Local Business Tax (IPA) Hungary 2026 Guide
Hungary offers one of the lowest corporate tax rates in Europe at 9%. In addition to corporate income tax, companies are subject to Local Business Tax (IPA), which typically ranges up to 2% depending on the municipality.
Local Business Tax (IPA) in Hungary – 2026 Guide for Foreign Businesses
Local Business Tax (IPA – Helyi Iparűzési Adó) is one of the most important municipal taxes in Hungary, and in 2026 it remains applicable to all companies conducting business activity within the country. Below is a concise overview of the key rules every entrepreneur and foreign investor should be aware of.
What is IPA?
IPA is a local tax collected by municipalities, allowing them to benefit from the economic activity carried out within their jurisdiction. It directly contributes to the financing of local infrastructure and public services such as roads, utilities, and waste management.
Who must pay IPA?
– IPA applies to all businesses, including:
- Sole traders
- Limited liability companies (Kft.), partnerships and corporations
- Cooperatives
- Foreign companies with a permanent establishment in Hungary
– Special tax regimes:
- KATA taxpayers may opt for a simplified, fixed-base IPA regime depending on revenue
- KIVA taxpayers calculate IPA based on the KIVA base increased by 20%
IPA rates in 2026
The maximum IPA rate remains 2%, but municipalities may apply lower rates — including 0% in certain locations. This creates a significant tax planning opportunity.
How is IPA calculated?
Standard formula: Tax base = Net annual revenue – deductible costs (COGS, material costs, subcontractor fees, mediated services)
Small business regime (introduced and refined in recent years):
| Revenue threshold | Tax base | Local Business Tax (2%) |
|---|---|---|
| 0–12,000,000 HUF | 2,500,000 HUF | 50,000 HUF |
| 12,000,001–18,000,000 HUF | 6,000,000 HUF | 120,000 HUF |
| 18,000,001–25,000,000 HUF | 8,500,000 HUF | 170,000 HUF |
For retail activity:
| Revenue threshold | Tax base | Local Business Tax (2%) |
|---|---|---|
| 18,000,001–120,000,000 HUF | 8,500,000 HUF | 170,000 HUF |
Deadlines (2026)
- Annual return: 31 May
- Advance payments: 15 March and 15 September
Key Advantage – 0% IPA with Registered Office Service
By choosing our registered office service in Hungary (registered office Hungary / company domicile / seat service for foreign companies), your company may be established in a municipality applying a 0% IPA rate.
This results in a full exemption from local business tax, significantly reducing annual tax burden, improving liquidity, and increasing overall profitability.
For international founders and foreign-owned companies, this is one of the most efficient and fully compliant tax optimization structures available in Hungary.
We provide full legal, tax and administrative support to ensure proper setup and ongoing compliance.
To calculate Local Business Tax (IPA), request our simple calculator here:
