Investing Guide Hungary 2014 Why invest in Hungary? A guide with useful information and inspiring success stories of investors in Hungary. Investing Guide Hungary 2014 3 PwC welcomes you with offices in Budapest and Győr Contents I. WHAT SHOULD YOU KNOW ABOUT HUNGARY? 5 Location and climate 6 Infrastructure in Hungary 10 Office market 12 Main industries 14 Leading sector in Hungary: automotive 15 Takata to establish first plant in Hungary – Production scheduled to commence in October 2014 16 Interview with Jiro Ebihara, president of DENSO Manufacturing Hungary Ltd. – Re-invest in Hungary 18 Electronics 19 Pharmaceuticals & medical technology 20 Interview with Erik Bogsch, CEO, Richter Gedeon Nyrt. – A flagship of the Hungarian pharmaceutical industry 21 ICT sector 22 Discover ICT opportunities in Hungary 24 Food industry II. WHY INVEST IN HUNGARY? 25 Overview about the incentives in Hungary 26 Regional aid intensity map 27 Non refundable cash subsidies 28 R&D&I in focus 29 Fast growing and best performing sector 30 Interview with Andor Faragó, General Manager – British Telecom in Hungary 35 Tax incentives III. HOW DOES ONE INVEST IN HUNGARY? 37 Establishing your business 40 Accounting requirements 42 Hiring and employment 44 Key tax related issues IV. ABOUTPlease THE HUNGARIANvisit our website INVESTMENT at www.pwc.com/hu. AND TRADE AGENCY (HITA) 49 Introduction of HITA 49 Investing An interview Guide with HungaryJános Berényi, 2013 Presidentwas prepared of HITA by PricewaterhouseCoopers Hungary Ltd. in cooperation with the Hungarian Investment and Trade Agency. Additional content was provided by Absolut Media Please visit our website at www.pwc.com/hu. Co. Ltd. as publisher. V. ABOUT PWC Investing Guide Hungary 2013 was prepared by PricewaterhouseCoopers Hungary Ltd. in cooperation with the Hungarian Investment and Trade Agency. Additional52 Neither PwC content in was Hungary PricewaterhouseCoopers provided by Absolut Media Hungary Ltd. nor the co-authors accept any responsibility for losses Co. Ltd. as publisher. arising from any action taken or not taken by anyone using this publication. It should not be regarded Neither PricewaterhouseCoopers Hungary Ltd. nor the co-authorsas a acceptbasis any for responsibility ascertaining for losses tax liability in speci c circumstances. Professional advice should always be arising from any action taken or not taken by anyonePublished using this by publication. PricewaterhouseCoopers It should not be regarded Hungary Ltd. in cooperation with as a basis for ascertaining tax liability in speci c circumstances.sought Professional before advice acting should always on any be information contained in this booklet. sought before acting on any information containedHungarian in this booklet. Investment and Trade Agency Publishing director: Borbála Palotai, Marketing, Communications and Business © 2013 PricewaterhouseCoopers Hungary Ltd. All rights reserved.© 2013PwC refers PricewaterhouseCoopers to PricewaterhouseCoopers Hungary Ltd. All rights reserved. PwC refers to PricewaterhouseCoopers Hungary Ltd. and may sometimes refer to the PwCDevelopment network. EachHungary member Manager, rm Ltd. is aPwC separate and may legal entity. sometimes refer to the PwC network. Each member rm is a separate legal entity. Please see http://www.pwc.com/structure for furtherTel.: details. +36 1 461 9100 (PwC in Budapest) • E-mail: [email protected] Art director:Please Zsolt Dupkasee http://www.pwc.com/structure • Production manager: János Madarász for further details. Photos: Máté Bach, Tamás Novinszki, MTI, Reuters Publisher: Napi Gazdaság Kiadó Kft. © 2014 PricewaterhouseCoopers Hungary Ltd. All rights reserved. PwC refers to PricewaterhouseCoopers Hungary Ltd. and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see http://www.pwc.com/structure for further details. 4 Investing Guide Hungary 2014 Investing Guide Hungary 2014 5 I. What should you know about Hungary? Partner letter The Hungarian economy may gain new momentum this year from initial growth in Europe and expanding investment activity. his year promises to be exciting for both has barely affected this sector. Therefore, capital the Hungarian and the world economy. inflow is still strong, especially to industries related to The economic events of the past years have automobile manufacturing. put corporations’ adaptability to the test. We are publishing the Investing Guide Hungary for 1. LOCATION AND CLIMATE TCompanies have been focusing on cost optimisation, the fourth time, in co-operation with the Hungarian realignment, and the re-interpretation of new Investment and Trade Agency (HITA). We hope that our ungary’s central location makes it a Hungary, a market of some 250 million people can be challenges and growth potential. In Hungary, last publication provides you with useful information and an favourite destination for foreign investors reached within 600 miles (about 1,000 kilometers). year already conveyed an important message: the extensive insight into Hungary’s economic developments. who intend to expand their operations EU accession in 2004 brought both commercial and Hungarian economy has found its way back to balance, in Central and Eastern Europe. The regulatory advantages. Becoming an EU Member State which is the basis for growth. The Hungarian economy Hcountry’s telecommunications, transport and logistics brought a free trade system, the free movement of may gain new momentum this year from initial growth infrastructure, and the quality of education and life goods, services and labour, as well as capital. in Europe and expanding investment activity. GDP have attracted large amounts of foreign investment to In addition to all these advantages, another of might increase by more than two percent, which offers Best regards, Hungary in recent years. The capital, Budapest, is the Hungary’s strengths is its well-qualified labour force. favourable opportunities to foreign investors. This Tamás Lőcsei center of the country’s economic activity; however, the Due to the high standards of its education system, the country is still an attractive target market for foreign Service Line Leader main cities are also gaining an increasing role. country has a highly skilled and talented workforce, working capital. This is well proved by the development Tax and Legal Services The country’s favorable geographical location places with professional foreign language skills and relatively of manufacturing investments, for example. Crisis PwC Hungary it at the crossroads of main commercial routes. From low wage requirements. 6 Investing Guide Hungary 2014 Investing Guide Hungary 2014 7 Regions of Hungary The financial crisis has led to a slowing in foreign direct investment, not only in Hungary but Northern Miskolc also in other Central and Eastern hungary Northern European countries. In spite of Great PLAIN Győr this, Hungary continues to occupy a leading position in this regard. Budapest Central Based on the third-quarter figures Debrecen TRANSDANUBIA Central for last year, Hungary’s total FDI hungary volume was EUR 76.4 billion, Székes- western fehérvár which, as a ratio of GDP, was the TRANSDANUBIA highest in the region, and, on a per capita basis, the second highest. Some 76.4 percent of all direct Southern capital investments implemented in Southern Great PLAIN Hungary originate from the member TRANSDANUBIA states of the European Union, and Szeged 24.9 percent of this total comes Pécs from Germany. Source: PwC Based on the total number of foreign greenfield investments in Hungary, the percentage of those 2. INFRASTRUCTURE implemented in the Hungarian ECONOMIC DATA manufacturing sector was 37 per cent in 2011 and 2012, while IN HUNGARY AND OUTLOOK: last year this share jumped to 46 GeNeraL iNformaTioN percent. Location: East-Central Europe Road transportation Time zone: GMT+ 1 hour Population: 9.909 million (2013) Motorway network in Hungary Hungary has a central location in Participation in international organizations: Europe, at the crossroads of four main United Nations, NATO, European Union, OECD, European transportation corridors, IMF, Visegrád Group, Organization for Security including: and Cooperation in Europe (OSCE), Conseil No. iV from northern Germany/ Européen pour la Recherche Nucléaire (CERN), North Sea to the Black Sea; Duna Committee, Schengen Agreement, World No. V from the Adriatic ports to Kiev- Meteorological Organization, Bank for International Moscow; No. Vii – the Danube River and Settlements, International Atomic Energy Agency, Rhine-Main canal, from the North Sea; Wassenaar Arrangement on Export Controls for and Conventional Arms and Dual-Use Goods and No. X the north-south corridor from Technologies the Baltic states to Turkey and Greece. Main industries: automotive, electronics, The largest Hungarian cities – pharmaceuticals, ICT, food Debrecen, Nyíregyháza, Miskolc, Currency: HUF (forint) Kecskemét, Szeged, Pécs, Győr and Székesfehérvár – are all connected to ecoNomic daTa the capital city, Budapest, by motorways Labour force: 4.419 million (2013 Oct-Dec) (motorway total: 1,099 km). Employment: 4.015 million (2013 Oct-Dec) Hungary has one of the highest Unemployment rate: 9.1% (2013 Oct-Dec) motorway densities in all of Europe Gross domestic product (USD, PPP/capita): and the third highest road density, after 21,456 (2012) Belgium and Holland. Highways reach the Consumer Price Index: 1.7% (2013) borders of the country and the different Inward foreign direct investment: USD 13.73