From 1 of January 1997. several new tax laws came into force in Hungary In this issue the main points of the Hungarian tax system will be outlined with special attention given to joint venture companies.


The corporate tax is 18% of the positive tax base.

"Off shore " companies registered in Hungary, but performing business activity abroad shall pay 3% of the positive tax base as the corporate tax. The off-shore companies may not claim any kind of other tax allowances.

The law also distinguishes between foreigners and domestic tax payers.

It has to be mentioned that the Corporate Tax Law declares itself subsidiary to international treaties. In case there is an existing international treaty in force between Hungary and a third country, the treaty shall be applied in every cases with the condition that the treaty cannot be more onerous to the foreign tax payers than the Hungarian Corporate Tax Law.

2. Tax on Dividends:

The tax on dividends is 20%. or 27%. The level of the dividend tax is defined by a mathematics formula in which the level of the dividend tax depends on capital of the company and the revenue.

On dividends which is payable to domestic corporate no dividend tax shall be paid.

Foreign tax payers do not have to pay tax on dividends if the dividend is reinvest into a domestic company as capital raise or as participation or funding of new domestic company.

Hungary has concluded bilateral treaties with several countries of the world in order to avoid double taxation. These countries are:

  • Australia
  • Austria
  • Belgium
  • Brazil
  • Canada
  • Cyprus
  • Denmark
  • Egypt
  • Finland
  • France
  • Germany
  • Great
  • Britain
  • Greece
  • India
  • Israel
  • Italy
  • Japan
  • Luxembourg
  • Malaysia
  • Malta
  • the Netherlands
  • Norway
  • Pakistan
  • Poland
  • Romania
  • South
  • Korea
  • Spain
  • Sweden
  • Switzerland
  • Thailand
  • United States of America
  • former Yugoslav states.


In Hungary in general Value Added Tax shall be paid a) for the sales of products and the provision of services performed by the taxpayer in Hungary, and b) for the importation of products. The general tax rate is 25%.

In some cases the tax rate is 12%.

Health, education and legal services are not subject to V.A.T.

The tax rate to be charged is zero per cent of the tax base in the case of a) the exportation of products; b) the sale of products qualifying as the exportation of products; c) sale of products and provision of services directly connected with international transport and the international circulation of products.

It has to be mentioned that the information in this summary is based on the basic rules of taxation and it is advised to consult an attorney or a tax consultant before making any kind of business decision .

The information in this newsletter is correct to the best of our knowledge and belief at the time of going to public. It contains only basic information and specific advice should be sought, however, before investment and other decisions are made.