Wealth tax on startups: industry voices serious concerns
Published
The professional organization Startup Hungary recently voiced sharp criticism regarding the planned wealth tax. In their view, the new tax would impose a disproportionately heavy burden on domestic innovative enterprises, which could threaten the long-term development and competitiveness of the Hungarian startup ecosystem.
Startups operate fundamentally differently from traditional companies. These businesses often do not generate profit for many years, as they reinvest all their revenue into development and growth. However, a wealth tax would not tax profit, but rather the company's value or assets, which would create a payment obligation even for companies that have not yet achieved stable financial results.
According to experts, this regulation could drastically reduce investor appetite in Hungary. If startups are required to pay high taxes in the early stages of their operations, venture capital funds will prefer other countries for their investments. This process would not only make raising capital more difficult but could also accelerate the brain drain of talented Hungarian professionals.
Representatives of Startup Hungary emphasized that supporting the technology sector is crucial for the future of the Hungarian economy. In their proposals, they ask policymakers to create a tax environment that takes into account the unique operating model of startups and does not penalize innovation.
The government is currently reviewing the feedback from economic stakeholders. Further consultations are expected in the coming months regarding how the new measures could be introduced without causing a decline in the domestic technology sector.
Sources: Mfor.hu
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