What opportunities are there to support investment decisions in Hungary?
Capital investment in Hungary hit a record high again in 2023. In order to maintain this trend, new grant schemes and tax allowances have been introduced. In this newsletter we introduce some of these possibilities.
New forms of aid have been introduced in 2024, including a new element, the Profit-Based VIP Cash Subsidy granted by Individual Government Decision (in Hungarian: EKD). The basic aim of the new scheme, which is applicable since January, is to provide cash support to companies that may be negatively affected by the introduction of the global minimum tax, instead of the well-known development tax credit that many businesses have previously benefited from.
Moreover, the classic incentives for both manufacturing companies and business service centers will of course remain available, and their use can have a positive impact on the financial return on a project.
Investment support and tax incentives available
The investment grants can be applied in any location in Hungary except Budapest. The investment amount can be covered by incentives in Central Transdanubia and Western Transdanubia regions, up to 30%, but in other locations, it may reach 50-60%.
Companies can utilize the maximum investment incentives set by the European Union if they successfully combine available cash support opportunities and tax incentives.
Through the Individual Government Decision based grants, non-repayable cash subsidy can be requested for greenfield investments and capacity expansions if the investment size reaches EUR 3 / 5 / 10 million depending on the location of the investment. Eligible costs can include expenses for renewable energy developments and energy storage systems. The amount of cash support is unique in each case but, combined with the development tax incentive, can reach the maximum incentive level available, or the cash subsidy can be further increased with the mentioned Profit-Based VIP Cash Subsidy.
Research and development grants and tax credits available
In Hungary, project-based support for R&D projects is available from national and EU funds, but if a new R&D center is created or an existing one is expanded with 10 new workplaces and the 3-year research costs reach €1 million, support can also be requested through Individual Government Decision based grants, offering much more flexibility in supporting research activities. The incentive can cover up to 50% of the research costs in the form of cash grant.
In addition to the above, the R&D tax credit, - mentioned in our previous newsletter - is available from 1 January 2024. This tax credit can be combined with a cash grant and, if the company cannot use it as a corporate tax credit, it can also be converted into a cash grant.
If you have any questions about the above, VGD experts are at your disposal.
This newsletter provides general information and does not constitute advice.
