30%
Filming in Hungary
Tax Incentive for Film Productions
How does the Tax Rebate System Work for Film Productions in Hungary?
Last updated on January 21st, 2025
Last updated on January 21st, 2025
Since 2004, Hungary has played a leading role in Europe in supporting international productions through its uniquely straightforward tax rebate system. While other countries had similar incentives, the Hungarian government introduced one that was unparalleled in its simplicity, originally offering a generous 20% rebate. Over the years, as countries like Ireland, Belgium, and the United Kingdom adopted similar models, Hungary increased its rebate rate—first to 25% and then to 30% in 2018. Productions can maximize this benefit if at least 80% of their budget is spent in Hungary.
Over the past 20 years, Hungary’s tax rebate system has helped establish the country as a globally recognized film production hub. This has provided invaluable experience for local professionals and generated capital for production companies and studios, enabling them to reach world-class standards. These are crucial factors for productions choosing a filming location, as such expertise and infrastructure take years to develop. As a result, while some countries—such as Poland, Croatia, and Serbia—now offer even higher rebate percentages, their infrastructures have yet to fully meet global industry standards, unlike Hungary’s.
Since 2004, Hungary has played a leading role in Europe in supporting international productions through its uniquely straightforward tax rebate system. While other countries had similar incentives, the Hungarian government introduced one that was unparalleled in its simplicity, originally offering a generous 20% rebate. Over the years, as countries like Ireland, Belgium, and the United Kingdom adopted similar models, Hungary increased its rebate rate—first to 25% and then to 30% in 2018. Productions can maximize this benefit if at least 80% of their budget is spent in Hungary.
Over the past 20 years, Hungary’s tax rebate system has helped establish the country as a globally recognized film production hub. This has provided invaluable experience for local professionals and generated capital for production companies and studios, enabling them to reach world-class standards. These are crucial factors for productions choosing a filming location, as such expertise and infrastructure take years to develop. As a result, while some countries—such as Poland, Croatia, and Serbia—now offer even higher rebate percentages, their infrastructures have yet to fully meet global industry standards, unlike Hungary’s.
Advantages Recognised by the Government
The Hungarian Parliament not only passed the film law defining the tax rebate system but also recognized the broader economic benefits of a thriving film industry. The generous 30% rebate reflects the government's belief that film productions have a significant positive impact on the country's GDP. Additionally, due to the legal administration required to access the rebate, unreported employment has been minimized. Fortunately for international productions, Hungary’s affordability is not diminishing due to its popularity; on the contrary, costs are actually decreasing due to the depreciation of the forint against the US dollar and the euro.
The government has also acknowledged the high marketing value that comes with visibility in international productions. This exposure attracts both further film projects and a large number of tourists. As Hungary—and particularly Budapest—gains a stronger reputation as both a film industry hotspot and an ideal travel destination, more productions choose to film in Hungary. Many even set their stories in Budapest, rather than using it solely as a stand-in for other European cities, as was often the case in the past.
Thanks to the late Andy Vajna, Hungary’s film industry and legislation were restructured to align with the simpler American model, particularly regarding processes like obtaining location permits. To ensure a stable and quickly accessible budget for tax rebate payments, a central deposit account was established in collaboration with the Hungarian Film Fund and the National Tax Administration. Developing such a reliable system required decades of experience—especially given the high volume of productions and the extensive support provided, as Hungary allocates the highest percentage of its GDP to the film industry in Europe.
In 2023, film production spending in Hungary reached approximately USD 910 million, with international productions accounting for nearly 90% of this expenditure. This significant investment underscores Hungary's status as a preferred location for major American studios such as NBC and Netflix. Thanks to the dynamic development of the Hungarian film industry and film-friendly government policies, Hungary has become the second most significant film production hub in Europe, behind only London. While both countries offer distinct production advantages, Hungary excels in on-location filming, whereas London leads in post-production and specialized production services.
In an International Context
By 2020, all European Union countries had introduced tax rebate systems to support feature films and TV productions, each with varying rates and caps. The only exception is Denmark, which does not have a tax rebate system. Commercials and music videos are generally not eligible for support, while the inclusion of other production types varies by country. Applicants in each country must pass a cultural test to determine whether their project qualifies for state support. The most essential criteria are that the production must not be pornographic or excessively violent. Additionally, it should present European culture—and ideally the host country's culture—in a positive and respectful manner.
Eligible Production Types in the EU
Offering tax rebate systems: Every EU country apart from Denmark
Accepting feature films and TV productions: Every EU country apart from Denmark
Accepting commercials or music videos: None of the EU countries
Accepting reality TV (while others do not): Cyprus, Malta
Accepting video games (while others do not): UK, Greece
Not accepting documentaries (while others do): France, Iceland, Italy, Sweden
Not accepting animation (while others do): Germany, Iceland, Italy, Sweden
As previously mentioned, all tax rebates apply to films and TV productions, but regulations differ significantly when it comes to documentaries, animated films, reality television, and video games. One of the most pressing questions today concerns the eligibility of streaming films and TV series. While many U.S. states offer tax rebates for web-based content, the EU has yet to develop a comprehensive support system for such productions, despite the increasing number of projects brought to Europe by American streaming giants like Netflix and HBO. Hungary has emerged as a leader in adapting its regulations to this new era of film distribution, as it no longer requires productions to have a theatrical release to qualify for rebates. The only other European countries that currently offer similar support for internet-based content are Romania and Italy.
Tax Rebate Rates in the EU
20-25%: Croatia, Czech Republic, Finland, Macedonia, Spain, UK
25-30%: Belgium, Estonia, France, Germany, Hungary, Italy, Lithuania, Poland, Portugal, Slovenia, Sweden
30-40%: Cyprus, Greece, Ireland, Netherlands, Romania, Slovakia,
40+%: Latvia, Malta
Germany, Greece, Italy, and Ireland have tax rebate systems comparable to Hungary’s, so a detailed comparison provides insight into how they measure up. Among these, only Greece imposes a minimum budget requirement for eligible productions. However, it is also the only country without a cap on the total rebate a production can receive. Greece stands out by extending its 35% tax rebate to video games, animated films, and documentaries as well. While Germany offers the lowest rebate percentage (20-30%), it compensates with the largest annual budget of €140 million. Italy follows with an annual budget of €115 million and a generous per-production cap of €70 million, but it excludes commercials, reality TV, animation, documentaries, and video games—limiting eligibility strictly to feature films and TV productions. Ireland, with an annual budget of €45 million, does not impose a minimum production size requirement for its 32% rebate but enforces a cap of €5 million per project. In comparison, Hungary’s tax rebate remains highly competitive. It stands out not only for its high percentage and broad eligibility across multiple genres but also for its lack of a strict cap, making it one of the most attractive options for international productions.
The Hungarian System
The available subsidy amounts to 30% of a film production’s total costs incurred in Hungary. Eligible genres include feature films, short films, documentaries, nature films, animated films, made-for-TV movies, and TV series. However, commercials, reality shows, and generic fiction series that lack cultural value do not qualify for support.
While there is no budget limit determining which productions qualify for subsidies, projects must pass a production test. This evaluates the proportion of Hungarian crew members involved in the production. As a result, even a project that is only partially filmed in Hungary but employs a significant number of Hungarian professionals may still be eligible for the rebate.
Another key requirement is the cultural test. In practice, this means that a production using Hungarian shooting locations must depict, at least to some extent, a European setting. Additionally, projects that focus purely on violence or contain content severely harmful to minors—such as adult films—are not eligible for support.
Act II of 2004 on Motion Picture, Article 12/B
A film shall meet cultural requirements if it scores at least 16 points based on the criteria established in the table below, in such a way that it scores points in at least four out of categories a)-n), and a) shall be considered a European co-production film, as determined in a separate law, if the co-production is made with Hungarian participation, or b) fulfils at least 2 of the criteria listed in Points a)-h):
a) the topic of the film or the work that serves as the basis for the film is based on a story (event) that is part of Hungarian or European culture, or is related to the presentation or reworking of a story (event) that is significant from a historical, mythological or religious aspect; Awardable points: 1
b) the topic of the film or the work that serves as basis for the film features persons or characters who are related to Hungarian or European culture, or are significant due to their relation to history, society or religion; Awardable points: 1
c) the film presents Hungarian or European traditions and lifestyles or promotes certain elements of these traditions and lifestyles; Awardable points: 1
d) the film is set at a Hungarian location or (an)other European location(s) or a related cultural setting, or its imagery presents a Hungarian location or (an)other European location(s) (city, region) or presents typical Hungarian or European cultural motifs; Awardable points: 1
e) the script of the film or the work that serves as basis for the film is based on the adaptation of a literary or other work of cultural value (works of applied and fine art, musical composition, etc.); Awardable points: 1
f) the topic of the film or the material that serves as basis for the film is focused on an issue that is relevant to Hungarian society or other European societies from a cultural, sociological or political aspect; Awardable points: 1
g) the film reflects or presents certain significant Hungarian or European values—in particular: cultural diversity, respect for cultural traditions, respect for the institution of the family, solidarity, equality, protection of minorities, tolerance, environmental protection; Awardable points: 1
h) the film serves the better understanding of and familiarity with Hungarian and European culture and identity. Awardable points: 1
i) a film creating cultural value based on its genre; Awardable points: 4
j) contributors to the film include Hungarian citizens or citizens of other EEA States, or citizens of non-EEA States who won awards at international film festivals in their capacity as a: director, producer, director of photography, script writer, leading and supporting actors, composer, production designer, costume designer, editor, make-up artist, senior production manager/production manager or post-production manager (audio/visual/digital); Awardable points: 1 point for each 2 categories fulfilled, maximum 6 points
k) the final version of the film is produced in the language of an EEA State; Awardable points: 4
l) At least 51% of the participants of the film — with the exception of contributors who scored points in accordance with Point j) — are citizens of an EEA State or the film in question is a co-production that does not qualify as a European co-production film; Awardable points: 4
m) The shooting location is in Hungary; Awardable points: 3
n) The preparation of film production or the post-production takes place in Hungary. Awardable points: 3
A further condition is that the production company must agree to properly credit the Hungarian state as a sponsor in the film’s closing credits.
What Expenses Can Be Included?
All qualified production costs are eligible. This primarily covers most below-the-line expenses, such as technical and crew production costs, facility rentals, props, makeup, wardrobe, set construction, and background talent. Additionally, under certain conditions, some above-the-line costs—such as those related to directors, producers, and performers—may also qualify.
Once the production budget is finalized, Progressive Productions will prepare a statement detailing the subsidy-eligible expenses. The next step is registering the production with the National Film Office by submitting the screenplay and budget. The office will then review the proposal and provide an official opinion. Registration must be completed at least 30 days before filming begins. This does not mean that the budget cannot be adjusted afterward, but major modifications should be avoided.
Once filming starts, the budget will be refined based on actual services rendered, which will determine the final subsidy amount. Progressive Productions will manage the process of drawing these funds and transferring them to our partner’s account. Afterward, all expenses—verified through receipts and invoices—will undergo a final review by the National Film Office. Upon completion of this audit, the office will issue the official subsidy certificate.
When are the Subsidy Funds Transferred?
Subsidy funds are always transferred retrospectively. This means that before filming begins, our partners must have the full production budget readily available. This amount must be listed as a financial obligation in the Production Service Agreement, which is submitted to the National Film Office. (A different regulation applies to films in which we participate as a co-production partner rather than as a service production company; in such cases, the subsidy funds can be integrated into the production budget.)
The Hungarian state provides subsidies indirectly through large corporations by offering them tax incentives for sponsoring film productions. At the end of the fiscal year, these corporations can reduce their taxable income by an amount greater than their actual sponsorship contribution, allowing them to optimize their tax liabilities through the subsidy program. Progressive Productions’ role in this process is either to identify a suitable sponsor company or to engage a financial broker to secure one for a commission. Alternatively, the Hungarian state has introduced a dedicated deposit account, regularly funded by the National Film Office. If sufficient resources are available, subsidies can also be disbursed from this account.
Hungary’s Place in the Central European Region
Finally, it is worthwhile to compare Hungary with other Central European countries, such as the Czech Republic, Romania, and Poland. Tax rebate rates vary across the region: the Czech Republic offers the lowest at 20%, Poland matches Hungary’s 30%, while Romania provides the highest at 35-40%. However, Hungary is the only country among them that imposes no cap per project or annually. The Czech Republic has no per-project cap but does set an annual limit, while both Poland and Romania impose restrictions on both. This can become problematic when a country is in high demand for international productions and operates on a first-come, first-served basis—meaning that if a production applies too late in the year, there may no longer be funds available for tax rebates. Additionally, Poland has a significantly higher minimum local spending requirement—ten times larger than that of the other countries—whereas Hungary does not impose any minimum budget threshold for eligibility. Across all four countries, feature films, TV shows, documentaries, and animated productions qualify for rebates. However, commercials, video games, and reality TV are not eligible—except in the Czech Republic, where reality TV does qualify for tax incentives.
In summary, this is a highly favorable system even by international standards, making it an attractive option for all types of productions—especially when combined with Hungary’s experienced professionals and well-equipped studio infrastructure. Progressive Productions is dedicated to providing our partners with the best possible solutions when choosing Hungary as their filming destination.
