Accounting and finance services in Hungary

• fiscal year closing / annual reports due: May 31st for the previous fiscal year
• VAT declarations and payments: on the 20th of each month, for the preceding month or quarter (depending on how often the company declares VAT)
• payroll taxes & social contributions: on the 12th of each month, for the preceding month
• corporate tax advances: paid quarterly on the 20th of July, October, January and April, in 4 equal installments, calculated on the basis of the previous closed fiscal year
• local business tax advance: paid twice a year (15th March and September)

The basic Hungarian business taxes are the following:

• local business tax: 2% on net revenues (meaning: your income minus any direct costs such as cost of goods or services that are re-sold)
• corporate tax (also known as profit tax): 9%; applies to profits after the deduction of all expenses including direct and general expenses
• dividend tax: the company’s taxed profits can be retained in the company’s budget or paid out to shareholders as dividend; in Hungary, dividend tax is 15% and there is an additional 13% social contribution tax payable which is maximized in HUF 832,416 (ca. EUR 2,100) per year – however, this only applies to Hungarian residents; in the case of non-local residents, specific bilateral agreements between Hungary and your country of residence may apply.
• VAT (value added tax, or also known as sales tax in some countries) is 27%; whenever you buy something in a shop for example, it is always already added to the price you see. You will charge VAT only towards individual (retail) buyers or corporate EU-based buyers who are not registered for VAT, meaning that if you are an international trader, you may not charge VAT at all.

VAT is value added tax, also known as sales tax in some countries. In Hungary, VAT is 27%, and whenever you buy something in a shop for example, it is always already added to the price you see, so you do not have to start counting each time how much something will cost. When you start your company in Hungary (which will immediately receive an EU VAT number as well), and issue your own invoices towards your clients, you will charge VAT only towards individual (retail) buyers or corporate EU-based buyers who are not registered for VAT. However, if you are an international trader, you may not charge VAT at all.

Invoices to buyers/clients can only be issued through a licensed invoicing software (recommended) or an official ’invoice booklet’ (not very convenient). Invoices issued in Excel, foreign invoicing programs or other means are not acceptable in Hungary. We strongly recommend that you purchase a license for the invoicing software (license fee: approx. EUR 140/year) and learn to use this program through our assistance. This way, you’ll be able to issue invoices in Hungarian and English, in full compliance with the local regulations, and even in PDF format if you wish.

In Hungary, all companies must submit regular accounting reports (in Hungarian) from the date of their incorporation. We are aware that some countries are more flexible or lenient in this regard, so we would like to ensure that our clients are aware of their obligations when setting up a company in this country, and can (with our assistance) run a compliant operation.