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Tax system in Budapest

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Taxpayers with Hungarian residence are obliged to pay taxes for their income from both Hungary and from abroad.

Hungary's tax and contributions system:

  • Personal income tax - flat rate of 16%
  • Corporate tax - The corporate tax is 10% of the positive tax base up to 500 million HUF, and 19% of the remaining portion of the tax base
  • Local taxes - may include business tax (2%), building tax (3.6%), land tax (3%), tourist tax (4% of accommodation fee)
  • Value added tax - 25% standard rate
  • Other taxes and contributions (social security contribution, healthcare, car tax, registration tax, etc).

A tax allowance is given through a family allowance. For the first and second dependent children the allowance is HUF 62,500, while in case of 3 or more children the allowance is HUF 206,250 per beneficiary dependent child.

Reporting Taxes in Hungary

The tax year in Hungary is the calendar year ending on December 31st.

An individual pays tax on their income as a wage earner or as a self-employed person. Tax on an individual who is a "permanent resident" in Hungary will be calculated on their income in Hungary and abroad. An employer is obligated to deduct on a monthly basis the tax payable on an employee's salary.

A self-employed person must prepay income tax that will be offset by filing an annual return.

VAT in Hungary

In Hungary there is a 27% tax on goods.

Foreign visitors are entitled to a refund. There is a system for quick refunds on the VAT called Europe Tax-free Shopping. Your purchase in any one store must be a minimum of 25,000 HUF. Upon checkout ask a shop assistant for your Fiscal Receipt and VAT Reclaim Form, which is your tax refund document. If you pay cash in the stores, be sure to keep receipts from changing money to HUF along with your Fiscal Receipt and VAT Reclaim Form. The form should direct you to where the refund offices are in order for you to get refunded.

As you depart Hungary, have your documents stamped at customs. You can receive you VAT refund in cash at Budapest airport. If a cash refund is not possible, then you should send in your documents to a Hungarian tax office.

Update 25/08/2015


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