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Dividend Tax in Hungary

Dividend Tax in Hungary

Updated on Wednesday 24th June 2015

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Companies incorporated in Hungary are subject to corporate income tax on all their sources on income. The taxation system in Hungary includes several main business taxes and also taxes applicable only to individuals.
 
Our lawyers in Hungary can offer you specific details about each type of tax in Hungary.
 

Dividend tax in Hungary

 
In Hungary no withholding tax is levied on dividends paid to a foreign legal entity. The tax on dividends paid to foreign companies is regulated by double tax treaties. Hungary has signed more than 60 treaties with other countries in order to avoid double taxation.
 
Dividends received from other Hungarian companies are not subject to corporate income tax or withholding tax, except for dividends distributed by a controlled foreign corporation. A number of treaties establish the percent of withholding tax rates for dividends between Hungary and other countries. In non-treaty countries, there are no withholding taxes on dividends for corporations. However, a 16% withholding tax rate applies on dividends for individuals.
 
According to the existent treaties, the withholding tax on dividends for individuals can have values between 0 and 20%, as follows:
- Belgium: a 15% withholding tax rate on dividends;
- Bulgaria: a 10% withholding tax rate on dividends;
- France: 5/15% withholding tax rate on dividends;
- Italy: 10% withholding tax rate on dividends;
- Luxembourg: 5/15% withholding tax rate on dividends;
- Poland: 10% withholding tax rate on dividends;
- Egypt: 15/20% withholding tax rate on dividends.
 

Other taxes in Hungary

 
Entrepreneurs who want to open a business in Hungary should know that the tax year in Hungary usually has a 12 months period and both the tax and accounting years must end on December 31st. 
 
The standard value of the Hungarian corporate tax is 19%, however, an initial amount of 500 million HUF is taxed at only 10%. Hungarian companies are required to make advance payments on the corporate tax. 50% penalties exist for underpayment.
 
Local taxes, local business taxes and building and land taxes may apply. For more information about tax compliance in Hungary, please contact our Hungarian lawyers.
 
Our law firm in Hungary can provide various legal services, including accounting planning and tax advice in Hungary or legal consultancy and assistance for company formation in Hungary.
 
 
 

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