisions, the threshold for distance sales to non-taxable persons is EUR 10,000.

Reduced VAT rates

Certain products and services are the beneficiaries of lower VAT rates.

The 0% rate applies to daily papers (issued at least 4 times a week).

The 5% rate applies to some type of milk, poultry meat, fish fillets and other fish meat, fresh eggs, medicine, books, magazines, specific large live animals, district heating services, instrumental live music performed by artists at private events, commercial accommodation services, restaurants and internet.

The 18% rate can be applied to dairy products, products made from milk, corn, starch and open-air events’ service providers.

Please note that VAT of certain group of services and products are not deductible, such as different types of fuels and motorcycles, passenger cars, taxis, parking services, food and beverages, catering services and residential properties and related activities to renovation of these buildings.

Domestic reverse charge mechanism

When both the buyer and the seller are taxable persons and not exempt from VAT, domestic reverse charge mechanism is to be applied with regard to certain services and product supply. Instead of including VAT in the invoice, the seller should state in the invoice, that the transaction is subject to the reverse charge mechanism; hence the buyer will have to pay VAT to the competent tax authority.

Domestic reverse charge VAT can be applied to services that require a building permit, construction work in connection with expanding, restructuring, demolition of buildings, maintenance, sale of certain metal products, grain, collateral assets, sale of real estate, trading greenhouse gas emission rights – when the vendor opts for taxability, and labour hire relating to specified construction and other installation works.

Live invoice data reporting

The legislation requires an immediate and automated data upload to the Hungarian Tax Authority’s online invoice system, integrated to the invoicing software of taxpayers. As of 1 April 2021, the scope of live invoice data reporting was extended to almost all outgoing invoices issued under HU VAT ID. Not meeting with this obligation may pose significant default penalties.

Transfer duty

Purchasing real estate through an asset or share deal is subject to transfer tax obligations. The assessed tax base will be the gross market value of the real estate by the tax authorities’ practice.

The transfer tax rate is 4% up to HUF 1 billion and 2% for the rest of the amount. The total amount of transfer tax payable per property is limited to HUF 200 million.

Local business tax

Tax base for permanent activities performed in the jurisdiction of the local government is the net sales revenue reduced by costs of sold goods, value of mediated services (or above a certain amount of sales revenue by the proportional share of the above mentioned), subcontractor fees, material costs and direct value of research and experimental development. The tax rate is determined by the local government but cannot be higher than 2%.

Building tax

Regardless of what they are intended or utilized for, both residential and non-residential buildings and structures may set building tax obligations for the taxpayer depending on the decision of the local government.

Depending on the local government’s decision, building tax is either calculated by the useful space in m² (maximum tax rate is HUF 2,950.1/m²/annum in 2025) or adjusted market value (maximum 3.6% of the adjusted market value of the building).

Land tax

The right of taxation of local governments includes the right to define the tax rates in observation of the upper limits prescribed by the Act but increased according to changes in the KSH consumer price index published. The upper limit plus the increment is to be called the “tax ceiling”.

Both building and land taxes’ rates are heavily affected by the local government’s decisions, so it is advised to obtain the necessary information regarding which method is being used.

The National Tax and Customs Administration of Hungary is the competent authority for customs duties. Since Hungary is a member state of the European Union, no customs procedures are required as free movement of goods is ensured between member states, unless you exceed the non-commercial quantity declared in the Hungarian Excise Act.

Passengers carrying goods from third countries that are outside the EU face more solid restrictions on these products if they depart from another member state.

In addition to the above goods, passengers are exempt from customs duty and taxes for goods imported

The import VAT exemption for imported goods below EUR 22 has been abolished, customs declaration is required for these goods as well. This means that import VAT is payable on imports of consignments regardless of their value. However, in case of import of goods of a value of under EUR 150 the customs exemption remained unchanged i.e. if the value of the goods will be below EUR 150, the consignment will be exempted from customs duty but VAT must be paid on the full value of the consignment.

R&D tax incentive

Taxpayers may be entitled for R&D incentives of which there are two available in the Hungarian tax system. Companies can either decrease their tax base with the costs incurring in relation with R&D, or choose to opt in for a tax allowance after their R&D costs and expenses.

The regulation on corporate income tax laid down strict rules guiding taxpayers on which expenses are eligible for the incentive or the tax allowance. The new tax allowance is also suitable for Companies operating with lower profit as it provides opportunity to have taxes refunded in the amount of the tax allowance calculated. Each R&D project is different, hence all the circumstances must be examined to choose the best solution among the available incentives