November 21, 2017

WHY HUNGARY? ADVANTAGES AND DISADVANTAGES OF HUNGARY

 Why Hungary?

  • Nowadays, working with offshore companies is becoming increasingly difficult and sometimes impossible, and as a result it is now necessary to choose between various jurisdictions which offer relatively low tax rates. One such country is Hungary.
  • Hungary offers the LOWEST RATE of corporation tax in the EU – 9%.
  • In addition, the tax on dividends (both received by and paid by the company) is 0%. The exception to this is dividends received from companies registered in low-tax countries, i.e. offshore jurisdictions, in which case the dividend tax is 9%.
  • Such preferential tax rates make Hungary a unique country for the registration of companies within the EU. An additional «bonus» is that Hungary does not sound “offshore” and is accepted without question as a partner by any company in the world

 Advantages of Hungary

  • Low income tax – 9%;
  • Tax on dividends – 0%;
  • Tax rebates on income from certain types of intellectual property;
  • Possibility to open a current bank account in Hungary (company + account in one country) relatively quickly, even if the owners and directors of thec ompany are non-residents;
  • Automatic receipt of Hungarian and European VAT numbers;
  • Full EU membership;
  • A wide network of treaties for the avoidance of double taxation;
  • The company is considered tax resident in Hungary through registration, regardless of the place of management.

  Disadvantages of Hungary

  • The existence of a municipal tax (0% to 2% on profit);
  • High level of VAT –  27%;
  • High level of social contributions to employees (23%);
  • The company’s initial capital must be paid up.

Such preferential tax rates make Hungary a unique country for the registration of companies in the EU. An additional “bonus” is that Hungary does not sound offshore and is accepted without question as a partner by any company in the world.