Investment Policy
Officially acceded to the EU in 2004, Hungary is the member state of the World Trade Organization (WTO), European Free Trade Association (EFTA) and Central European Free Trade Agreement (CEFTA), but not the euro zone. Since Jan 1, 2001, Hungary has eliminated the quota on products imported from the member states of the World Trade Organization.
Hungarian laws are in line with that of the EU. As the country’s most important law, the Hungarian Civil Code stipulates the relationship between natural persons and legal persons. It covers various areas of business management, such as the making, implementation and termination of contracts and the basic regulations on mortgage and guarantee, and regulates the establishment, organization and operation of enterprises registered in Hungary and the rights, duties and obligations of their founders and members. Business organizations can register in the forms of limited partnership (Bt.), limited liability company (Kft.) and company limited by shares (Rt.).
Compared with other Central and Eastern European countries, Hungary has marked advantages: the Hungarian government makes great efforts to raise its competitive edge through streamlining processes of doing business and attracting foreign investments, and offers a series of preferential policies such as enterprise subsidy (from the Hungarian government or EU funds), tax allowance, low-interest loans and land premium waiver.
Preferential Policy | Form | Amount of the subsidy | Conditions | Application |
Government subsidy | Non-refundable cash grants; cannot apply for EU co-financed tenders at the same time | Subsidy with Individual Government Decision | Investment min. EUR 20M and min. 100 new jobs (Central and Western Transdanubia, and Central and Western Hungray) Investment min. EUR 10M and min. 50 new jobs (Southern Transdanubia), Northern Hungary and Northern and Southern Great Plain) | Related materials submitted to the Hungarian Investment Promotion Agency (HIPA) |
EU co-financial tenders | Non-refundable cash grants, post-financed
| No more than 35% of the amount of investment, around EUR 370,000-3.7M | Investment min. EUR 1M, new jobs, invest in non-Central Hungarian regions | Request should be submitted to the Hungarian Center for Economic Development (HCED), subsidy is provided by the Ministry of National Economy |
Development tax allowance | Tax allowance following the completion of the investment | Exemption for 80% of the corporate tax payable for 10 years following the fulfillment of the investment; 10% income tax for enterprises with a turnover lower than HUF 500M; 19% for turnover over HUF 500M | Investment min. EUR 11.3M, min. 150 new jobs; investment in prioritized development regions min. EUR 3.7M, min. 75 new jobs | Subsidy is provided by the Ministry of National Economy |
Training subsidy | Non-refundable cash grants | 25%-90% of eligible training costs. Max. EUR 1M if job creation is between 50-500, max. EUR 2M if job creation is over 500 | Min. 50 new jobs; subsidy is decided individually by the Hungarian government | Letter of intent needs to be submitted to the Hungarian Investment and Trade Administration (HIPA), subsidy is provided by the Ministry of National Economy |
Job creation subsidy | Non-refundable cash grants | EUR 1.26M per project 4400-8150 Subsidy of EUR per new job, available only for small enterprises | Min. 500 new jobs in preferred regions; subsidy is decided individually by the Hungarian government Min. 2 new jobs | Letter of intent needs to be submitted to the Hungarian Investment and Trade Administration (HITA), subsidy is provided by the Ministry of National Economy Application should be submitted to regional labor office every Feb.-Mar., provided by the Ministry of National Economy |
Workshop establishment aid | Non-refundable cash grants | Max. EUR 2M | Min. 50 employees with student contracts, and provide job training | Letter of intent needs to be submitted to competent ministry |
2014 Hungarian Preferential Policies for Foreign Investment Attraction
Source: The Hungary Investment Promotion Agency (HIPA)
In addition, tax incentivized investors are eligible for claiming EU subsidies, which are allocated through government plans. 2014-2020 European Structural and Investment Funds is planned to provide EUR 25B to Hungary through nine plans including national five operational programs (OP), regional programs, rural development programs and fishing programs, with an aim to increasing information and telecommunication technology coverage, raising competitive edge of SMEs, eliminating poverty and improving the efficiency of energy use.