Hungary applies a single flat corporate income tax (CIT) rate of 9%, the lowest standard rate anywhere in the European Union. The rate has stood since 2017, when it replaced an earlier two-tier system of 10% and 19%, and the gap between Hungary and the rest of the EU has if anything widened in 2026, as several competing low-tax jurisdictions, including Cyprus and Lithuania, have raised their rates. This article looks at why Hungary’s rate still stands out, and what the full picture looks like once other charges are factored in.
Hungary’s Flat 9% CIT Rate
Hungary’s 9% CIT rate applies universally, regardless of a company’s size or profit level. There is no tiered system and no threshold above which a higher rate kicks in, which makes tax planning and forecasting considerably simpler than in countries with progressive corporate tax brackets. Hungarian tax resident companies pay CIT on their worldwide income, while non-resident companies pay it only on Hungarian-source profits. Because the rate does not depend on distributing profits, it applies consistently whether a company reinvests its earnings or pays them out as dividends.
How Hungary Compares Across the EU in 2026
Hungary’s 9% rate remains the lowest headline corporate tax rate among EU member states. For comparison, as of 2026:
- Hungary: 9% (flat, universal)
- Bulgaria: 10%
- Ireland: 12.5% (for smaller companies; 15% applies to large groups under Pillar Two)
- Cyprus: 15% (raised from 12.5% at the start of 2026)
- Poland: 9% for small taxpayers with revenue below EUR 2 million, 19% standard rate otherwise
- Romania: 16% standard rate (a separate 1% turnover-based regime exists for very small micro-companies)
- Lithuania: 17% (raised from 16% in 2026)
- Croatia: 18%
- Italy: approximately 28%, Germany: approximately 30%, France: 25%
Outside this list, Slovakia raised its rate from 21% to 24% in 2026, and Estonia has also increased its rate over the past year, adding further weight to the trend of competing jurisdictions moving up rather than down. Rankings like this shift from year to year as countries adjust their rates, so while Hungary’s position at the top has held for some time, it is worth checking current rates before relying on any specific comparison for a cross-border decision.
The Full Picture: Local Business Tax and the Minimum Tax Base
The 9% headline rate is not quite the whole story. Hungarian municipalities are entitled to levy a local business tax (helyi iparűzési adó, HIPA) of up to 2% on a company’s adjusted net sales revenue, which is a broader base than taxable profit. Combined with CIT, this can bring the effective corporate tax burden to as much as 11% in municipalities that apply the maximum local rate, though the exact figure depends on the municipality and the company’s cost structure.
Hungary also applies a minimum tax base rule: where a company’s calculated taxable profit is very low relative to its revenue, the tax base is compared against 2% of total revenue, and CIT may be assessed on the higher of the two figures unless the company submits a detailed statement justifying the lower result. This is separate from the minimum income tax that applies more broadly across the CIT system, and companies with unusually thin margins should factor it into their planning.
Does the Global Minimum Tax Change This?
Since 1 January 2025, Hungary has applied the OECD’s Pillar Two global minimum tax rules, which require multinational groups with consolidated global revenue of at least EUR 750 million to pay an effective tax rate of at least 15% in every jurisdiction where they operate. Where Hungary’s 9% CIT would otherwise leave a large group below that floor, a top-up tax (a domestic minimum top-up tax) applies to bring the effective rate up to 15%, collected in Hungary rather than by another country. In practice, this only affects large multinational groups above the revenue threshold. The vast majority of foreign-owned SMEs operating in Hungary continue to benefit from the 9% rate in full.
How Leinonen Can Help
Hungary’s low, flat CIT rate remains one of the country’s strongest arguments for foreign investment, but getting the full picture right, including local business tax, the minimum tax base rule, and whether Pillar Two applies to your group, matters for accurate planning. Leinonen team in Hungary can help you understand how these rules apply to your business and structure your operations accordingly.
To find out more about corporate taxation and setting up a business in Hungary, get in touch with our team.
