Hungary's 9% corporate tax rate is the lowest in the EU, and it's a genuine, permanent headline rate rather than a temporary incentive. What often gets left out of the pitch is that Hungary also charges the EU's highest VAT rate, 27%, plus a separate local business tax on revenue. Here's what it takes to start a business in Hungary in 2026.
1. Which business structure fits you?
Before you register anything, it helps to know what you're actually choosing between.
- Egyeni vallalkozo (individual entrepreneur). Hungary's sole trader route, with a simplified fixed-payment regime (KATA) available for qualifying small operators.
- Kft (Korlátolt Felelősségű Társaság). Hungary's standard private limited liability company, and the most common choice for foreign investors. Minimum capital is HUF 3,000,000, roughly €7,300 to €7,700.
Foreign entrepreneurs can own 100% of a Hungarian company with no residency or nationality restrictions for directors or shareholders, though non-EU nationals do need a business residence permit to actually live and work there.
2. Register your business
Company formation runs through the Court of Registration (Cégbíróság) via the Cégjegyzék system, and documents must be countersigned by a lawyer, a mandatory step under Hungarian law. Standard Kft formations using simplified electronic filing typically register in 1 to 3 business days. The government registration fee itself is modest (around €150), but full formation packages including legal work, a registered address, and tax number setup generally run €1,800 to €2,500.
3. Get your tax number
Once your company is registered, the tax authority (NAV) generates your tax number within about two days, and that same number automatically serves as your EU VAT identification number, no separate VAT application needed. You must open a Hungarian bank account within one year of incorporation, or the company risks being removed from the trade registry.
4. Check licenses and permits
Hungary doesn't issue a single national business license. What you need depends on your industry; certain regulated sectors carry their own permits on top of standard registration.
5. Understand Hungarian taxes
Corporate income tax is a flat 9%, the lowest in the EU, applied to positive taxable income after depreciation and amortization adjustments. On top of that, most municipalities levy a Local Business Tax of up to 2%, calculated on gross revenue rather than profit, with the exact rate depending on the city. Distributing profit as dividends triggers a further 15% personal income tax plus a capped 13% social contribution on the distribution.
VAT is 27% standard, the highest in the EU, with reduced rates of 18% and 5%. Small businesses with annual turnover under HUF 20,000,000 (roughly €48,000 to €50,000) can elect a VAT exemption, a threshold scheduled to rise to HUF 22 million in 2027 and HUF 24 million in 2028.
6. Stay compliant
Every Hungarian company keeps full double-entry books and files monthly VAT returns if VAT-registered, along with an annual report due by May 31. Real-time e-invoicing is required. A realistic annual compliance budget for a properly run Kft is €3,000 to €6,500, well above what the initial incorporation quote alone suggests.
Hungary business costs at a glance
| Item | Cost |
|---|---|
| Kft minimum capital | HUF 3,000,000 (~€7,300 to €7,700) |
| Kft formation (full package) | ~€1,800 to €2,500 |
| Tax number / EU VAT ID | Free, automatic |
| Corporate tax | 9% |
| Local business tax (on revenue) | Up to 2% |
| Dividend tax + social contribution | 15% + up to 13% |
| VAT, standard rate | 27% |
| VAT exemption threshold | ~HUF 20,000,000 turnover |
Frequently asked questions
What's the corporate tax rate in Hungary?
A flat 9%, the lowest in the EU.
How much capital do I need to start a Kft in Hungary?
HUF 3,000,000, roughly €7,300 to €7,700.
What's the VAT rate in Hungary?
27% standard, the highest in the EU, with reduced rates of 18% and 5%.
How much does it cost to form a Kft in Hungary?
Full formation packages including legal work, a registered address, and tax number setup generally run €1,800 to €2,500.
Can a foreigner own 100% of a Hungarian company?
Yes, with no residency or nationality restrictions for directors or shareholders, though non-EU nationals need a business residence permit to actually live and work there.
Fees and rates above come from the Hungarian Court of Registration and the National Tax and Customs Administration (NAV) as of 2026, and they do change over time, so double check before you file. None of this is legal or tax advice. Talk to a Hungary-qualified accountant or lawyer about your specific situation.