Investment opportunities in Hungary: best ways to invest in a strong economy in the CEE region

1. Investor-friendly legal environment. As Hungary is an EU member, its legislation is fully transparent and harmonised with EU law. The process of company registration under a simplified procedure takes 1—2 days, and the costs are low compared to other EU countries.

Terms of the Hungary Golden Visa for property investors

2. Solid banking system. The Hungarian banking system is considered one of the healthiest and most developed in Central and Eastern Europe. There are about 40 banks, including branches of major European banks such as OTP Bank, Raiffeisen Bank, and Erste Bank.

Opening bank accounts is available to both residents and non-residents. Hungarian bank account holders can make facilitated bank transfers to other EU countries via the SEPA system.

3. Business-friendly tax regime. In Hungary, companies pay an income tax at a flat rate of 9%. To compare, in neighbouring Austria, the corporate income tax is 25%; in Germany, the total tax paid by companies may reach 30%.

Hungarian companies also pay no withholding tax on outbound payments to foreign businesses.

The general VAT rate is 27%, which is high when compared to other EU countries. However, there are reduced VAT rates of 5% and 18% applied to certain categories, such as bread, dairy products, medicines, or internet and accommodation services.

4. Subsidies and incentives for businesses. The Hungarian Government offers a range of measures to support business competitiveness. They include regional and non-regional aid from funds, VIP investment cash subsidies, and tax incentives for certain types of businesses and investment projects.

5. Favourable location. Hungary is located at the crossroads of major transport paths, allowing quick access to any part of Europe. It ranks 5th in railway density in the EU and has three international airports. The one in Budapest offers direct flights to more than 120 destinations worldwide.

6. Affordable cost of living. The Hungarian price level indices for consumer goods and services are 30% lower than the EU average. Prices for electricity, gas, and fuels are the lowest in the EU, according to Eurostat.

7. Opportunity to obtain residency when investing in real estate. Foreigners purchasing property in Hungary can get a residence permit for 10 years. To qualify, they buy a residential property for at least €500,000.

The economy of Hungary ranks 47th in the world per GDP per capita and 56th in terms of the total GDP, as per the International Monetary Fund data. The GDP per capita is comparable to those of Portugal and Poland. From 2017 to 2022, it increased from around 69% to 74,7% of the EU average and reached the level of $23,000 in 2023.

The country showed a stable economic recovery after the COVID‑19 pandemic. However, in Q3 2023, the economic growth slowed down and showed a decrease of 0,4% compared to Q3 2022. In 2024, the country’s economy is expected to grow by 2.5—3.5%.

Up to 80% of the country’s GDP accounts for exports. Hungary’s most important trading partners in the EU are Germany, Italy, and Romania. The largest non-EU export partner is the United States.

Key sectors of the Hungarian economy include building materials, food, textiles, chemicals, motor vehicles, IT, electronics, and software.

The labour market has improved significantly in the recent decade. The current employment rate is around 64%, which is above the EU average and the third highest in Central Europe.

The values are measured by the purchasing power parity and represented in thousand dollars. Source: International Monetary Fund

The Hungarian Government encourages investments in business. To promote foreign direct investments, it continuously improves the taxation system. Currently, Hungarian companies pay the EU lowest corporate tax — at a 9% rate regardless of the income.

The best investment business areas in Hungary are automotive, electronics, IT, battery, medical technologies, life sciences, foods, and logistics.

Hungarian businesses can benefit from various subsidies and incentives provided by both the government and different funds.

The VIP cash subsidy system enhances business competitiveness. It is a non-refundable cash grant provided for investment, job creation, R&D, and training projects. The subsidy amount may reach 50% of eligible investment costs depending on the investment type and the region in which the company is registered.

Other eligibility criteria for subsidies may include maintaining investments for a certain number of years, creating the stated number of jobs, and showing an increase in wage costs or base sales revenue.

Tax incentives allow businesses to optimise their taxes. The development tax incentive may be claimed for 13 years from the year of the investment and allows a deduction of up to 80% of the annual payable corporate income tax.

Tax incentives for energy efficiency investment projects depend on the location of the investment and allow deduction of up to 45% of eligible costs, with a maximum amount of €15 million. A company may claim the incentive from the tax year the investment is made and in the following five tax years.

Hungarian legislation allows foreigners to purchase property. To do this, they must obtain permission from the competent government agency. The deal is always accompanied by the lawyer who obtains permission and communicates with the authorities on the investor’s behalf.

Guide to buying real estate in Hungary

Property prices in Hungary are continuously increasing: since 2015, they have risen by 2.5—3 times.

The average property price per m² in 2024 is about €2,360. The most expensive real estate is located in Budapest: here, the average price is €2,900 per m², reaching €5,500 per m² in prestigious and tourist parts of the city.

Most real estate expenses include the 4% stamp duty for the title transfer, administrative fees, and charges for legal, realtor, and notary services. Total accompanying expenses usually equal 10% of the property price.

When selling the property, the investor pays a capital gains tax at 15% of the difference between the purchasing and selling price.

Foreign investors can buy real estate to obtain a residence permit. To qualify, they need to purchase property for at least €500,000 and pay stamp duty and administrative fees.

Examples of Hungarian properties qualifying for a residence permit by investment

Hungary, Budapest

from €510,000

Cosy and large apartments with 2 bedrooms, Fifth District, Budapest

77 m²

2

2

Hungary, Budapest

€552,000 — €581,000

Elegant apartments with 4 bedrooms, Eleventh District, Budapest

103 m² — 124 m²

4

3

Hungary, Budapest

from €642,000

Classic three-bedroom apartment, Ujbuda, Budapest

150 m²

3

3

The Hungary Golden Visa program allows investors in Hungarian property to obtain a 10-year residence permit in the country. Thus, Golden Visa holders can move to Hungary and stay there for more than 90 days out of 180.

A spouse and children under 18 obtain residence permits together with the investor.

Residency can be renewed once for an additional 10 years. To be eligible for an extension, the investor must still possess the investment property.

Investors are only allowed to buy residential property worth at least €500,000 in any part of the country. The property can be new or a resale one.

Other investment options available under the Golden Visa program are a €250,000+ investment in local real estate funds and a €1,000,000+ donation to an institution of higher learning.

Foreign nationals wishing to invest in Hungarian shares and bonds turn to the Hungarian stock market represented by the Budapest Stock Exchange. Securities are traded online via the special system and can be purchased at exchange dealers.

Buying government securities at the Hungary stock market is the most conservative and safe investment tool. Most securities offer regular coupons and are fully repaid at their maturity. Interest rates depend on the issue date, maturity period, and the current inflation rate in the case of securities with a floating coupon. The current average interest rate ranges from 6.2 to 6,8%.

Hungarian government securities are available to both residents and non-residents. Non-residents make purchase and sell transactions in accordance with the legislation of Hungary and the country of their residency.

Source: Government Debt Management Agency of Hungary

1. Hungary encourages foreign investments. It offers an investor-friendly legal environment, low corporate income tax rate, and various subsidies for business.

2. The Hungarian economy ranks 56th in the world per total GDP and is expected to grow by 2.5—3.5% in 2024.

3. Investors benefit from various grants and tax incentives provided by the Government. The corporate income tax for businesses is 9% — the lowest in the EU.

4. Hungarian government securities are a conservative and safe investment tool that can bring a yield of 6.2—6.8% per annum.

5. Foreign citizens are also allowed to purchase real estate in Hungary. Investors buying residential property for at least €500,000 can obtain a Golden Visa for 10 years.