Everything you need to know about doing business in Europe.
Compiled by Metropolitan Media
Budapest
Map
Overview
Budapest is located along the banks of the River Danube, in the central region of Hungary, and is its countries capital city. Budapest spans a total of 535km2, making it the largest city in Hungary. Over 1.7 million people inhabit the urban area, with 3.27 million people living in the greater metropolitan regions. Hungary is a landlocked country and shares its borders with 7 other countries: Romania, Ukraine, Serbia, Croatia, Slovenia, Austria and Slovakia.
Up until the unification in 1873, Budapest was divided into 2 cities: Buda which is located on the west bank of the city, and Pest on the east bank. Today the total area is divided into 23 "kerület" or sub-districts, each with individual administrative bodies and councils. The entire country of Hungary is governed by over 300 democratically elected members, who are voted in on a four year basis. Hungary became a member of the European Union in 2004, and aims to adopt the euro as its national currency by 2012. The current currency used is the Hungarian forint (HUF).
Economy
Budapest has long been established as the most important commercial and economic area in Hungary. As with many developed European cities, the service sector is the most prominent business type, accounting for almost 80% of the total GDP. Industrial production has decreased over the past 40 years, but still contributes to 19% of the total GDP. Budapest's stunning scenery and historical architecture help attract many tourists a year. The European Union is feeding a total of €25 billion into Hungary to help improve economic growth, and attract foreign investors to the country, with a large percentage on this amount being spent specifically within the region of Budapest.
The city of Budapest has experienced a recent growth in GDP per capita rates, which stand at $15,424 (World Economic Outlook Database), double the national average. Budapest also generates of 40% of Hungary's total GDP.
Infrastructure
The city of Budapest has the most concentrated amount of transportation systems in the whole of Hungary. The Budapest Ferihegy International Airport (BUD) is located 16km from the central area of the city. It serves 8.5 million passengers annually, and is the largest airport in Hungary. There are 37 airlines operating from the airport, with numerous flights mainly to European destinations, although several airlines fly long-haul to Tel-Aviv, New York and Beijing. The airport is spread out over three terminals and has a separate cargo terminal. There are major plans for future renovation of the airport, which include a €261 investment which will go towards improving parking facilities and expanding existing terminals.
The recent completion of the M0 ring road which goes around the city of Budapest, has greatly improved travel in the city centre. The ring road is connected to 7 other major motorways, and allows easy access to all other major cities in Hungary. There are 7 bridges which cross the River Danube and allow motorists to travel between Buda and Pest.The mass transport company of Budapest (BKV) operates the majority of the public transportation system in the city centre, which consist of buses, trams, metro lines and trolleybuses. More than 50% of the Budapest population rely on public transportation (2009), and BKV's extensive transport system allows a large number of people to conveniently travel throughout the entire city.
The Port of Csepel is located in an industrial suburb on the outskirts of Budapest, it plays a major role in both the shipping of cargo, and the transportation of passengers on cruise ships. It transports over 3 million tonnes of cargo a year, and is the largest port along the River Danube.
Workforce
The majority of the population in Budapest are Hungarian, with 1% of the population being German. Other foreign nationalities located in Budapest include Slovaks, Greeks, Romanians, Chinese, and Poles. The official language is Hungarian, while 22% of people residing in the city speak English, and 16% speak German.
Budapest is the educational hub of Hungary, with many students travelling to the city to study. The Budapest University of technology was founded in 1782, making it one of the oldest technology centres in the world. It has produced several world famous scientists and physicists including the Nobel Prize winner Dénes Gábor. It has a total student population of 24,000, and lectures are taught in five different languages: German, French, Hungarian, Russian and English. There are several creative based institutes, including the Moholy-Nagy University of Art and Design and the prestigious Franz Liszt Academy of Music.
Business Costs
Budapest is known for its reasonable and competitive business costs. Office rentals are extremely low in comparison to many major business locations in the world. Office rentals in the CBD district cost an average of $37.57 per square foot per annum, lower than several cities in neighbouring countries such as Vienna which costs an average of $42.26 per square foot per year (Cushman & Wakefield 2010).
Tax rates are also favourable for businesses, with a low standard corporate tax rate of 16%, and an additional 4% solidarity tax, which is below the national European Union tax average of 26%. A special discounted rate of 10% is available for some companies that meet specific requirements and earn less than Ft 50 million per annum. Income tax rates work on a two tiered system which is dependant on how much the individual earns per annum. Any individual earning less than Ft 1,7000,000 (the equivalent of $8565) is required to pay 18% tax on all earnings, and anyone earning over Ft 1.7 million is subject to a 36% tax rate. Ther are two separate rates for VAT in Austria: a 20% flat rate which is added to most goods and services, and a 10% reduced rate which applies to tourism services and some foodstuffs.
Although wages are higher in Budapest in comparison to the national average of Hungary, the are considerably lower than many western European cities. A minimum wage is available for all legal and contracted workers within the country, and stands at Ft 73,500, which is equal to $370 a month (2010). Employees who have completed university level education are legally entitled to a rate that is 60% higher than the basic flat wage.