Hungary Corporate Taxes

U.S. companies that wish to establish a local presence in Hungary will be allowed to pay their taxes in Euros or Dollars. This move could boost the country’s reserves at a time its hard currency needs have increased.  

Hungary’s move is similar to the Czech plan which also let companies pay taxes in euros from 2024, enabling the state to raise its borrowing in euros. This option would be available to all companies and would simplify corporate book-keeping while ensuring taxes kept flowing to the state and the budget remained balanced.  Companies can save on conversion fees and the government aims to boost foreign exchange reserves.  

Even if disputes with the EU go on and there will not be significant amount of EU funds arriving by the end of the year in Hungary, this is an easy way to get foreign currencies without issuing foreign exchange bonds.  The government could also use taxes paid in euros or dollars to refinance bonds denominated in foreign currencies. The new rule may simplify administration for companies whose income is partly or entirely in foreign currency, and the option is available to all corporate bodies.

If more and more market participants can use only euros, then significance of the forint will be diminished which also means getting closer to the eurozone without adopting the euro.

For additional information, please contact: Csilla Viragos, Commercial Specialist at csilla.viragos@trade.gov