Taxes, pros and cons, and a comparison with Cyprus, Estonia, Poland and other countries
In short: Hungary has the lowest corporate tax in the European Union (9%). A Hungarian company gets access to the entire EU market, is registered within a few days and can be a basis for a residence permit. There are downsides too: the highest VAT in the EU (27%), a local turnover tax and a mandatory accountant. Below we go through everything in detail and compare Hungary with Cyprus, Estonia, Poland, the Czech Republic, Slovakia, Austria and Serbia.
Every year thousands of entrepreneurs choose where to open a company in Europe. The decision depends not only on the tax rate: market access, running costs, banks and how comfortable it is to live in the country yourself all matter. This article is an honest look at what makes Hungary attractive in 2026, who it suits and who would do better to look at other countries.
All rates have been checked against 2026 data. This is a general overview, not tax advice: the best structure always depends on your business and your country of tax residence.
The main reason entrepreneurs look at Hungary is the flat corporate tax rate (TAO) 9%. It is the lowest rate in the EU: on average, companies in Europe pay about 21%. For comparison, neighbouring Austria charges 23%, and Slovakia 21–24% for medium and large companies.
The rate is the same for everyone: a small IT company and a large manufacturer pay the same 9%. Losses from previous years can be carried forward, which matters in the first years of business.
The KIVA regime for small businesses. Companies with up to 100 employees and revenue of up to HUF 6 billion can choose the KIVA tax — 10%. It replaces both corporate tax and the employer’s social contribution tax (13% on salaries). For companies with employees that reinvest their profits it is often more favourable than the standard regime — the choice is best made together with an accountant.
Important: in addition to corporate tax, Hungary has a local business tax (HIPA) — up to 2%. It is calculated not on profit but on adjusted revenue (minus the cost of goods, subcontractor services and materials). The rate is set by the municipality; in Budapest it is usually the maximum — 2%. Take this into account in your calculations: for low-margin businesses this tax can be more noticeable than corporate tax.
Below are the key taxes and capital requirements for a limited liability company in the countries most often compared with Hungary.
| Country | Corporate tax | Dividend tax (resident individual) | VAT | Min. LLC capital | EU |
|---|---|---|---|---|---|
| 🇭🇺 Hungary | 9% | 15% (+13% social contribution tax up to a cap) | 27% | 3 000 000 Ft (≈ 8 200 €) | yes |
| 🇨🇾 Cyprus | 15% (from 2026, previously 12.5%) | 5% (0% for non-doms) | 19% | no set minimum | yes |
| 🇪🇪 Estonia | 0% while profit stays in the company, 22% on distribution | 0% (the tax has already been paid by the company) | 24% | 0,01 € | yes |
| 🇵🇱 Poland | 19% (9% for small companies) | 19% | 23% | 5 000 PLN (≈ 1 200 €) | yes |
| 🇨🇿 Czech Republic | 21% | 15% | 21% | 1 CZK | yes |
| 🇸🇰 Slovakia | 10% / 21% / 24% — depending on profit | 7% | 23% | 5 000 € | yes |
| 🇦🇹 Austria | 23% | 27,5% | 20% | 10 000 € | yes |
| 🇷🇸 Serbia | 15% | 15% | 20% | 100 RSD (≈ 1 €) | no |
Data for 2026. Dividend tax is shown for an individual who is a tax resident of that country; for non-residents it depends on the double taxation treaty.
Profit left after the 9% tax can be paid to the owner as dividends. For an individual who is a Hungarian tax resident, the rate is 15% personal income tax. In addition, there may be 13% social contribution tax, but only until the person’s total annual income exceeds 24 times the minimum wage (about HUF 7.75 million in 2026). Above this cap, no social contribution tax is paid on dividends.
If the owner is a tax resident of another country, dividends are taxed under the double taxation treaty between Hungary and that country. It is worth discussing the structure with a tax adviser before paying out dividends.
A Hungarian company is a fully fledged European company. It receives an EU VAT number, can sell goods and services to any EU country without customs, take part in European tenders and work with clients who prefer EU contractors.
For online sales to private customers in other EU countries there is the single OSS system: VAT for all countries is declared in one country, without registering in each one separately.
Details on the procedure, timelines and costs are on the page “Company registration in Hungary”.
Budapest is right in the centre of Europe: Vienna is about 2.5 hours away by train, Bratislava even closer, and the airport has direct flights to most European capitals. There is a well-developed business infrastructure, many qualified professionals, including English speakers, and a large international community.
At the same time, the cost of living, office rent and hiring staff is noticeably lower than in Vienna, Munich or Paris. For an entrepreneur who wants to live where their company operates, this is a significant advantage.
Your own Hungarian company can be a basis for a residence permit for its owner or director. To qualify, the company must carry on real business activity, and the applicant must have proven funds and housing in Hungary. We cover the requirements and procedure in detail on the page “Business immigration”.
Who should consider other options:
Corporate tax is 9%. In addition, there is a local business tax of up to 2% of adjusted revenue. Small companies can choose the KIVA regime — 10%, which replaces corporate tax and the social contribution tax on salaries.
Yes. A citizen of any country can be the founder and director; no local partner is needed. Registration can be done remotely by power of attorney.
The fee for electronic registration is HUF 0. The minimum share capital of a Kft. is HUF 3 million, but this is the company’s money. The main costs are the lawyer’s services, the registered address and the accountant. Our packages are on the Company registration page.
Since 2026 corporate tax in Cyprus has risen to 15%, while in Hungary it is 9%. On the other hand, Cyprus has lower VAT (19% versus 27%) and dividend tax. The choice depends on where your clients are, whether you plan to take out profits and where you want to live.
Estonia does not tax profit while it stays in the company, but when dividends are paid the company pays 22%. In Hungary profit is taxed immediately, but at 9%. If you regularly take out profits, Hungary is usually better; if you reinvest for years, it is worth calculating both options.
A company can be a basis for a residence permit for its owner or director if it carries on real business activity. Details are on the Business immigration page.
Start with a free consultation: we will look at your business, calculate the taxes and tell you whether Hungary suits you.
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