How a dividend paid by a Hungarian company is taxed depends entirely on who receives it. Corporate shareholders and individual shareholders face very different rules, and conflating the two is a common source of confusion for foreign-owned businesses. This guide sets out both, along with a worked example.
Dividends Paid to Corporate Shareholders
Hungary does not apply withholding tax on dividends paid by a Hungarian company to another company, whether that shareholder is resident in Hungary or abroad. For the receiving Hungarian company, dividend income is generally excluded from the corporate income tax base under Hungary’s participation exemption, so it is not taxed again at the parent level. The main exception is dividends received from a controlled foreign company (CFC), which remain taxable.
Dividends Paid to Individual Shareholders
For a private individual, dividend income is taxed differently and more heavily:
- 15% personal income tax (PIT), withheld at source by the paying company, applied to the full dividend amount.
- 13% social contribution tax (szocho), also generally due on dividend income, but capped at 24 times the monthly minimum wage per year. The 13% social contribution tax is payable on dividends until the individual’s income taken into account for the statutory annual szocho ceiling reaches 24 times the monthly minimum wage. In 2026, this ceiling is HUF 7,747,200. Certain other income earned during the year, including employment income, may therefore reduce or eliminate the amount of dividend subject to szocho. Interest income subject to szocho does not count towards this annual ceiling.
- Exception: dividends paid by a company whose shares are traded on an EEA stock exchange are not subject to szocho, though the 15% PIT still applies.
Both taxes are normally withheld and paid by the company on the shareholder’s behalf, so the individual receives the dividend net of tax.
A Simple Example
For a gross dividend of HUF 7,747,200 (the approximate 2026 szocho cap threshold) paid to a Hungarian resident individual with no other capital income that year:
- PIT (15%): HUF 1,162,080
- Szocho (13%, capped): HUF 1,007,136
- Net dividend received: approximately HUF 5,577,984
For dividends below this threshold, the same 15% and 13% rates apply proportionally; above it, only the 15% PIT continues to apply on the excess, since the szocho cap has been reached.
Non-Resident Shareholders
Non-resident corporate shareholders are treated the same as resident companies: no withholding tax applies. Non-resident individual shareholders are generally subject to the same 15% PIT withholding, though an applicable double tax treaty between Hungary and the shareholder’s country of residence may reduce this rate or shift taxing rights, and Hungary’s treaty network covers more than 80 countries. Whether szocho applies to a non-resident individual depends on their social security status and should be checked case by case.
How Leinonen Can Help
Getting dividend tax right in Hungary means knowing which rules apply to which shareholder, tracking the szocho cap correctly across a tax year, and applying any relevant double tax treaty. Leinonen team in Hungary can review your ownership structure and help ensure dividend payments to both corporate and individual shareholders are taxed and reported correctly.
To find out more, get in touch with our team.
