The Local Business Tax (IPA) is a municipal tax in Hungary, payable by companies conducting business activities within a given municipality. It is used to fund local public services (infrastructure, street lighting, etc.).
- Who pays it?
All entities engaged in business activity in Hungary, including sole proprietors, limited liability companies, and foreign branches.
- Tax base:
Net sales revenue minus the cost of goods sold (COGS), subcontractor services, intermediated services, material costs, etc.
- Rate:
Maximum 2%, but municipalities may set a lower rate or offer exemptions.
- Example calculation:
If net revenue is HUF 100 million and deductible expenses total HUF 55 million, the tax base is HUF 45 million.
→ Tax: 45,000,000 × 2% = HUF 900,000