Hungary offers you a more than attractive, nine per cent flat rate of annual corporate tax rate, which is one of the lowest among EU jurisdictions.
Alternatively you may opt for a flat amount taxation, called shortly as ‘KATA’: that is available up to twelve million HUF yearly income, and requires only 50.000 forint flat amount tax payment, which includes all payroll taxes and corporate tax as well. This option is available for limited partnership (‘betéti társaság’) company form.
Otherwise, payroll taxes are due after the executive officer of the company, unless:
- the executive has or will have by the time of company registration an active national insurance coverage in an EU jurisdiction;
- the executive has active undergraduate status at a Hungarian university or college
- the executive has national insurance coverage in Hungary at another employer, under a work contract exceeding 35 hours weekly
Payroll taxes consist of the flat rate fifteen per cent personal income tax, social, heathcare insurance and other contribution taxes, a total of at least approx. 280 EUR* a month. * the equivalent of the payroll items monthly total, depending on the current exchange rate.
Due to the current pandemic situation, the government has introduced a temporary exemption on payroll taxes: in the fields of tourism, catering, the entertainment industry, sport, cultural services and passenger transport. In these sectors employers’ contributions were reduced to zero, and employees’ contributions were also significantly reduced: they are not required to pay pension contributions, and their health insurance contributions were reduced to the statutory minimum. At present these measures are planned to remain in place until 30 June.
Regarding VAT, the general rate is 27 per cent. However, certain services such as dining, hotel service and (…) have a fife per cent rate. Obviously interborder transactions may be exempt of VAT under EU legislation, in such cases the applicable rate will be zero.