Hungary as a European investment andimmigrantsPopular destinations for theirLow tax rates, tax incentivesrespond in singingEU market accessIt attracts a large number of foreign investors and immigrants. Whether you are an entrepreneur, an investor or an individual wishing to settle in Hungary on a long-term basis, tax issues are an unavoidable and important part of the process. So.Immigration to HungaryWhat are the tax obligations of foreigners after How to take advantage of Hungary's tax advantages to reduce the tax burden? This article will provide an in-depth analysis of the Hungarian tax system to help you plan your finances wisely and achieve tax optimization.

I. Overview of the Hungarian tax system

The Hungarian tax system is mainly divided intoPersonal Income Tax (PIT), Corporate Tax (CIT), Value Added Tax (VAT), and Social Security Tax. In general, Hungary has lower tax rates than Western European countries, which makes it especially attractive for businesses and investors.

1. Personal income tax (PIT) - one of the lowest in Europe

Adopted by Hungaryflat taxPersonal income tax is levied and applies to all residents and non-residents:

• Harmonized tax rate: 15%(no progressive rates)
• Applies to wages, bonuses, dividends, rents, capital gains, etc.
• Possible tax treaty protection for overseas income

Compared to other European countries (Germany up to 45%, France up to 55%), Hungary's15% Harmonized tax rateIt appears to be extremely competitive. For higher income earners, this means a lower tax burden.

2. Corporate Income Tax (CIT) - the lowest corporate tax rate in the EU

Corporate Income Tax (CIT) in Hungary isLowest in the EU at 9%, which applies to all companies, regardless of size. This makes Hungary a preferred place of incorporation for many multinationals and entrepreneurs.

• 9% Harmonization of corporate taxesApplies to all corporate profits
• No capital gains tax(applicable to equity transactions under certain conditions)
• No dividend tax (if dividend is paid to foreign parent company)
• Allowable loss carry-forward(up to 5 years)

For investors who want to set up a company in Europe, Hungary's 9% corporate tax rate is attractive as it is much lower than that of countries such as Germany (15% + 5.5% surtax) and France (25%).

3. Value added tax (VAT) - applicable to business activities

HungarianValue Added Tax (VAT) is the higher level in the EU, but preferential rates are available for specific goods and services:

• Standard rate: 27%(highest in EU)
• Preferential Tax Rate: 5%-18%(applicable to specific commodities, e.g., food, pharmaceuticals, accommodation services, etc.)

Despite the higher VAT, for export-oriented businesses or cross-border e-commerce companies, Hungary allows for theVAT exemption for exportsThis provides international trading firms with greater scope for tax incentives.

4. Social security tax and other taxes

If you work or hire employees in Hungary, you are required to pay Social Security Tax (SST):

• Individual Employee Contribution: 18.5% (gross salary)
• Employer's contribution: 13% (gross wages)

Compared to other EU countries (Germany totaling about 401 TP3T and France about 501 TP3T), Hungary has a relatively light social security tax burden.

II. Tax residency and tax obligations of foreigners

1. How to become a tax resident of Hungary?

If you meet one of the following conditions, you will be considered to beTax residents of Hungary, need to pay taxes on global income:

• Residence in Hungary more than 183 days/year
• Possession of a residence permit or long-term visa for Hungary
• Center of family or economic interests in Hungary

Tax residents are taxed on worldwide income, while non-tax residents are taxed only on theIncome from Hungarian sourcesPayment of taxes (e.g. wages, rent, company profits in Hungary).

2. Tax obligations of non-tax residents

If you arenon-tax resident, only income received in Hungary (e.g., salary, dividends, rent) is taxed, and the same 15% personal income tax and 9% corporate tax applies.

In addition, Hungary has signed agreements with a number of countries (including China, the United States, Canada, etc.)Double Taxation Treaties (DTTs)In addition, it avoids double taxation of the same income by both countries.

Third, the tax advantages of immigrating to Hungary

1. Low corporate tax, suitable for start-ups and investments

• Corporate income tax only 9%More than half as much as Western European countries
• No capital gains tax(Qualifying equity transactions)
• Multinationals can use Hungary as a European tax transit location

2. Low personal income tax for high income earners

• Personal Income Tax 15%, applicable to salaries, bonuses, dividends, etc.
• No inheritance tax, no gift tax(applicable to immediate family members)
• Capital Gains Tax 15%, applies to investment income from stocks, funds, etc.

3. Tax exemptions for real estate investment

• Exemption from capital gains tax on the sale of real estate held for more than 5 years
• 15% tax rate applied to rental income (with credit for related costs)

4. Overseas income tax optimization

• Hungarian Tax Residents Can Avoid Double Taxation by Utilizing Double Taxation Agreements
• Tax exemptions or low tax benefits for some foreign income

IV. Tax planning suggestions for immigrants to Hungary

1. Choosing the best identity: Decide whether to apply based on individual needsLong-term residence(only Hungarian income is taxed) ortax resident(Taxation of worldwide income).
2. Reasonable planning of income sources: If there is overseas income, double tax treaties (DTTs) can be used to optimize the tax burden.
3. Taking advantage of corporate tax: If you have business plans, you can register your company in Hungary and enjoy 9% ultra-low corporate tax.
4. Real estate investment: If you are planning to buy a house in Hungary, hold as much as possibleMore than 5 years, to avoid capital gains tax.
5. Rationalizing the Use of Social Security Taxes: If you plan to work in Hungary, you need to be aware of the obligation to pay social security tax to avoid unnecessary expenses.

V. Summary

Hungary by virtue ofLowest corporate tax rate in Europe (9%) and relatively low personal income tax (15%), becoming one of the most attractive immigration destinations in Europe. Whether for investment, entrepreneurship, or long-term settlement, Hungary offers a wealth of tax incentives for immigrants to provide great tax optimization space. If you plan to immigrate to Hungary, you might as well do your tax planning in advance to maximize the tax advantages and achieve wealth preservation and growth!