Hungary Country Profile taxation trade issues

Hungary

TAXES - ACCOUNTING

Corporate tax

Tax rate for resident companies	16%

Tax rate on long-term capital gains	The tax rate on long-term capital gains is 16%.

System governing groups of companies and dividends paid by subsidiaries to their parent companies	Since January 1st, 2006, dividends paid to resident or non-residents companies are not withheld at source.

Tax rate on branches	Branches are subject to general corporate taxation rules .

Income tax

Fiscal year

The fiscal year begins on January 1st and ends on December 31st of the same year.

Income tax rate

The incomes of individuals are subjected to a progressive tax rate that varies between 18% and 38%.
Tax schedule 2004:

Income	Rate
0 - 800 000 HUF	18%
800 001 - 1 500 000 HUF	26%
> 1 500 000 HUF	38%

Tax deductions or other allowances

Tax deduction are allowed as
school fees, interests paid annually for the purchase of a house, and sums paid to charity sales.

VAT rates

Standard rates	20%

Reduced rates	A 5% rate applies to textbooks and certain medical materials and supplies. Financial services, health and education services, and leases of dwellings are exempt.

Other important taxes

Name of tax	Rate
Gifts and inheritance tax	11 - 15%
Tax on transfer of large patrimony	2 to 6% for the housing and 10% for the rest of the patrimony.

Accounting

Introduction
Accounting as in all ancient soviet countries is regulated by the Ministry of Finance and undergoes a big influence on behalf of the government.

General accounting principles
The balance sheet is presented into accounts with liabilities composed of constant capital and debts, because there is a distinction between long and short-term debts.
The profit and loss account gives priority to the repository of the global production and lets the choice of the cost classification either by nature or by function.

Obligations and publications
Companies have to produce a balance sheet, a profit and loss account and an appendix.

Certification and auditing
The external control of the accounts must be given to a body of external auditors chosen by the company.

Professionals and representative organizations
Accountants associations have some difficulties to get organized, because of the importance of the State in the accounting system.

Useful links

Business2hungary.com
Ministry of Finance
Tax Administration
Customs Administration

Last modified in January 2007