Doing business in Hungary: Hungary trade and export guide
Updated 1 December 2016
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This publication is available at https://www.gov.uk/government/publications/exporting-to-hungary/doing-business-in-hungary-hungary-trade-and-export-guide
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1. Hungary export overview
Hungary is situated in the heart of the Carpathian basin. It is an ideal place for UK companies to set up, serving as a gateway to the Central and Eastern Europe (CEE) region.
Contact a Department for International Trade (DIT) Hungary export adviser for a free consultation if you’re interested in exporting to Hungary.
Contact UK Export Finance (UKEF) about trade finance and insurance cover for UK companies. You can also check the current UKEF cover position for Hungary.
The UK ranks as the fifth largest investor in the country, mainly for the retail, telecommunications and professional services sectors.
Benefits for UK businesses exporting to Hungary include:
- English accepted as a business language
- western style business culture
- over £28 billion European Union (EU) funding between 2014 and 2020
- UK ‘brand’ viewed positively
Strengths of the Hungarian market include:
- strategic location in the heart of Europe
- well developed transport network
- open economy
- good infrastructure and communications
- investment incentives
Read the EU’s practical guide to doing business in Europe.
2. Challenges
Hungary ranks 42nd in the World Bank’s Ease of Doing Business report. However, the report places Hungary at 110th in terms of protecting investors.
Despite Hungary’s increasingly westernised business culture, UK companies can encounter difficulties. These include:
- bureaucracy
- corruption
- language difficulties, especially with smaller companies and outside Budapest
- legal barriers at public procurement
You should ensure you take the necessary steps to comply with the requirements of the UK Bribery Act.
3. Growth potential
3.1 Economic growth
Gross Domestic Product (GDP) growth for 2016 is expected to be 2.5%. GDP growth is expected to slow down in the coming year with 2.3% growth projected for 2017.
Inflation was at a record low in 2016 at 0.0% with core inflation at around 1%.
3.2 European Union (EU) funds
Hungary receives very significant structural and cohesion funds from the EU.
Hungary will get EUR 25.4 billion via the EU’s Multi-annual Financial Framework (MFF) 2014 to 2020. The government aims to allocate 60% of the available funding to strengthen the economy and domestic Small and Medium Enterprises (SMEs). The remaining funds will be used to:
- improve the infrastructure
- develop human resources
- increase energy efficiency
Project tenders will be issued, offering British companies an opportunity to participate.
3.3 Emerging Europe
The CEE region offers considerable potential to British business. UK exports are worth over £18 billion, with goods exports doubling over the past decade, and services exports - over £4 billion - trebling. The CEE countries have a combined GDP in the region of more than £1 trillion.
Hungary is part of the CEE region and can act as a gateway into other markets. The CEE region is:
- easily accessible from the UK and has widespread use of English as the business language
- a market of over 100 million consumers
- expected to have GDP growth of 4.7% annually over the next 10 years
- making huge investments in energy, transport and other infrastructure as a result of £170 billion in EU funding
High Growth Europe: Grow your business close to home
Watch our other videos on growing your business in CEE markets.
3.4 Trade agreements
Hungary is a member of the EU, the World Trade Organization (WTO) and other international bodies. Goods manufactured in the UK are exempt from import duties.
Contact the SOLVIT team if you have market access issues relating to the operation of the Single Market.
4. UK and Hungary trade
UK-Hungary bilateral trade in goods and services was £1,849 million in 2015.
Hungary is the UK’s third largest export market in CEE. 1.9% of Hungary’s imports are from the UK.
The top 3 UK exports to Hungary are:
- medicinal and pharmaceutical products valued at £20 million
- electrical machinery, apparatus and appliances valued at £8.6 million
- power generating machinery and equipment valued at £7.6 million
Total direct investment by British companies since 1990 has been about £2.1 billion.
5. Opportunities for UK businesses in Hungary
DIT provides free international export sales leads from its worldwide network. Search for export opportunities.
Access high value public procurement notices via Tenders Electronic Daily (TED). TED contains all procurement notices above a certain threshold from the EU and European Economic Area (EEA).
Read our publication ‘Emerging Europe - Central and Eastern Europe 2015/2016: The top 50 commercial opportunities’.
5.1 Scientific equipment
The Extreme Light Infrastructure (ELI) project is an integral part of the EU plan to build the next generation of large research facilities. The project, based in Hungary, is part of the European Strategy Forum on Research Infrastructures (ESFRI).
Opportunities for British companies include:
- laser equipment
- vacuum technology and equipment
- related products and services such as specialised training courses
Early engagement with local public procurement experts and potential Hungarian partners is recommended.
Contact Senior Trade Adviser zsuzsa.nemedi@fco.gov.uk for more information on opportunities for scientific equipment.
5.2 Energy
Nuclear
The Paks II extension, worth EUR 11 billion, is one of the region’s largest nuclear new build projects.
Rosatom will build 2 new reactors (1,200 MV each). These are due to go into operation between 2025 and 2030. EU tenders will be submitted from Q3 2016.
The Paks II project provides UK companies with large scale opportunities. Early engagement with potential Hungarian partners and local public procurement experts is recommended.
The Paks nuclear power plant, with its 4 VVER reactors also offers consulting, maintenance and equipment supply opportunities. Submission of public procurement tenders are ongoing.
Renewables
Hungary aims to double the proportion of renewable energy sources by 2020. This offers supply chain opportunities for UK companies with expertise in:
- geothermal
- wind
- biomass
- solar
Smart Cities
Hungary will distribute EUR 4,000 million mostly from EU funding to regional development in the coming years. This will embed solutions and applications that fit the smart cities model and will offer opportunities in:
- renewable electricity generation
- energy storage
- smart (flexible and reactive) grid and smart metering
- smart homes
- public lighting
Clean coal technologies
The Mátra power plant, the second largest producer of electricity in Hungary, needs a clean coal solution retrofit to meet environmental requirements. This offers opportunities for UK companies with the relevant expertise.
Contact Senior Trade Adviser zsuzsa.nemedi@fco.gov.uk for more information on opportunities in the energy sector.
5.3 Infrastructure
EU structural and cohesion funds are allocated to transport and infrastructure projects in Hungary.
UK success in this sector has been limited. However, there are opportunities for:
- modernising railway lines (both track, signalling and surrounding facilities)
- setting up sports facilities especially as Budapest bids for the 2024 Olympic Games
- large property developments as part of urban reshaping of cities such as the Museum Quarter in Budapest known as Liget Budapest and the National Castle Programme, focusing on the restoration of the national heritage
Contact Trade Adviser gabor.imeli@fco.gov.uk for more information on opportunities in the infrastructure sector.
5.4 Defence and security
Hungary has historically under invested in defence and security so some modernisation of the armed forces is needed. There are opportunities for UK companies in:
- cyber security
- the supply of helicopters (both military and civil use)
- the supply of CCTV observation systems and stadium safety equipment
Contact Export Control Organisation (ECO) to check your goods are meeting legal requirements for export.
Contact Trade Adviser timea.balazs@fco.gov.uk for more information on opportunities in the defence and security sector.
5.5 Life sciences
The Hungarian life sciences sector has:
- one of the most developed pharmaceutical and biotechnology sectors in CEE
- a growing number of Small Medium Enterprise (SME) biotechnology companies
- fast developing research institutions which are now reaching maturity
It offers significant opportunities for UK companies to collaborate with Hungarian counterparts.
There are opportunities for:
- joint research and development (R&D) projects
- investment
- supply chain
80% of products needed for the everyday running of Hungary’s healthcare service are imported. British healthcare and medical equipment products have a good reputation. There are opportunities for quality and competitively priced products.
Contact Senior Trade Adviser zsuzsa.nemedi@fco.gov.uk for more information on opportunities in the life sciences sector.
5.6 Manufacturing
Hungary has a strong electronics and automotive manufacturing base. This capability offers opportunities for UK companies in the supply chain.
Contact CEE regional lead for automotive and advanced manufacturing krisztina.gorog@fco.gov.uk for more information on opportunities in the manufacturing sector.
6. Start-up considerations
Hungary has been an EU member since 2004, so European business practices and standards generally apply.
You should appoint a distributor or an agent who knows the market and is well connected to export directly to Hungary. Local representatives can provide either national or regional coverage.
Before entering the market make sure you thoroughly research the market. Your background checks should include:
- research into products, competitors and market strategy
- testing your products
- speaking to Hungarian buyers at international trade shows
- getting an initial market assessment from experts
Read the Hungarian Investment and Trade Agency’s Business Guide for information on setting up a company in Hungary.
7. Legal considerations
Hungary’s legal system is largely harmonised with EU requirements. If you are considering a large scale transaction you should consult one of the international law firms based in Hungary.
Contact the DIT team in Hungary to help find tax and legal advisers before entering into agreements.
7.1 Standards and technical regulations
Products and packaging should meet EU standards.
As the main regulator the Hungarian Trade Licensing Office’s standards apply to foreign products coming into the country. Special rules are in force for the registration and certification of certain products.
Labelling should be in Hungarian. You should seek advice from the relevant registration or certification authority on the extent to which labelling should comply with Hungarian domestic legislation on:
- advertising
- health and safety
7.2 Intellectual property (IP)
Trademarks, designs, patents and copyright are the principal forms of IP protection available to companies and individuals.
IP law, especially for patent protection, is not totally harmonised within the EU.
The Hungarian Intellectual Property Office has responsibility for IP.
8. Tax and customs considerations
8.1 Value Added Tax (VAT)
All enterprises supplying goods or services within the territory of Hungary must register for and charge VAT. Small businesses can choose to be VAT exempt under certain conditions.
The 4 VAT rates in Hungary are:
- a standard rate of 27%
- 18% for central heating, bakery and dairy products, and providing commercial accommodation services
- 5% for some goods and services such as certain pharmaceutical products, books and daily papers
- 0% for some transactions such as radio, television, postal and financial services
Check with HM Revenue and Customs (HMRC) regarding VAT refund of business expenses incurred in Hungary.
8.2 Corporate tax
Find information on Hungarian tax for enterprises on the National Tax and Customs Administration of Hungary (NTCA) website.
8.3 Income tax
Individuals’ income is taxed by 15%.
8.4 Customs
The internal market of the EU is a single market which allows the free movement of goods and services. Therefore, no import duties apply.
9. Business behaviour
German is the most widely spoken foreign language in Hungary, but use of English is rapidly increasing.
Business cards are used extensively. Hungarians often place their surnames first on business cards printed in Hungarian.
10. Entry requirements
You do not require a visa to travel or work in Hungary, but passports must have 6 months validity.
10.1 Travel advice
If you are travelling to Hungary for business, check the Foreign and Commonwealth Office (FCO) travel advice first.
11. Contacts
Contact the DIT team in Hungary for more information and advice on opportunities for doing business in Hungary.