Interview with H.E. Erik Haupt, Ambassador of Hungary to Greece

Interviewer: Ms. Vicky Makrigianni, Senior Advisor ExportReady, SEV

V. Makrigianni: Your Excellency, we are currently trying to intensify bilateral relations with Hungary. A few weeks ago, we have organized, with your support, an informative event, together with our partners ACCI, SEVE and EG, to increase the awareness on Hungary. Which opportunities can Greek companies explore in the Hungarian market?

Ambassador: I believe there are always space for improvements in case of trade and investments. That is why we have organized a very successful business forum last year on the margin of the visit of Mr. Szijjártó, minister of foreign affairs and trade on the 1st of October 2021. 13 Hungarian and 42 Greek companies attended the event and 80 B2B meeting were conducted between Hungarian & Greek companies.
Greece has significant export opportunities in the Hungarian market in the field of industrial and pharmaceutical products, as well as in the agri-food sector. In addition, Greece is the second preferred tourist destination for Hungarian citizens.
Building on the experience of teleworking and distance learning, the government intends to prioritize digitalisation. Demand for related equipment and technology, administrative, banking and business solutions and applications is expected to increase.
In the field of tourism, hotels, restaurants have to meet increasingly strict health standards. Demand for “smart” solutions, equipment, technologies (e.g. smart thermometers, building hygiene solutions and agents) is expected to increase in this area. There are serious potentials in green/renewable energy sector as well.

Hungary is a bustling business hub situated right at the very heart of Europe; physically and in historical, geographical, cultural and economic terms, all destinations are within easy reach. Hungary is an open economy and particular emphasis is placed on encouraging foreign direct investment. Forty-five of the world’s 80 largest multi – nationals, and many of their SME suppliers, have established a long-term presence in Hungary, benefiting from the highly skilled workforce, access to world-class universities, an advantageous location, qualified suppliers, and from an advanced business infrastructure. Investors do not simply regard Hungary as an ideal production location, but also as a remarkable “advanced manufacturing & innovation centre” of Europe.

Companies based in Hungary are especially strong in the automotive industry, the biotechnology and the electronics sector, the services sector, and the food and agriculture industry. Famous domestic brands include pharmaceutical company Gedeon Richter, low-cost airline Wizz Air, and brewer Dreher, but there are also up and coming technology brands based in the country, such as presentation software company Prezi and architectural software developer Graphisoft. A number of significant multinational companies − including Citi, Suzuki, Siemens, Audi, Flex, Bosch, Nestlé and Coca Cola − have established their long-term presence in the country and benefit from the highly skilled and relatively inexpensive workforce, access to top universities (both in Budapest and the rural cities), advantageous location, qualified suppliers and excellent infrastructure, including ready-made industrial sites, offices and science parks.

V. Makrigianni: As you have previously mentioned, Hungary boasts a strategic location in Europe, easy access to EU markets, a highly skilled and educated workforce, and a sound infrastructure. Greece on the other hand, stands on the crossroads of three continents steadily strengthening connectivity with global trade lanes, improving port and logistics infrastructure, and providing an excellent level of financial and business services. Do you see investment opportunities in both countries and how we could increase the economic presence?

Ambassador: In 2020, mainly due to COVID our bilateral trade in goods decreased by 2.6% to 615.4 million compared to 2019, so definitely there is space for improvements.

Political stability and business friendliness make Hungary a top investment location in Europe. Hungary’s 9% corporate tax is the lowest in the European Union. The government has also reduced the tax burden on the gross salaries paid by employers from 28.5% in 2016 to 13% in 2022. According to the data of the Hungarian Central Statistical Office, Hungary’s real GDP growth rate in 2021 was 7.1%, unemployment is at 3.8%, and the overall economic outlook remains very positive.

Thanks to its excellent geographic location, Hungary serves as the ideal hub for businesses that connects the East to the West. With its central geographical location, Hungary also offers ideal conditions for both manufacturing and service activities, providing a close proximity to a 250 million market and the opportunity to deliver global services around the clock. The Transeuropean Transport Network offers a direct transport connection between Greece and Hungary. On the other hand, a high-speed train route is under construction from Budapest, through Serbia and North Macedonia to the Greek port of Piraeus, which will also facilitate transport between the two countries.

The Hungarian economy is moving up the global value chain. There has been a shift from labor-intensive to knowledge-intensive investments which is referred to as shifting from ‘Made in Hungary’ to ‘Invented in Hungary’. In line with this, the launch of high value-added business activities is preferred with special emphasis on R&D.

As far as sectors are concerned, automotive, electronics, including battery manufacturing, and food are the top industries that attract the most FDI to Hungary. Medical technology, logistics and ICT are among additional segments that have generated significant number of FDI projects by foreign investors. Hungary has become one of the leading international hubs for the Business Services Sector in Central and Eastern Europe, where more and more complex activities are carried out, including functions like R&D, engineering, product design or software development. In addition, there is an increasing emphasis on talent management, educational collaborations and innovative solutions. Hungary puts special emphasis on E-mobility with the aim of keeping its current position among the top three countries of EV battery manufacturing in Europe.

The Hungarian Investment Promotion Agency (HIPA) provides professional management consultancy services and information packages for companies interested in investing in Hungary. As a governmental agency, HIPA is in charge of providing necessary information about the Hungarian business environment, labor market, potential location possibilities, available incentives (cash and tax form) and information about potential local suppliers. Our goal is to support strategic investment decisions by providing accurate information and relevant advice as well as mediate between the government and the business sector to ensure common success. HIPA offers a wide variety of incentives to facilitate foreign direct investments and reinvestments by the enterprises.

V. Makrigianni: What is the most important factor for doing business in your country?

Ambassador: Investor friendly business environment, highly educated labour force and competitive incentive system: these are the factors that contribute to the success of companies, operating in Hungary. The Hungarian Government has been highlighting the role of innovation and research and development to enhance productivity growth and competitiveness. Promoting higher value-added activities and R&D projects has gained a significant role in the Hungarian investment promotion policy.

Thanks to the business-friendly policies of the Hungarian government and the intensive engagement of HIPA, Hungary saw a new record-breaking investment volume of EUR 5.9 billion in 2021, which shows the unprecedented level of investor interest for the country.

HIPA’s one-stop-shop business consultancy model assisting investors in every step of the way also ensures that tailor-made client services are provided prior to and following an investment decision. HIPA gathers the information needed for decision-making, mediates between government and business, helps to identify suitable local suppliers and supports further expansion plans.

Hungarian government has created an investment friendly environment for companies wish to enter to the Hungarian market.

Key reasons to invest in Hungary:

The unique advantages of the Hungarian branch can be summarized as favourable location, in addition to being located in the heart of Europe, it has excellent infrastructure as well, thus all European countries easily accessible within 2 hours, growing economy EU accession, technically qualified and highly skilled professionals with language knowledge at a reasonable cost. Hungary is situated in the heart of Europe, which makes the country optimal for manufacturing, services and logistics.

The Hungarian corporate income tax (‘CIT’) rate is a flat rate of 9%. There is no withholding tax, based on Hungarian domestic law, on any outbound payments (including dividends, interest, royalties, management fees) made to foreign business entities. Dividend received is exempt from CIT unless it is received from a CFC. In addition, Hungary operates a participation exemption regime for capital gain taxation purposes resulting in Hungary being a favorable holding location for company groups. Furthermore, a favorable group taxation regime is available for Hungarian taxpayers operating within the same company group as from 2019. In a nutshell, by opting for group taxation, group members’ positive tax bases can be offset up to 50% by other group members’ negative tax bases (or previous group tax losses) and group members can benefit from tax incentives together.

Hungary – as a member of the European Union – has harmonized its legal system with European law. New business associations may be established in several forms; however, the most common company form is the limited liability company (Kft.). In a simplified procedure, the registration of a Hungarian company can take place in 1-2 days, and the costs of company registration in Hungary are considered low in the European Union. One of Hungary’s economic advantages is the wide range of available incentives the Government offers to increase competitiveness.

V. Makrigianni: Thank you your Excellency for this fruitful and interesting interview.