Hungary - Country Commercial Guide
Trade Financing

It covers payment methods and information on, banking systems, foreign exchange controls, and U.S. and correspondent banking.

Last published date: 2021-11-19

Hungarian businesses tend to be price sensitive.  U.S. exporters are advised to work with Hungarian representatives on a pricing strategy to keep import costs low.  With Hungary’s accession to the European Union in 2004, Hungary adopted the EU’s common external tariff (CXT) rates.  Tariff assessment and all other customs procedures take place at the first port of entry into the EU.

Hungary’s Value Added Tax (VAT) sharply increases the price of U.S. exports for Hungarian consumers. The Value-Added Tax (consumption tax) is 27% on most products and services.

The rate of inflation was 3.4% in 2019 and 3.3% in 2020.  Fluctuations in the exchange rate of the Hungarian Forint to other currencies make planning very difficult. Much of the population was indebted in foreign currencies (mainly EUR and Swiss Franc), so the weakening of the Forint also significantly raised the burden of debtors, including households, the business sector, as well as the government. 

Foreign companies operating in price-regulated sectors, such as telecom, energy, pharmaceuticals and retail suffered decreased margins due to sector taxes and other austerity measures, as well as government delays over the past few years.

After joining the EU, the numerous EU-oriented reforms have removed price controls on most utilities.  By the early 2000s, the Government of Hungary had largely deregulated utilities, and made an effort to be closer to the EU pricing levels for electricity, gas and wastewater prices, (this was a significant price increase for households and businesses).  However, in 2013, the Government of Hungary introduced a 10% decrease in retail utility prices to consumers for electricity and gas heating, and another 10% retail price decrease later that year on water and sewage services as part of the country’s public utility rate cut program and that of protecting arable land in the country.  Most utilities were re-nationalized including electricity, gas, water and sewage to provide favorable rates to consumers.  In other sectors such as telecommunications, cable or digital TV services, and internet services, stiff competition continues among service providers.

Transparency International (TI) and other anti-corruption watchdogs have highlighted EU-funded development projects as one of the largest sources of corruption in Hungary.  A TI study found indices of corruption and overpricing in up to 90% of EU-funded projects.  A Corruption Research Center Budapest study based on public procurement data between 2010-2016 revealed that the massive influx of EU funds reduced competition and increased levels of corruption risk and overpricing in public procurements.  According to the study, EU-funded tenders perform poorly in regard with corruption risks, competitive intensity, and transparency, compared with Hungarian-funded tenders. Besides their positive impact on GDP growth and development, EU funds in Hungary contribute to the system of political favoritism and fuel crony capitalism, the study concluded.  Find more at EU Pricing.

Methods of Payment

Hungary’s EU-harmonizing reforms have created a financial environment where virtually all capital-related institutions, products, and services can be found.  The Hungarian Forint has been fully convertible for all financial transactions since 2001, and both the Hungarian financial market and capital market transactions are fully liberalized.

The National Bank of Hungary (Magyar Nemzeti Bank – MNB) is the central bank and a member of the European System of Central Banks (ESCB).  The MNB and the members of its decision-making bodies perform their duties and carry out their obligations independently from the government.  With the exception of the European Central Bank, the MNB (and the members of its decision-making bodies) may not ask for or follow instructions from the government, the institutions and bodies of the European Union, the governments of other EU member states or any other institution or body.

According to Act CCXXXVII of 2013 on Credit Institutions and Financial Enterprises (Financial Enterprises Act), credit institutions are financial institutions which collect deposits and provide credit lines and loans and perform other financial services.  A commercial bank may only operate in Hungary as a company limited by shares (Rt.) or as a branch office of a foreign bank.  In the case of a branch office of a foreign bank, a license for banking activities issued by its foreign authority is also required.  The Financial Enterprises Act determines the range of financial services that commercial banks may provide.

In Hungary, foreigners may only perform financial services in one of two ways: by establishing a company limited by shares and registered in Hungary, or by founding a registered branch office. Banks - including the branch office of foreign credit institutions - may be founded with a minimum of HUF 2 Billion (about USD 7 Million) in initial capital.  A foreign registered credit institution may also establish bank representation but may not perform any kind of business activity.

Since Hungary’s accession to the European Union, credit institutions registered in another EU member state may engage in cross-border services.

Financial institutions whose controlling interest is owned by foreign professional investors constitute more than 90% of the registered capital of the sector including 35 commercial banks (see their list on the website of the Hungarian Banking Association. The Hungarian Development Bank – a bank offering favorable credit facilities to Hungarian businesses implementing economic development projects – and Eximbank – a bank serving Hungarian exporters by providing them effective financing and insurance facilities – have been owned by the state ever since their founding in 1993.  In 2015, MKB and Budapest Bank became state property, increasing state-ownership to more than 50% of the banking sector in Hungary.   Although foreign investors had controlled 80% of the banking sector in Hungary, this was reduced to 47% in 2016.  The dominance of foreign ownership has been crucial in upgrading the formerly one-level banking sector to a double-level one which meets international standards. The U.S. exporter should be aware that access to capital in Hungary is still difficult and limited, compelling many Hungarian SMEs to depend on self-financing, including payments for imports.  For this reason, U.S. exporters tend to offer 60-day or 90-day payment terms to their Hungarian customers, after establishing a track record for payments.

A bank account at a commercial bank is required to register and run a company in Hungary.  Wire transfers are used for more than 80% of payment transactions, and new customers are sometimes required to pay in advance.  A letter of credit is often used for more significant and high-value first transactions before mutual trust develops between partners.  Credit cards are also used but mostly for individual purchases.  The largest commercial banks in Hungary are: OTP - Hungarian Savings Bank, MKB, Commercial and Credit Bank (K&H), UniCredit, Erste, Raiffeisen, Budapest Bank and CIB Bank.  They are all members of the Hungarian Banking Association.

How Does the Banking System Operate?

The Hungarian banking system is a two-tiered banking system, with the MNB occupying the first level, with the primary objective of reaching and maintaining price stability.  The Central Bank’s rights and duties include forming and implementing the country’s monetary policy, managing the production and distribution of the Forint, and managing the accounts of commercial banks.  Unlike the Federal Reserve, the MNB is only allowed to contribute to the government’s economic goals if the measures don’t pose a threat to price stability.

On the second level are the credit institutions - including banks, credit unions and saving cooperatives. They collect deposits and offer further financial services for Hungarian citizens and businesses.  Please see above for a list of the major commercial banks in Hungary.

Foreign-Exchange Controls

There are no foreign exchange controls in Hungary.

U.S. Banks and Local Correspondent Banks

At present, Citi is the only U.S.  bank operating in Hungary but since Citi sold its consumer banking business in 2015 it only offers commercial banking services in Hungary.

The U.S.-based BlackRock, the world’s largest investment management company, entered Hungary in 2017 with a global technology and innovation hub in Budapest.