How does the 9% corporation tax rate affect your business?
Whether you already have a company in Hungary or you are planning to register one, this information on the corporation tax rate is crucial to understand your finances in 2017.
Whether you already have a company in Hungary or you are planning to register one, this information on the corporation tax rate is crucial to understand your finances in 2017.
Changes to the corporation tax rate in 2017
From the 1st of January 2017, Hungary has lowered its corporation tax rate to 9%, making it the lowest business tax in Europe. During the previous system until the end of 2016, the government taxed companies at a rate of 10% on profits up to HUF 500 M (EUR 1.7 M) and 19% on profits above that threshold. Now a single band has been introduced applying equally to all businesses with a flat rate of 9%.
The new corporation tax rate has a great impact on the finances of small businesses, but has brought an even larger tax reduction for large corporations, as seen in the chart below:
| For small businesses |
Profit before taxes | |
|
2016 |
2017 | |
| Revenue | EUR 650,000 | EUR 650,000 |
| Costs | EUR 520,000 | EUR 520,000 |
| Profit before taxes | EUR 130,000 | EUR 130,000 |
| Corporation tax | EUR 13,000 | EUR 11,700 |
| Taxes reduced by | EUR 1,300 | |
And…
| For big corporations |
Profit before taxes | |
|
2016 |
2017 | |
| Revenue | EUR 8,000,000 | EUR 8,000,000 |
| Costs | EUR 6,300,000 | EUR 6,300,000 |
| Profit before taxes | EUR 1,700,000 | EUR 1,700,000 |
| Corporation tax | EUR 177,839 | EUR 153,000 |
| Taxes reduced by | EUR 24 839 | |
As you can see, the more profit your corporation makes, the more you can save on operation your company in Hungary.
Added value from Helpers
Helpers Hungary offers comprehensive solutions for setting up and managing Hungarian businesses, specializing in assisting international entrepreneurs and businessmen. Contact us for further information and let our tax advisors assist you with better understanding your corporate finances in Hungary.
Do you want to know more about taxation in Hungary? Do you need a reliable accounting partner? Do you need help setting up your own company in Hungary? Contact us at info@helpers.hu or call our office on +36 1 317 8570 to receive a free consultation.
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