Here is some guidance for your new company operating in Hungary.
Taxes:
1. Yearly taxes:
- Local Business Tax: A 2% payment is required to your local government (e.g., the municipality of Budapest city).*
- Corporate Income Tax: Set at 9%.**
- Chamber Fee: A fixed fee of 5,000 HUF.
- Dividend: Optional; consult your account manager.
2. Monthly taxes:
- Approximately 400 EUR minimum as a social contribution. If employed in any Hungarian or EU country, an A1 form can be applied for, exempting monthly contributions when not exceeding the mandatory minimum salary.
Invoicing:
Invoicing must be conducted through government-approved software, directly connected to the tax authority post-registration. The tax authority connection is mandatory, and invoices will be invalid without it.
Gathering Invoices:
On the 10th of each month, submit invoices, attendance sheets, contracts, etc., to your accountant. Alternatively, use portal.everest.hu for uploads.
ID Cards:
- Personal Tax ID
- Social Security ID
Apply for both; the accountant will provide claiming forms for your signature.
Government Gate Registration (Ügyfélkapu):
This registration must be applied for in dedicated offices in Hungary or any Hungarian embassy. It is a mandatory requirement for companies in Hungary and can only be applied for in person.
*Local Business Tax:
Apart from corporate tax, Hungary imposes a local business tax based on profit. The tax rate is a maximum of 2%. Allowed expenses include material purchases' costs, cost of goods sold, and cost of services sold. Reporting is annual, with advances and top-ups due in March, September, and December.
*Corporate Income Tax:
Set at 9% of the positive amount of the tax base. The tax base includes pre-tax profit modified by various factors. CIT returns are due by May 31 for business associations. Hungary grants tax credits for various purposes. There is an income minimum requirement even for companies making no profit.
Transfer Pricing:
Hungary follows OECD Transfer Pricing Guidelines. Documentation for related party transactions is crucial, with harsh penalties for missing or incomplete documentation. Hungary introduced CbC reporting in 2017 and implemented the Master file – local file concept from FY 2018. As of January 1, 2023, there's a data provision obligation for related party transactions in CIT returns for taxpayers subject to the transfer pricing documentation obligation. FY2022 is affected by this rule.
If you have any questions feel free to contact us!