Mundo´s country rating is essentially a freedom index whereby our team of specialists rate a combination of freedoms which include freedom from violence and personal attacks, financial freedom from high taxes, business freedom from government interference and especially from socialism and communism.

Political stability - 6

Although Hungary has been part of the Eastern Block controlled by the Soviet Union until 1989, it was the most westernized country. Thanks to this, the economy did not suffer much during the perestroika process, with a mild transaction to a liberalized economy. This tendency kept growing even after the perestroika with government policies which favored business and that kept boosting the country into the western economic model. These efforts resulted in Hungary finally joining the European Union in 2004. 

Hungary is generally a stable country, but it has been facing political issues during the past few years. The current Prime Minister, who has been the head of state since 2010, is highly criticized for its authoritarian regimes and conservative views. During the coronavirus crisis, Victor Orbán implemented a controversial measure in which he was allowed to implement extraordinary government powers upon a health emergency without the parliament´s consent. This measure has found many opponents and created political uncertainty.

Hungary has for now a stable economic and political environment but due to its communist past and due to the increasing political tension, we give it 6 points. 

Personal Safety -8

Hungary is, in general, a very safe place. Violent crimes are extremely rare, but you might encounter petty crimes such as pickpocket and bag snatching, especially in the big cities. We recommend watching your belongings at events with large crowds and to apply precaution in public transportation or on the bus and railway station.

The country also hosts refugees which may potentially cause social unrest and is considered to be one of the most corrupt countries in Europe. All in all, as long as you are careful and watch your stuff, Hungary is a place where you will feel safe and where your life will rarely be threatened, with no kidnapping danger for rich people. However, due to the petty crimes, refugees, and corruption, we give it only an 8 score. 

Lifestyle -10

Mundo considers the most developed Eastern European cities as the best places where to establish residency. Eastern Europe has the perfect combination of culture, history, and art with low costs of living. In Hungary’s most important cities you will find excellent transportation options, entertainment, art, and beautiful sights.

Like we have pointed out before in our About Hungary section, the gastronomic offer is excellent, especially in Budapest, with a rich combination of different nationalities. In the country´s capital and other important cities you will be able to dine at excellent restaurants and visit high quality cafes and bars. There are also excellent options when it comes to classical music and art such as the Bela Bartok concert hall. 

The Hungarian population, like most Eastern Europe countries, is characterized for being friendly but have a little trouble opening up to strangers. However, if you are respectful of their culture and patient enough, Eastern Europeans will let you into their lives and become the best friends in the world. 

The Hungarian language is one of the most difficult on the planet and it´s only related to Estonian and Finnish, however, in Budapest most of the people have good English skills. If you want to live in the countryside, then language is a barrier that you must consider. 

For those who love nature and relaxing after a hard week of work, Hungary offers a wide variety of thermal baths across its territory, of which the most famous one is Szechenyi bath, in the capital.

The best part is that you can enjoy all these advantages at relatively low costs. Although Hungary is not as cheap as it used to be anymore it is still cheaper that many of the western world´s biggest capitals and important business centers. Cost of living in Hungary, for example, is 55% lower than in New York and lower than London and Paris, but more expensive than Warsaw and Bucharest.

We will dive deeper into the cost of living in other sections but, in general, renting a 2-bedroom apartment in Budapest city center costs around 730USD per month and dinner for one in a high-end restaurant costs around 20USD.

Due to the relatively low costs and the entertainment and cultural environment, we give Hungary 10 points. 

Contact us

Taxation -8

When it comes to taxation, Hungary offers the lowest corporate tax in the EU and the second lowest among the OECD countries. This is the best place where to establish an operating company as the corporate tax is a flat rate of 9% a year. Moreover, if you hold your assets under a trust, the trust assets will be tax resident in Hungary, therefore they will also be taxed at 9% corporate income tax a year.

It is the writer’s opinion that this is a very good deal, especially if we consider that Hungary is a European and OECD compliant jurisdiction, which makes international trading and business much easier. Thus, you can easily prove your source of income anywhere in the world and still pay relatively low taxes. 

The personal tax is not so low, with a 15% rate for withholding tax. If you add to this the 9% corporate tax, then the offer is not so attractive. You can either choose not to live in Hungary or, if you do live here, you can choose not to pay yourself dividends. You can transfer these dividends to another company abroad and thus you won´t be subject to withholding tax. 

Moreover, Hungary is a country that does apply tax on worldwide income, for which we recommend carefully structuring your business or your trust when you settle in Hungary, combining it with other options. It is still possible to make use of the double taxation treaties of which you can find more information in the tax section.

Undoubtedly, Hungary offers great tax optimization for companies and trusts with double taxation treaties. Nevertheless, the personal taxes are higher than in most countries and it levies tax on worldwide income. For this reason, we give it an 8. 

Investment potential -7

The Hungarian government actively supports investments in future technologies and large-scale projects. Hungary is also a great field to invest in a business due to the 9% corporate income tax and to other incentives. In 2020, for example, the government decreased the employer social security contribution from 17.5% to 15.5%, making it even more attractive to start a business here.

Moreover, the labor laws are employer friendly and this was confirmed this year when the government passed a resolution to extend flexible working time unilaterally from 4 months to 24 months. 

The most important and profitable industries in Hungary are manufacturing, services and construction, but the automotive industry still shows a unique potential. Medium and big-sized companies have settled in Hungary during the past 25 years and we can see some industry giants operating in Hungary like Audi, Mercedes-Benz, BMW, and Suzuki. 

Regarding real estate, some fear that the political issues that have arisen in Hungary may affect the real estate market, however, from an economic point of view the country is doing extremely well. It has a steady growth rate, low unemployment, good pricing dynamics and increasing wages. This contributes to creating inflation in the real estate market because there is more acquisition power which is reflected in a higher demand for renting and buying property.

Also, Hungary is home to some of the most important universities in Europe, meaning that there are many students which need accommodation, and this increases the demand for rental real estate. Last year, the office vacancy was extremely low in Budapest, however, there are entry prices for buying office space lower than in most neighboring countries with yield from 6% to 7%.

Due to the current political situation and considering the economic growth of the region, we give Hungary 7 points for investment potential. 

Mundo´s country rating for Hungary: 39/50

Contact us