Tax optimisation in Hungary: alleviating financial burden by moving to the EU
With Europe’s lowest corporate income tax rate of 9%, a simplified flat personal income tax of 15%, Hungary stands out as one of the top jurisdictions for tax optimisation.
In this detailed guide, we explore key aspects of Hungary’s tax residency rules and beneficial tax regimes such as the KATA. Also, we highlight how residency options, including the Hungary Golden Visa, can further amplify your tax savings and streamline international business operations.

Clarified Hungary’s tax optimisation nuances
Fact checked byPaul Lauber
Reviewed byVladlena Baranova

Tax optimisation in Hungary: alleviating financial burden by moving to the EU
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Introduction to the Hungarian tax system
Hungary’s tax system is consistently ranked among the most competitive and investor-friendly in Europe. This reputation stems from its low flat tax rates on both personal and corporate income, a range of special tax regimes such as the KATA, and accessible options for foreign nationals to obtain residency and benefit from local tax advantages.
Europe’s lowest corporate tax. At the core of its appeal lies the exceptionally low corporate income tax rate of just 9%, which stands out as the lowest among all EU member states.
Flat personal income tax. Hungary stands out in the EU by applying a flat 15% income tax, not a progressive scale like most other member states. This straightforward approach not only simplifies tax compliance but also significantly reduces the tax burden for high-income individuals, entrepreneurs, and companies.
Simplified taxation for small taxpayers. The KATA lump-sum system is a simplified tax regime in Hungary designed for small taxpayers such as freelancers.
There is an annual income limit of HUF 18 million or €48,000 under the KATA system. To stay within the regime, individuals pay a fixed monthly fee of HUF 75,000, or €200, which covers all personal income tax and social security obligations.

Ferenc Tihánszky,
Head of the Hungarian office
Hungary is not just about low corporate and personal income taxes. It also offers savings through specialised tax incentives. Companies involved in research can significantly reduce their effective tax rates thanks to the generous R&D credits, while digital nomads and freelancers benefit immensely from the simplified and affordable KATA lump-sum system.
Advantages for taxpayers from other countries. For residents of high-tax jurisdictions such as the US, UK, and Israel, Hungary’s tax regime may provide substantial relief. Hungary’s double taxation treaties with these countries further streamline cross-border financial activities, making money transfers to Hungary efficient and tax-advantageous.
Obtaining Hungarian tax residency. Spending 183 days or more within a calendar year in Hungary qualifies one as a Hungarian tax resident.
However, the Hungarian authorities may also apply the centre-of-interests test, which considers where a person’s principal economic and personal ties are located. Key factors include:
location of one’s main business or professional activity;
residence of close family members;
ownership or lease of real estate in Hungary;
local bank accounts or habitual place of living.
So, it is possible to become a Hungarian tax resident without spending 183 days in the country, if your centre of vital interests, such as business, property, family, or habitual residence, is in Hungary. It is particularly relevant for mobile individuals who split their time between countries or maintain international business operations.
In both cases, whether based on days of presence or centre of interests, formal registration with the Hungarian tax authority is required to be recognised as a tax resident.
Foreigners can obtain Hungarian residence by investment by applying for the Hungary Golden Visa, officially known as the Guest Investor Permit. This route allows non-EU nationals to acquire long-term residency in Hungary by making a qualifying investment.
Once residency is granted and the individual begins to physically reside in Hungary, they may become tax residents under the 183-day rule or, in some cases, based on the centre-of-interests test.

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Historical trends: Hungary tax cut timeline and comparison with other European countries
Over the past decade, Hungary has consistently lowered its tax rates to attract foreign investment, stimulate economic growth, and simplify fiscal compliance. The most impactful tax reforms began in 2017, significantly reshaping the country’s business and individual tax environment.
Personal income tax reforms. Before 2011, Hungary had a progressive PIT system with rates of 17% and 32%. In 2011, the PIT system was overhauled to implement a flat rate of 16%.
In 2016, the flat PIT rate was further reduced to 15%, simplifying the tax structure and reducing the tax burden on individuals.
From 19% to 9% corporate tax. In 2017, Hungary implemented a groundbreaking reform, drastically reducing the corporate income tax rate from 19% to just 9%, positioning itself as the EU’s lowest-tax jurisdiction for businesses.
As a direct result of the reform:
Large companies that previously paid the 19% rate saved an estimated HUF 132 billion in 2017 and HUF 140 billion in 2018.
Smaller companies, which saw their tax rate fall from 10% to 9%, collectively saved HUF 20 billion annually over the same period.
The reform reinforced Hungary’s reputation as a tax haven within the EU that can compete with traditional low-tax countries like Cyprus or Ireland.

Overview of the 2025 tax cuts
Hungary’s 2025 tax reform package aims to stimulate domestic consumption, support families, and attract international investment. Here are the key measures announced for 2025.
Expanded family tax benefits. Income tax benefits for families will double in two stages by January 2025, providing greater relief for households with children.
Personal income tax exemption for mothers with 2—3 children. Starting October 2025, mothers of three children are fully exempt from paying personal income tax.
Reinforced R&D tax incentives. Businesses involved in innovation and technology development will benefit from enhanced tax credits. It allows up to 200% of eligible costs to be deducted from the corporate tax base and potentially reduces the corporate income tax liability to zero.
KATA regime expansion. The simplified flat-tax regime for freelancers and small entrepreneurs will be adjusted to include more eligible professions and provide greater annual income thresholds, allowing digital nomads and self-employed residents to legally minimise taxes through a fixed monthly payment.
Core taxes and rates: Hungary tax benefits table
Hungary’s tax framework combines low rates and simplified structures, presenting significant benefits for both companies and individuals. The 15% flat personal income tax and Europe’s lowest 9% corporate income tax rate are cornerstones of Hungary’s attractiveness for tax optimisation.
Social security contributions, payable by both employers and employees, are moderate compared to other EU countries, and further opportunities for optimisation exist through Hungary’s flexible local business taxes, which range from 0 to 2%, depending on the municipality.
Hungary’s KATA lump-sum taxation regime simplifies compliance, making it particularly appealing to freelancers, digital nomads, and small-scale entrepreneurs.
The table below summarises the key taxes and their rates, clearly illustrating why Hungary is increasingly becoming a preferred choice among businesses and individuals from high-tax jurisdictions:
Hungary tax rates
Double taxation treaties and international reporting
Hungary maintains comprehensive double taxation treaties, DTTs, with over 80 countries, including the United States, the United Kingdom, and Israel. These treaties significantly reduce or eliminate double taxation on income earned internationally.
Important provisions within double tax treaties include articles on:
Residency. Clarifies tax residency, preventing dual residency conflicts through tie-breaker tests such as permanent home, centre of vital interests, habitual abode, and nationality.
Dividends. Limits withholding tax rates on cross-border dividend payments, usually capping rates between 5—15%, thus enabling efficient repatriation of profits.
Interest and royalties. Often reduces withholding tax rates on interest and royalty payments, fostering intellectual property strategies and financing arrangements.
Capital gains. Typically exempts certain cross-border gains from taxation in the source country, facilitating beneficial asset management strategies.
Double taxation. Provides mechanisms such as foreign tax credits or exemptions, ensuring taxpayers aren’t taxed twice on the same income.
Beyond double taxation treaties, Hungary adheres to the international reporting framework, the Common Reporting Standard globally. Under the CRS framework, Hungary exchanges financial account information with over 100 jurisdictions globally. Investors must ensure accurate disclosures to avoid compliance issues.
Hungary tax benefits for citizens from the United States
The United States uses a citizenship-based taxation model, meaning that US citizens are required to file and pay taxes to the IRS regardless of where they live or earn income. However, the US–Hungary double taxation treaty helps avoid being taxed twice on the same income.
If you relocate to Hungary and become a Hungarian tax resident, you’ll typically pay 15% personal income tax on your worldwide income. Under Hungary’s double taxation treaties, this tax can often be credited against your US tax liability, helping reduce or even eliminate double taxation.
By contrast, if you are a non-resident, Hungary taxes only Hungarian-source income and does not tax foreign-source income at all.
In either case, Hungary’s comparatively low tax rates can substantially reduce your total effective global tax burden.
Hungary complies fully with FATCA, automatically sharing information with US tax authorities. Americans residing in Hungary must report foreign financial accounts and income to the IRS annually, although Hungary’s favourable tax rates significantly mitigate overall tax exposure.
Hungary’s tax climate creates tangible financial benefits. Particularly for high earners, entrepreneurs, and multinational businesses, relocating tax residency or business operations to Hungary can reduce their overall tax burden dramatically.
Hungary presents considerable tax savings opportunities compared to its counterparts.
Hungary tax benefits for citizens from the United Kingdom
The UK is abolishing the non-domiciled tax status, meaning UK residents will be taxed on their worldwide income, regardless of whether it is remitted to the UK. This change aligns the UK system more closely with residence-based models and makes relocation to Hungary even more relevant for high earners.
By moving tax residency to Hungary, you can access a flat 15% personal income tax and a 9% corporate tax on business profits.
Thanks to the UK–Hungary double taxation treaty, income will be taxed in only one country, with relief available via foreign tax credits.
While Hungary doesn’t offer a specific "remittance-basis" tax regime like the UK, its low, flat PIT of 15% inherently reduces the need for complex offshore planning.
UK citizens moving tax residency to Hungary should carefully structure income streams and asset ownership to benefit from favourable treaty terms and Hungary’s simpler taxation environment.
Hungary tax benefits for citizens from Israel
Israel taxes its residents on worldwide income, and top marginal personal income tax rates can reach up to 50%, with corporate income taxed at 23%. However, Israel also has a residence-based tax system, and the Israel–Hungary tax treaty provides relief against double taxation.
After becoming a Hungarian tax resident, you may pay Hungarian tax only and apply exemptions or credits in Israel based on treaty terms.
Hungary’s lower flat tax rates make it attractive for relocating your main centre of economic activity, especially if you operate a business or hold dividend-generating investments.
Dividend and royalty flows can be structured efficiently through Hungarian holding companies, using treaty-reduced withholding rates.
How to pay taxes in Hungary
Hungary’s tax administration system, managed by the National Tax and Customs Administration, NAV, is modern and user-friendly, making tax compliance efficient, especially for international taxpayers.
Personal Income Tax declarations must be filed annually by May 20th, covering income earned during the previous calendar year.
For businesses registered for Value Added Tax, reporting frequency is typically monthly or quarterly, with VAT returns due by the 20th day of the month following the reporting period.
Entrepreneurs using the KATA lump-sum tax regime must pay their monthly fixed tax by the 12th day of each month, and an annual summary declaration must be submitted by February 25th each year.
Here is a clear step-by-step guide for fulfilling your Hungarian tax obligations.
1. NAV registration and obtaining your tax ID. Upon establishing tax residency or starting a business in Hungary, you must register with the NAV. Individuals and companies receive a Hungarian tax identification number, required for all tax transactions and filings.
2. Accessing the e-BEV portal. NAV provides the electronic tax portal called e-BEV, accessible in English, making online tax reporting straightforward. Through this portal, taxpayers can:
File personal income tax and VAT returns.
Monitor tax account balances.
Request certificates or tax clearances.
Submit and amend filings electronically.
3. Payment. Taxes can be paid via several convenient channels:
bank transfers — recommended for international taxpayers;
online payments via e-BEV portal;
cash payments, usually via postal cheque.
NAV provides clear payment instructions, including account numbers and reference details, within e-BEV or official notifications.
3 ways to become a Hungarian tax resident and benefit from its tax system
Hungary offers several legal pathways to obtain residency and access its competitive tax regime. Depending on your goals, family situation, or type of income, one of the following three options may be the most suitable for your tax optimisation strategy.
1. Golden Visa, or Guest Investor Permit. It is an investment program that allows non-EU nationals to obtain long-term residence in Hungary. The minimum required amount is €250,000, typically directed into approved national investment funds. It is a suitable option for high-net-worth individuals.
2. The White Card, or the Digital Nomad Visa is ideal for remote professionals and freelancers. The White Card grants residency to third-country nationals who work online for foreign employers or run remote businesses.
Applicants must prove a monthly income of at least €3,000 and cannot engage in Hungarian local economic activities.
3. Business Residence Permit. Foreign entrepreneurs who wish to start or expand operations in Hungary can apply for a residence permit based on business activity. The minimum recommended investment to establish and sustain a company is approximately €30,000, covering incorporation, office lease, and operating costs.
Each of these residency pathways opens the door to Hungary’s favourable tax rules, but they differ in terms of eligibility, investment size, and flexibility.
In the following sections, we take a closer look at each option to help you choose the most suitable route for your tax residency and optimisation goals.
Integrating Golden Visa investment into the Hungary tax optimisation plan
The Hungary Golden Visa allows non-EU investors to obtain residence in Hungary by contributing to the country’s strategic development. Applicants must meet one of the following qualifying investment conditions:
Make a minimum contribution of €250,000 to a government-approved real estate fund.
Donate at least €1,000,000 to a designated public-interest trust supporting cultural or educational initiatives in Hungary.
Successful applicants receive long-term residence rights in Hungary and may include eligible family members under the same application. There are no requirements to own property in Hungary, but the local address is mandatory.
Hungary Golden Visa holders are granted visa-free access to the Schengen Area. They are eligible to stay in any of the 29 Schengen countries for 90 days every 180-day period.
Using fund investments for residency and tax planning. The fund-based investment route offers more than just a residence permit — it can serve as part of a broader tax strategy. While the contribution itself is not tax-deductible, investors can use their residency status in Hungary to access the country’s exceptionally low personal and corporate tax rates.
High-income individuals can benefit from Hungary’s flat 15% PIT, substantially lower than top marginal rates in the US, UK, or Israel.
Establishing a Hungarian holding company taxed at only 9% can further optimise dividend flows and asset management within the EU.
Though Golden Visa contributions are fixed and non-refundable, strategic structuring of business and investment income through Hungary offers:
tax-efficient dividend distribution under Hungary’s extensive network of double taxation treaties, often reducing withholding taxes to 0—10%;
use of Hungarian residency to support international wealth management, estate planning, and corporate relocation strategies;
integration with Schengen mobility and EU compliance frameworks such as CRS and FATCA.
Step-by-step process of obtaining Hungary Golden Visa
The entire process takes a minimum of 5 months, after which successful applicants can relocate, obtain Hungarian tax residency, and start benefiting from the country’s favourable tax rates and double taxation treaties.
1—2 weeks
Get professional assistance
Immigrant Invest experts will assist a potential applicant in navigating the steps required to obtain a residence permit in Hungary.
Immigrant Invest experts will assist a potential applicant in navigating the steps required to obtain a residence permit in Hungary.
1 day
Preliminary Due Diligence
A preliminary check is required to anticipate and reduce any risks of rejection. The check is fully confidential.
A preliminary check is required to anticipate and reduce any risks of rejection. The check is fully confidential.
2 weeks
Preparing documents
The investor gathers documents for a Guest Investor Visa application as per the list provided by the expert.
The investor gathers documents for a Guest Investor Visa application as per the list provided by the expert.
1 week
Applying for a Guest Investor Visa
If the application is approved, the investor receives a six-month Guest Investor Visa. During this period, they must enter Hungary and apply for a residence permit.
If the application is approved, the investor receives a six-month Guest Investor Visa. During this period, they must enter Hungary and apply for a residence permit.
Up to 93 days
Travelling to Hungary and investing
After the first entry to Hungary with the Guest Investor Visa, the foreigner has 93 days to complete the investment and submit their residence permit application.
After the first entry to Hungary with the Guest Investor Visa, the foreigner has 93 days to complete the investment and submit their residence permit application.
3 days
Applying for a residence permit
Applications can be submitted:
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online via the Enter Hungary website;
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in person at the regional directorate of the National Directorate-General for Aliens Policing.
In both cases, the applicant must be present in Hungary.
Once the application is approved, the investor schedules an appointment with a migration office.
Applications can be submitted:
-
online via the Enter Hungary website;
-
in person at the regional directorate of the National Directorate-General for Aliens Policing.
In both cases, the applicant must be present in Hungary.
Once the application is approved, the investor schedules an appointment with a migration office.
Up to 3 weeks
Submitting biometrics and obtaining a residence permit card
The investor visits the migration office to provide original documents, submit biometrics, and take a photo for the residence permit card, which is sent by mail.
The investor visits the migration office to provide original documents, submit biometrics, and take a photo for the residence permit card, which is sent by mail.
After 10 years
Renewing the residence permit
To extend Hungarian residency for another 10 years, applicants must demonstrate that they still meet the investment requirements. Investors who made a charitable donation receive an extension without additional requirements upon request.
To extend Hungarian residency for another 10 years, applicants must demonstrate that they still meet the investment requirements. Investors who made a charitable donation receive an extension without additional requirements upon request.
Maximising Hungary tax optimisation for entrepreneurs
Hungary has become an increasingly attractive destination for international entrepreneurs, not only due to its low and predictable tax rates, but also thanks to a clear and structured pathway to residency via business formation.
Since March 2024, new immigration rules under Law 2023.XC allow non-EU and non-EEA nationals to obtain a Hungarian residence permit by registering a legal entity in the country.
Foreigners can qualify for a Hungary business residence permit by founding a company in Hungary, such as a Kft. — Hungarian analogue of an LLC or JSC. Sole proprietorships do not qualify, as they require an existing Hungarian residence permit.
Key conditions include:
minimum authorised capital: €7,700;
initial permit duration: 1 year;
extension: once for an additional 2 years;
family reunification: family members can apply for residence permits after 1 year.
This route offers a legitimate and structured path toward temporary residence, with the potential for long-term stay or permanent residence if conditions are met over time.
Tax advantages for business owners. Entrepreneurs who register companies in Hungary benefit from one of the most favourable tax systems in Europe:
9% corporate income tax — lowest in the EU, suitable for trading, consulting, and holding structures;
15% flat personal income tax — predictable and easy to calculate;
local business tax of 0—2%, depending on the municipality;
access to R&D tax incentives and investment tax credits, promoting innovation and reinvestment.
Dividend optimisation and international planning. Hungary’s wide network of double taxation treaties enables tax-efficient repatriation of profits to the entrepreneur’s home country. For example, dividends paid to shareholders in the US, UK, or Israel may be subject to reduced or zero withholding tax under the respective treaties.
Hungary Digital Nomad Visa tax and KATA strategy
The Hungary Digital Nomad Visa, officially known as the White Card, caters to remote professionals seeking EU residency without relocating their employer or founding a local company. When combined with Hungary’s KATA lump-sum tax regime, this visa offers an attractive framework for simplifying tax obligations and lowering the overall tax burden.
To be eligible for the Hungary Digital Nomad Visa, applicants must:
Work remotely for a foreign employer or operate a business registered outside Hungary.
Earn at least €3,000 per month from verified sources.
Demonstrate valid health insurance and accommodation in Hungary.
Hold a clean criminal record and valid travel documents.
The visa is initially valid for one year, with the possibility of a one-year extension, granting residence rights within Hungary and access to the Schengen Area for 90 days in any 180-day period.
How KATA Lump-sum taxation integrates with visa perks. Although the KATA system was historically designed for Hungarian micro-entrepreneurs, recent developments have opened the door for eligible visa holders who register a sole proprietorship locally.
Under the KATA regime:
Remote professionals pay a fixed monthly tax of HUF 75,000, or €200;
Income up to HUF 18 million per year, or €48,000, is covered;
No additional personal income tax or social contributions are due under KATA;
The scheme dramatically reduces paperwork and annual reporting obligations.
This structure enables digital nomads to operate legally in Hungary, invoice clients abroad, and keep taxes predictable and minimal, making it one of the most cost-efficient models in the EU for remote freelancers.
Final thoughts about tax optimisation in Hungary
Hungary offers Europe’s lowest corporate income tax rate of 9% and a flat 15% personal income tax. Also, the country reduces administrative burden and supports entrepreneurial activity.
Over the past decade, Hungary has demonstrated a clear trend toward tax competitiveness — replacing progressive rates with flat ones, introducing lump-sum systems like KATA for freelancers, and expanding R&D tax incentives.
The Hungary Golden Visa grants long-term residence in exchange for an investment of at least €250,000. This route is ideal for high-net-worth individuals who want to establish a legal base in the EU, access the Schengen Area, and benefit from Hungary’s favourable tax regime.
Freelancers can obtain Hungarian residency through the White Card, a digital nomad visa designed for remote workers with foreign income.
Entrepreneurs have the option to apply for a business residence permit by starting and operating a company in Hungary.
Immigrant Invest is a licensed agent for citizenship and residence by investment programs in the EU, the Caribbean, Asia, and the Middle East. Take advantage of our global 15-year expertise — schedule a meeting with our investment programs experts.

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Frequently asked questions
An individual is considered a Hungarian tax resident if they:
spend 183 days or more in Hungary in a calendar year; or
have their centre of vital interests, like main business, home, or family, in Hungary.
Only one of these conditions must be met. Residency status is determined under domestic law and in accordance with Hungary’s double taxation treaties.
The 2025 tax reform in Hungary introduces confirmed changes that will enhance tax optimisation for both individuals and businesses.
For individuals. Mothers with two or three children will gradually become exempt from paying personal income tax, starting in October 2025 for mothers of three. These changes can significantly lower the effective tax rate for eligible families.
For businesses. The 9% corporate income tax remains unchanged — the lowest in the EU. But R&D tax credits will be expanded, allowing eligible companies to deduct up to 200% of qualifying costs, and potentially reduce their tax liability to zero.
For freelancers and entrepreneurs. The simplified KATA regime will be expanded, making it accessible to more professionals and increasing the allowable income threshold, helping reduce tax complexity and overall burden.
To comply with Hungarian tax regulations, you must first register with the National Tax and Customs Administration, NAV and obtain a tax identification number.
Once registered, taxpayers can manage their obligations through NAV’s e-BEV portal, which is available in English. The platform allows users to file returns, monitor their tax accounts, and communicate directly with the tax authority.
Taxpayers must observe the following annual filing deadlines:
Personal income tax returns must be submitted by 20 May each year.
Value-added tax returns are typically filed monthly or quarterly, with payments due by the 20th of the following month.
KATA lump-sum taxpayers must file their annual summary declaration by 25 February and make monthly payments by the 12th of each month.
Taxes can be paid via bank transfer or through online payment options provided within the e-BEV portal.
The United States–Hungary Double Taxation Treaty helps prevent US citizens and residents from being taxed twice on the same income. Since the US uses citizenship-based taxation, Americans must still file US tax returns even if they live abroad.
If you are a tax resident in Hungary, you’ll pay 15% personal income tax on your income there. Under the treaty, you can claim a foreign tax credit on your US return for the Hungarian tax paid.
You’ll typically pay tax only once, to the country with the higher rate, while the other country grants relief.
The treaty also limits withholding tax on dividends, interest, and royalties, and includes a tie-breaker residency test.
The United Kingdom–Hungary Double Taxation Convention ensures that income is taxed in only one country, with relief in the other. If you move your tax residency to Hungary, you pay Hungarian taxes under its simplified flat-rate system.
The UK tax authority allows you to claim tax credit or tax exemption for income already taxed in Hungary. With the abolition of the non-dom regime from 2025, UK citizens can no longer rely on the remittance basis.
The Israel–Hungary Double Taxation Treaty helps Israeli residents avoid being taxed twice on the same income earned abroad.
If you become a tax resident in Hungary, your income is taxed there, and Hungary’s lower rates typically apply. In Israel, you may be eligible for tax exemptions or foreign tax credits on income taxed in Hungary.
The treaty includes provisions on residency tie-breakers, reduced withholding taxes on dividends and interest, and capital gains exemptions for qualifying scenarios.
R&D super deductions: up to 200% of eligible costs are deductible from the corporate income tax, CIT, base.
Direct R&D tax credits, allowing some companies to reduce CIT liability to zero.
Holding company advantages: Hungary levies no withholding tax on outbound dividends to treaty countries and has no CFC rules, making it ideal for profit retention and reinvestment.
These incentives make Hungary especially attractive for tech companies, IP structures, and investment vehicles.
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