Hungary as a tax haven: An attractive environment for companies, founders, investors and retirees

Imre Németh,  Wednesday, 6 September 2023

Consultant Hungary

Did you know that from a taxation perspective, Hungary can be seen as somewhat of a haven for businesses, entrepreneurs, investors, freelancers, as well as retirees and pensioners? Although the country isn't officially labeled a tax haven, it offers a range of attractive benefits that make it an ideal location for international business and private retirement planning.

The low corporate tax, straightforward incorporation laws, and central location within the European Union make Hungary an extremely advantageous location for businesses and investors. With a flat corporate tax of just 9%, Hungary offers the lowest rate in the entire European Union.

But it's not just the low taxation that makes Hungary appealing. To establish a company in Hungary, only one shareholder and one director are required, and these can be the same individual, neither needing to be a citizen or resident of Hungary. This makes the incorporation process very flexible and straightforward, especially for foreign investors like those from the UK.

Non-EU investors find Hungary particularly appealing as the country offers access to the European market through a cost-effective and tax-friendly EU jurisdiction. Since 2019, Hungary has also eliminated foreign exchange controls, greatly facilitating international monetary transactions.

Hungary is also characterized by its robust economy, excellent infrastructure, and well-educated workforce. Added to this is a stable government and political system that provides offshore investors with a secure jurisdiction.

Numerous tax advantages, such as no dividend tax, no withholding tax (when structured properly), no wealth tax, along with a host of double taxation treaties with many of the world's primary jurisdictions, make Hungary an especially tax-efficient location.

Furthermore, Hungary offers straightforward visa and residency options for most foreigners, significantly simplifying mobility for international workers and retirees.

From a personal income tax perspective, Hungary remains attractive. The income tax is set at a flat 15% of the taxable gross income, a rate that's significantly lower for many people compared to their home countries.

For retirees and pensioners, Hungary offers another tax advantage: all payments received due to age are tax-free in Hungary. If retirees have other incomes, such as from rentals or interest, they are taxed at a flat rate of 15% in Hungary.

With over 70 double taxation agreements with many vital jurisdictions worldwide, Hungary also helps to avoid losses through double taxation.

In summary, while Hungary isn't officially recognized as a tax haven, it provides significant tax benefits for both businesses and individuals. It's worth considering this attractive environment for setting up businesses, investments, or retirement.  

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