Starting a business in Hungary can be a profitable decision for entrepreneurs looking to enter the European market. The country attracts investors with its stable economic environment, favourable tax system, and strategic location in the heart of Europe.
Advantages of starting a business and paying Taxes in Hungary
Hungary boasts a well-developed economy with a dynamic business environment. As of 2023, the country’s gross domestic product (GDP) was approximately $180 billion, reflecting stable economic growth. The key sectors driving the economy include industry, agriculture, and services.
One of Hungary’s major advantages is its simple and fast business registration process, which takes only a few working days. This efficiency allows entrepreneurs and investors to quickly launch operations and enter the European market.
According to the World Bank’s Ease of Doing Business ranking, Hungary was ranked 52nd in 2022, demonstrating its entrepreneur-friendly conditions.
A key benefit is the lowest corporate tax rate in the EU—just 9%, helping businesses optimise tax expenses and enhance competitiveness. Additionally, Hungary has a highly skilled and educated workforce, which is particularly beneficial for the technology sector. Budapest has emerged as a leading IT hub in Central Europe, hosting R&D offices for major companies such as EPAM, IBM, Ericsson, and Prezi.
Moreover, Hungary’s strategic geographic location provides fast access to European markets, while its modern infrastructure and stable business environment attract foreign investment. The government actively supports new businesses by offering grants and subsidies to encourage growth.
Another important factor is low labour costs. Hungary has one of the lowest minimum wages in Europe, significantly reducing business operational expenses.
Startups in Hungary: which businesses attract the market?
Several Hungarian startups have gained strong recognition in European market, as their products are widely used by both businesses and individual users.
One of the most notable examples is Prezi, a platform for creating interactive presentations that revolutionised visual communication. Founded in 2009, Prezi quickly gained global popularity, including in EU. Today, the platform boasts over 100 million users, with more than 400 million presentations created. Many EU marketers, educators, and entrepreneurs choose Prezi as a modern alternative to traditional PowerPoint slides.
LogMeIn is another technological giant well known in EU. Founded in 2003, the company offers solutions for remote access and collaboration. Its GoToMeeting product is widely used by EU business teams, while the LastPass password manager has become an essential tool for cybersecurity in companies. In 2019, LogMeIn was acquired for $4.3 billion, underscoring the company’s global reach and market impact.
Ustream, founded in 2007, was a popular platform for live video streaming before its acquisition by IBM. In EU, it was widely used for online conferences and educational programs. By the time it was acquired for $130 million in 2016, the service had gathered over 80 million viewers per month.
Equally recognizable to EU drivers is iGO Navigation by NNG. The navigation system, which was launched in 2004, has been integrated into millions of cars worldwide. It provides accurate offline maps and serves as a reliable alternative to Google Maps or Waze.
The last, but equally interesting startup is AImotive, which is working on autonomous vehicle technologies. Founded in 2015, the company has raised over $75 million in investments and is already collaborating with leading global automakers. While it is less well-known in EU, with the growing interest in self-driving cars, its developments could soon find their place in the market.
Overview of Taxes in Hungary 2025
Hungary is one of the most attractive countries for doing business in the European Union, largely due to its competitive tax system. However, it is important to consider other taxes that may impact the profitability of businesses and individuals.
| Corporate Income Tax (CIT) |
9% on the profits of resident companies and foreign branches Companies investing in research and development (R&D) or strategic industries may qualify for additional tax deductions The conditions are especially favorable for startups and IT companies engaged in innovation – the government offers grants, tax incentives, and access to state investment programs |
| Value Added Tax (VAT) |
The rate is 27% – 18% – for certain food products, hotel services – 5% – for medical goods, books, printed newspapers, and certain residential properties For exporters and international companies working with clients within the EU, a zero VAT rate is available, provided the requirements for intra-EU trade are met. |
| Personal Income Tax (PIT) |
The main rate is 15%, regardless of income level Social contributions: 18.5% (pension insurance, health insurance, and unemployment fund contribution) Additional tax (Surtax): An additional 13% levy may apply to certain high incomes |
| Dividend Tax |
The rate is 15% Additional charges: 13% social contribution for residents if annual income exceeds a certain threshold Since Hungary has a double taxation avoidance agreement with many countries, foreign investors can reduce their tax burden depending on the specific case |
| Local Business Tax (LBT) |
The rate is from 0% to 2%, depending on the municipality This tax can significantly increase the tax burden on companies, especially if they operate in cities with the maximum LBT rate (for example, in Budapest, it is 2%) |
| Social Security Contributions |
For employers: 13% of the employee’s salary For employees: 18.5% (deducted from the salary) These contributions are mandatory for all employees and self-employed individuals |
| Social Security Contributions |
The rate is 15% on profits earned from the sale of stocks, bonds, or other assets For long-term investments, a reduced tax rate may apply in certain cases |
New changes in Hungary’s tax system in 2025
Starting from January 1, 2025, the Hungarian government is introducing new regulations aimed at supporting small businesses and improving public finances. In particular, an optional VAT registration threshold of €100,000 will be available for EU-resident businesses engaged in cross-border sales. This will allow small enterprises to sell in other EU countries and file a domestic VAT return without the need to register in each country, provided their turnover does not exceed the specified amount.
Additionally, the new rules introduce simplified reporting and the option to use a special EX identifier for cross-border trade. These measures are designed to reduce tax burdens and administrative barriers for small businesses, fostering their growth and integration into the EU single market.
