INVESTMENT INCENTIVES IN HUNGARY Besides the well-built infrastructure and other factors like well-developed technology, highly educated labor force, high-level language skills, class “A” offices and cheap living costs that are the main elements of the competitive advantage of Hungary, both in the region and in wider Europe as well, Hungary provides several financial incentives to foreign companies that would like to invest in Hungary, and also to domestic enterprises that would like to reinvest in the country. HIPA (Hungarian Investment Promotion Agency) helps companies in their decisionmaking by providing management consultancy services and also informs them about the available incentives. The Government of Hungary provides different types of financial incentives to investors. There are both refundable and non-refundable incentives such as: various cash subsidies (either from the Hungarian Government or from EU Funds): for investments, training, job creation, R&D tax incentives: reduction of corporate tax, social tax, encouraging R&D activities low-interest loans. Hungary is well aware that the weight of these financial incentives is almost equally important compared to other non-financial factors. In the incentives overview of HIPA, 3+2 legal titles are differentiated. The first three titles of incentives from the previous years are still accessible and two new were introduced on April
21st, 2020 in order to support companies that suffered losses as a result of the COVID-19 pandemic.
I. INCENTIVES FOR INVESTMENTS (REGIONAL AID) REGIONAL SUPPORT It is important to see that incentives are available nationwide, a fact that contributes to the success of new investments and also means that investments do not have to and should not be implemented only in the most frequently chosen areas; however, the extent of the support differs by regions, depending on the development level of the given area. Parts of Central Hungary are ineligible for support, because these are much closer to the EU average in terms of development compared to other regions. VIP CASH SUBSIDY FOR ASSET INVESTMENTS The aim of the subsidy is to support corporate productivity and competitiveness. The eligibility criteria have three main elements: the expected additional net sales revenue, gross wages of the employees and also the development of the region where the investment is being or will be implemented. This last element is different from region to region, just as the criteria are. In the preferred regions, the minimum investment volume should be at least EUR 5 million, while in the more developed regions it should be at least EUR 10 million.
Figure 4.1: Level of Government Incentives in the Different Regions of Hungary
0% 20 % 25 % 35 % 50 %
Source: HIPA
24 Hungarian GBS Report | Hungary, 2020
