Invest in Hungary

Hungary is officially is known as the Republic of Hungary. The country is located in the Central European continent and it is landlocked by other nations on all sides. Hungary is situated in the Pannonian Basin and it shares its border with Slovakia in the north and in the east it is bordered by Ukraine and Romania, on the southern borders Hungary is surrounded by Croatia and Serbia and to the west Hungary is bordered by Austria. Budapest, the capital city of Hungary is also its largest city. Hungary is a popular tourist destination in the European Union and it attracts a large number of tourists every year.

Hungary today represents one of the most advanced economies in the European Union. It became a member country of the EU in 2004 and as a part of the EU; Hungary has a very dynamic and a promising economic outlook. Hungary has a very healthy per capita income rate, which is approximately about two-third percent of the average per capita income of all other countries in the European Union.

Some interesting facts about the investor-friendly Hungary:

Hungary has successfully transformed its centrally planned economy into a market driven economy. Currently private sector contributes to approximate 80% of GDP in which Foreign ownership industry share is prominent. The Hungarian Investment and Trade Development Agency (ITD) provide full support to high value added investment projects. It provides a one stop shop services which includes VIP treatment to such investment while providing detailed information about the available subsidies to such projects.

If there is no EU co-financed subsidy available to any high value investment projects, the Hungarian government provides tailor made incentive packages for big investment project that exceed €10 million.

Growth Figures and FDI Figures:

The GDP growth of Hungary in the third quarter of 2010 was around 0.80%. Hungary   has maintained consistent quarterly GDP growth of 0.64 throughout these years (1995 to 2010). Hungary has an institutionally open medium sized economy   which is structurally, politically stable and a part of the EU market. The European Commission has predicted that Hungary’s economy will increase by 2.8% in 2011.

If you look at the FDI figures in Hungary, you will notice that US is leading investor in Hungary with approximate investment worth $700 million.  Other leading investors in Hungary are Germany and Austria.  The major sectors that have attracted investment include Telecommunications, Food processing and packaging and computer hardware and software, Automotive and Financial services.

Keys industries and sector to invest in Hungary:

Hungary is a country located in the heart of the Europe. The country boast of a sophisticated IT and telecommunications infrastructure. Hungary is also known for its highly educated and able workfoce.  This characteristic attracts host of internationals companies and one third of central Eastern Europe service centers are set up in Hungary.
 

Besides the services sector, Hungary also attracts investment in automotive, bio-life sciences, electronics, information technology, R&D, renewable energy, supply chain managements and distribution logistics.

FDI Policy:

The Hungarian Government is keen to encourage foreign investment in the country and taking initiatives to make Hungary an economic super power at the global stage. With a view to attract investment from foreign companies the government of Hungary grants benefits to foreign companies to invest in certain productive sectors that would contribute to creation of employment opportunities for the locals. The government also encourages foreign investment in the certain geographic locations which is industrially underdeveloped and where the unemployment levels are high.
 

The Hungarian Government provides grants to foreign investors in terms of tax exemptions on certain investments. The tax exemptions are typically granted on a certain minimum sum of investment. The government has made it a mandatory law to not to discriminate between local investors and foreign investors, the foreign companies enjoy the same benefits as given to the local companies.

Incentives provided by government of Hungary to promote investment:

Hungary government provides numerous tax benefits on specific investments.  These tax benefits are for a specific or minimum sum of investment. The benefits are granted to both local investors as well as foreign investors. The benefit is provided to companies investing in specific areas that have high unemployment or region that is not industrially developed.

The tax incentives provided by the government changes with regions and size of investment.  The government provides a tax relief for maximum 10 years. The maximum intensity ratio of the tax benefit changes with regions


•    25% in Budapest
•    40% in Western Transdanubia
•    30% in Pest County
•    50% in all other regions of Hungary
 

Additional 10% of additional relief is available for mid-sized companies and 20% additional for small enterprises. The incentive package offered by Hungarian Government also include


•    development tax allowance
•    training subsidy
•    cash subsidy decided individually by the Hungarian Government
•    job creation subsidy

Resources:

The Hungarian Investment and Trade Development Agency was formed by the Hungarian Ministry of Economy and Transport on 1993. The main objective of the agency is to implement the government trade and invest policies and help the investors to set up enterprise in   Hungary. With formal and informal relations with Government, the ITD Hungary is in a position to offer unique service to investors and small and medium sized enterprises. The agency has an extensive network of skilled teams that are located in eight offices spread across the country. The ITD Hungary also has 55 international bureaus in 43 countries providing valuable assistance to investors keen on investing in Hungary.


 

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