R&D Tax Incentives
1 | Corporate income tax incentives
Hungary levies corporate income tax at a flat rate of 9%, one of the lowest in the European Union. In addition to this low headline rate, several R&D-specific incentives are available.
Eligible R&D costs may be deducted twice for corporate income tax purposes. In practice, this means that qualifying direct R&D expenses can be deducted once as an operating cost and again as an additional tax base reduction, significantly lowering the effective tax burden for profitable R&D performers.
From 2024 onwards, companies may alternatively opt for a new refundable R&D tax credit. The credit amounts to 10% of eligible R&D expenditure and may be used to offset up to 100% of the corporate income tax payable. The credit can be utilised in the year the R&D project starts and over the following utilisation period. Any unused amount may, under current rules, be refunded in cash after the utilisation period, making the scheme particularly attractive for loss-making or low-profit, R&D-intensive companies. Upper limits apply per project and depending on the nature of the research activity.
Companies must choose between the refundable R&D tax credit and the traditional tax base reduction for the same costs, as the two incentives cannot be combined.
The refundable nature of the credit has been designed to align with the OECD Pillar Two global minimum tax rules, which is particularly relevant for large multinational groups.
2 | Patent box style IP regime
Hungary operates a favourable regime for income derived from qualifying intellectual property. Fifty per cent of qualifying royalty profit may be deducted from the corporate income tax base, subject to a cap of 50% of the taxpayer’s pre-tax profit. This results in a significantly reduced effective tax rate on eligible IP income.
In addition, royalty income is excluded from the local business tax base. As a result, qualifying royalty income is effectively free from local business tax, further enhancing the attractiveness of IP exploitation activities carried out in Hungary.
3 | Social contribution tax relief for R&D employees
Employers may benefit from substantial social contribution tax allowances in respect of employees engaged in R&D activities. Enhanced relief is available where researchers or developers hold a PhD or equivalent academic degree. Given that the standard employer social contribution tax rate is 13%, these allowances can translate into material payroll cost savings for R&D centres.
Cash Subsidies and Direct Support
VIP Cash Subsidy programme
The Hungarian Investment Promotion Agency administers the VIP Cash Subsidy programme, which provides non-repayable cash grants for qualifying investment projects. As of April 2025, the minimum investment threshold has been reduced in certain regions, with eligibility starting from EUR 2 million, depending on location and project characteristics.
Separate tracks exist for R&D centres and for employee training projects. R&D centre subsidies typically require the creation of at least ten new R&D positions and the establishment of a new cooperation with a Hungarian higher education institution or research organisation.
Training subsidies are available where eligible training costs reach at least EUR 250,000 and involve a minimum of 25 participants. Since April 2025, training support no longer requires a parallel investment project or shared service centre expansion, which significantly broadens access for medium-sized and large enterprises.
Public R&D Grants and Programmes
The National Research, Development and Innovation Office plays a central role in allocating public R&D funding. For 2026, over HUF 120 billion is earmarked from domestic sources to support innovation, alongside substantial EU-cofinanced programmes.
Key funding instruments include competitive calls targeting collaborative research, applied innovation and excellence-driven projects, as well as broader schemes under the GINOP Plus framework. These programmes are particularly relevant for companies cooperating with universities, research institutes and other industrial partners.
Venture Capital and Start-up Financing
Széchenyi Funds remains a cornerstone of the Hungarian venture capital ecosystem, managing more than HUF 155 billion in capital. The fund manager operates as a publicly backed investor with a mandate to support innovation, digitalisation and strategic sectors across various stages of company growth.
In parallel, new state-backed co-investment initiatives launched in 2025 aim to address early-stage financing gaps, particularly for innovative start-ups and scale-ups. These programmes typically operate alongside private investors and are complemented by the continued operation of the Hungarian Start-up University Programme.
Legal and Structural Support for Innovation
Recent legislative reforms have strengthened Hungary’s start-up and innovation framework. Convertible notes governed by Hungarian law have been available since 2023, providing greater flexibility for early-stage financing. In addition, the tax treatment of certain employee share and incentive schemes has been improved, enhancing the ability of innovative companies to attract and retain talent.
Conclusion
Hungary offers a comprehensive and competitive package of innovation funding incentives combining low corporate taxation, generous R&D support, direct cash subsidies and an active public financing ecosystem. While careful planning is required to navigate eligibility conditions, caps and interaction between incentives, the overall framework remains highly attractive for R&D-intensive businesses operating within the EU.
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