August 23, 2013

International award winning locations in Hungary

Beside the all-time-winner Budapest, Eastern Hungary won the most relevant international business awards.

The Financial Times' bi-monthly publication, the fDi Magazine and its online edition focus on international business and foreign direct investments. In every two year the fDi Magazine ranks the European cities and regions based on statistics about infrastucture, HR, economic potential, cost effectiveness, quality of life, business friendliness and fdi promotion strategies.
Hungarian cities and regions entered for this competition, and we edited a summary about more year results.
... and the winner is... Source: fDi Magazine
1. Budapest and Central Hungary
2012/13: top10 Eastern European cities (8. Budapest)
2012/13: top10 Eastern Regions, Overall (5. Central Hungary)
2010/11: top25 European Cities, Overall (25. Budapest)
2010/11: top10 Eastern European Cities (3. Budapest)
2010/11: top10 Eastern Regions, Overall (3. Central Hungary)
2008/09: top50 European Cities, Overall (47. Budapest)
2008/09: top25 Most Attractive for FDI (25. Budapest)
2008/09: top10 Most Cost Effective (6. Budapest)

2. Debrecen and Northern Great Plain Region
2010/11: top5 Eastern Regions, FDI strategy (1. Northern Great Plain)
2010/11: top5 FDI strategy: Eastern Europe (5. Debrecen)
2010/11: top25 Regions: FDI startegy (24. Northern Great Plain)
2010/11: top10 Small Regions: FDI strategy (10. Northern Great Plain)

3. Miskolc and Northern Hungary Region
2010/11: top5 FDI strategy: Eastern Europe (4. Miskolc)
2010/11: top5 FDI strategy: micro (4. Miskolc)
2008/09: top25 Most Attractive for FDI (16. Miskolc)

4. Central Transdanubia
2010/11: top10 Eastern Regions, Overall (10. Central Transdanubia)

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As you can see, beside Budapest, two Eastern Hungarian regions and their capital cities, Northern Hungary (and Miskolc) and the Northern Great Plain Region (and Debrecen) won the most awards. These are the most emerging regions in Hungary, with enormous work force reserves, relatively good infrastructure and large scale public investments to improve business environment.

On the map:
Graphics: Manufacturing Hungary Blog

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August 2, 2013

Tax competition for manufacturing investments

The Eastern part of the European Union is not just a low-cost but also a low-tax location, supporting manufacturing on this way.



Corporate tax rates in the EU. Sorurce: Wikipedia

Most of the Eastern European countries provides corporate tax rates under 20%, while tax rates over 30% is not rare in Western Europe. Tax competition may be a controversial trend: some opinions interpret it as the liberalizing force in the word economy, others - involving the European Comission - think: tax competition is harmful. The emerging Eastern European member states of EU accompany old-school tax racers like Ireland to block tax harmonisation efforts in Europe.

Hungary: towards 10% corporate tax rate?

There are some goships how does Hungary decrease corporate tax rate. One of them is about the leading automaker: Audi. When the company investigated Hungary in 2010 as a potential site for its new €900 million and 1,800 new jobs investment, the Hungarian government drafted a tax cut from 19% to 10%. Finally (in the economic crisis) the government couldn't manage the tax cut (10% corporate tax is for small companies only), but this kind of "normative incentive" is in the air (Audi decided for Hungary).

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Development tax allowance

Hungary provides a special development tax allowance for investors. If your investment in manufacturing industry reaches €10 million and you create 150 new jobs (€3.3 million/75 new jobs are enough in prefered regions like Eastern Hungary), you get an exemption for 80% of your corporate tax payable for 10 years following the fulfillment of the investment.

Background: a 2-minutes video about tax competition


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