Hungary has a progressive personal taxation system, with individual taxation rates currently being between 20% and 40% of income. Corporation tax is fixed at 16%.

Foreign nationals living and working in Hungary are required to register as a taxpayer there. Those who are permanently resident in Hungary are taxed on any income generated in Hungary or overseas, while foreign residents who are living and working on a temporary basis in Hungary are only taxed on their Hungarian income. Criteria used in defining permanent residence for taxation purposes include the usual family place of residence, property ownership and whether the taxpayer spends more than 183 days per year in Hungary.

Hungary has Double Taxation treaties with many other countries, which mean that tax paid in one country can be offset against any tax payable in the other.

Retirement pensions are not liable to tax in Hungary, whether they are paid in Hungary or from abroad.

Employees with no other income have their tax deducted direct from salaries on a monthly basis. Those with additional income, the self-employed and people with overseas-generated income are required to make advance payments of tax and to complete a tax return at the end of the financial year, at which point they must pay any additional tax due, or are reimbursed if their advance payment exceeded the amount of tax actually payable.

Value Added Tax is payable at a standard rate of 20%, with reduced rates of 15% or 5% on certain items such as food, textbooks and medicines.

Local government offices are responsible for the collection of local rates.