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Withholding tax on interest in Hungary generally does not apply when a Hungarian company pays interest to a non-resident entity, except in specific cases (such as payments to entities in tax havens or to individuals). Local legislation provides for exemptions for most non-resident companies, especially within the EU and under double tax treaties, but reporting duties may still apply to such payments.
If your business earns interest from Hungarian sources, it’s essential to understand these rules to avoid compliance issues, unnecessary taxation or administrative setbacks.
This article outlines the key aspects of withholding tax on interest in Hungary, helping non-resident companies stay informed and compliant.
While Hungary generally does not impose withholding tax on interest paid to non-resident companies (except in specific cases, such as payments to entities in tax havens or to individuals), it remains an important consideration for non-resident companies receiving interest payments from Hungarian entities, as reporting obligations and exceptions may apply. This topic is especially relevant for:
Foreign holding companies and parent firms lending to Hungarian subsidiaries
Financial institutions with lending activities in Hungary
Investment and private equity funds involved in acquisition or shareholder loan financing
Real estate and infrastructure investors earning interest from Hungarian project companies
If your company falls into any of these groups, it’s essential to review how withholding tax on interest is handled to ensure your setup is both compliant and tax efficient.
0 % (except for payments to entities in non-cooperative jurisdictions).
The maximum withholding tax rate is applicable on interests paid to foreign entity residing in jurisdiction considered non-cooperative for tax purposes or in jurisdiction with corporate income tax rate below 9%. Such interest represents an item increasing the tax base; exemption from obligation to increase the tax base may be applied under specific conditions. It may result in a corporate income tax base increase, effectively leading to additional tax liability at the standard CIT rate (currently 9%).
Interest paid to non-resident individuals is generally subject to a 15% withholding tax in Hungary, unless a lower rate applies under a Double Tax Treaty. No withholding tax applies if a Double Tax Treaty exempts the interest and the individual proves foreign residency.
In Hungary, interest payments are exempt from withholding tax, regardless of whether the conditions for related party status, minimum ownership percentage, or any other requirements set by the European Union Directive are met.
The interest payer must withhold tax at the time of payment and transfer it to the tax authority by the 12th of the following month, along with submitting a notification. A certificate showing the income and withheld tax must be given to the recipient at payment. If the recipient provides proof of foreign residency, the payer applies the Double Tax Treaty rules; otherwise, domestic rules apply. If no residency proof is provided by payment, the payer must treat the recipient as a domestic individual for withholding purposes.
Withholding tax on interest in Hungary is not simply about applying a fixed rate. The actual impact depends on factors such as the structure of the loan, the recipient’s country of residence, and the availability of exemptions—especially since, in most cases, interest paid to non-resident companies is exempt from withholding tax.
Without a clear understanding of the local rules, non-resident companies may face avoidable tax charges, missed obligations, or penalties. Knowing how the Hungarian system works helps you stay compliant, lower your tax exposure and manage cross-border funding with more confidence.
“Interest payments in Hungary can trigger very different tax outcomes depending on the recipient and documentation. While interest paid to non-resident individuals is generally subject to 15% withholding tax, Double Tax Treaties may offer lower rates or exemptions—if proper residency certificate is provided.
Payments to companies, including EU residents, are typically exempt from withholding tax, but special rules apply for payments to entities in non-cooperative jurisdictions. Strict reporting and documentation requirements apply, and missing paperwork or deadlines can lead to unnecessary tax or penalties.” Ildikó Hajnal-Balázs | Tax Manager at Accace Hungary
At Accace Hungary, we support companies in managing withholding tax and other cross-border tax matters efficiently. While Hungary generally does not impose withholding tax on interest paid to non-residents, there are exceptions and specific compliance requirements—especially for payments to individuals or entities in non-cooperative jurisdictions. Whether you need help with local compliance or want to structure interest payments in a tax-smart way, our experts are here to guide you.
Our services include:
Thanks to our experience and practical approach, we help your business stay compliant, reduce tax risk and keep ahead of local and international requirements.approach, we make sure your company stays tax-compliant, efficient and prepared for changing regulations.
About Accace
Accace is a proactive consultancy and outsourcing partner who bridges the gap between needs and solutions. Combining smart and streamlined technology with a holistic approach, we provide an all-round care to clients and consider their matters as our own. With over 800 experts and approximately 2,000 customers, we have vast experience with facilitating the smooth operation and growth of small to large-scale, global businesses.
About Accace Circle
Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 60 jurisdictions with more than 7,000 professionals, we support over 80,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 800,000 pay slips globally.
