Could Hungary be The New Jurisdiction of Choice For Holding Companies?

3 January 2017
The recent enactment of a flat 9% Corporate Income Tax (CIT) rate, effective 1 January, coupled with the existing absence of withholding taxes on dividends, interests, and royalties received by foreign enterprises from Hungary, as well as the security of an EU-compliant tax legislation, could propel Hungary to the forefront as a preferred holding company jurisdiction.

The 9% tax will apply to all Hungarian companies, regardless of their activities or shareholders and as a result, Hungary will offer the lowest tax rate within the EU. Furthermore, obtaining this tax rate will not require any tax negotiations or agreements with the tax authority.

The underlying intent of the new 9% rate is to drive Foreign Direct Investment (FDI). Vistra Hungary’s International Expansion division is principally driven by inbound FDI which means making this innovative move could potentially provide clients with numerous positive benefits.