Tax laws Hungary
Hungary's tax system is characterized by a combination of direct and indirect taxes, with rates that have evolved over time.
Key Taxes:
Personal Income Tax: Hungary imposes a flat rate of 15% on personal income. Additionally, employees contribute 18.5% in social security contributions, deducted from gross salary, while employers pay an additional 13% as an employer's tax.
Corporate Income Tax: Hungary offers a competitive corporate tax rate, which has undergone reductions in recent years. As of 2017, the corporate tax rate was unified at 9%, the lowest in the European Union.
Value Added Tax (VAT): Hungary applies a standard VAT rate of 27%, the highest in Europe, since January 2012.
Recent Developments:
Inflation-Linked Tax Adjustments: Starting from 2025, Hungary plans to adjust certain taxes in line with the July inflation rate. This includes increases in excise taxes on fuel, alcohol, tobacco, as well as car registration and ownership taxes. The aim is to stabilize budget revenues amid economic challenges.
Tax Exemptions for Mothers: In February 2025, Prime Minister Viktor Orban announced an income tax exemption for mothers of two or three children. This initiative is part of broader efforts to boost the economy ahead of the 2026 national election.
Compliance and Administration:
The Hungarian National Tax and Customs Administration (NAV) oversees tax collection and compliance. Taxpayers are required to file annual tax returns, and NAV conducts audits to ensure adherence to tax laws.
Note: Tax laws and regulations are subject to change. It's advisable to consult the NAV or a tax professional for the most current information.
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