Hungary consistently ranks high on competitiveness and economic freedom with a stable government and business-friendly policies. The country offers a skilled workforce and talent pool with a sizeable engineering and ICT talent available at competitive salary levels. Infrastructure is advanced with excellent road, rail, air, and data connectivity.
Hungary actively encourages foreign investment with generous tax incentives, streamlined registration processes, and investor-friendly policies. The government focuses on attracting technology and R&D focused companies, service centers, high value-added manufacturing, and environmentally conscious industries.
Budapest serves as an ideal hub for European headquarters. Multinationals such as GE, Morgan Stanley, Huawei, Audi, and Ericsson run major operations from the country utilizing its strategic location and connectivity. With a high quality of life, Hungary also makes an appealing destination for expats to live and work in.
While some challenges remain with bureaucracy and regulations, the Hungarian Investment Promotion Agency provides dedicated support and assistance to foreign investors. With its strong fundamentals and business environment, Hungary offers tremendous opportunities across industries for overseas companies.
Government Incentives and Support
The Hungarian government offers attractive incentives to encourage foreign investment and business development in the country. Some of the key incentives include:
- Tax incentives – Hungary offers competitive corporate tax rates of 9% on the first HUF 500 million of income and 19% on income above this threshold. There are also tax deductions available for R&D and training expenses. Additionally, companies can qualify for tax credits by creating new jobs and making investments in less developed regions.
- Grants and subsidies – The Hungarian government provides cash grants for job creation, training programs, and R&D activities through schemes like the VIP cash subsidy. Grant funding is also available for infrastructure development, energy efficiency improvements, and exporting companies under EU structural funds.
- Investment promotion – The Hungarian Investment Promotion Agency (HIPA) actively attracts FDI into the country and helps investors with site selection, cost analysis, administrative procedures, and identifying local partners. HIPA offers complete project management and custom incentive plans for large strategic projects.
- Free trade zones – Hungary has several industrial free trade zones that offer customs-free benefits, tax deductions, simplified administration, and well-developed infrastructure. Major free zones include Airport City Logistics Park in Budapest and the free zone at Zalaegerszeg.
- Priority sectors – The Hungarian government targets and promotes certain priority sectors such as automotive, electronics, life sciences, ICT, food industry, etc. Investors in these sectors may qualify for additional incentives and subsidies.
The wide range of incentives make Hungary an attractive destination for foreign investors looking to establish new operations and benefit from pro-business policies. Consultation with HIPA is recommended to develop a customized incentive plan.