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Hungary introduces new tax credit scheme

30 Apr 2004 - Freeway Entertainment

Hungary has introduced a simple and transparent tax incentive mechanism to stimulate local film production activities and boost film and TV production in Hungary.


Under the new scheme, films for cinema and television produced in Hungary are eligible for a 25% rebate based on their expenditure in the country. The incentive is available through local companies which receive significant tax relief after they have supported films. 

Hungarian companies (or the Hungarian branches of non-Hungarian companies) are allowed to deduct 20% of the total direct costs of film production in Hungary from their corporate income taxes payable in the tax year that the subsidy was granted and the following three tax years, in proportions determinable by the subsidising company. 

Eligible film include films of all genres made for cinema release, and feature films, series, documentaries and animations made for televisions or other distribution platforms. Films applying for the incentive have to be submitted to a points-based cultural test, and must contain European content or cultural values. Additional points are granted if EU nationals are either making or financing the movie.

All direct film production costs are eligible except those excluded by the legislation. The producer is also free to spend 20% of the budget outside Hungary without suffering a reduction in the amount of the incentive. This means that not only the spend made to Hungarian taxpayers will qualify, but also some services provided by foreign taxpayers - up to 20% of the total production budget. Consequently, 25% of the Hungarian spend will be refunded.

To qualify, the film production costs must be paid to individuals or companies that are subject to Hungarian taxation and the relief can only be utilised if the Hungarian Film Office (HFO) has registered the film prior to the beginning of its production.

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