Social Economy in Europe: Hungary
Table of contents
Note: The data presented in this table derive from the OECD country fact-sheets and the European Commission DG GROW studies. Variations in scope, methodology and most recent available years may lead to differences in the headline figures across countries and with other sources.
Source: Data for Hungary relates to 2021 (CIRIEC; Euricse; European Innovation Council and SMEs Executive Agency (European Commission); Spatial Foresight, 2024[1]) (OECD CFS, 2023[2]), except data on the involvement with any social economy organisation as a volunteer relating to 2020-2025 (European Commission, 2025[3]).
Hungary has no national strategy for the social economy nor a unified definition of the concept. Instead, the social economy ecosystem operates through a combination of fragmented legal frameworks, EU-funded initiatives, and localised community projects. Although there is no framework law around the social economy, there are specific acts on its constituents, namely Act X on Cooperatives of 2006, Act CLXXV of 2011 on Non-Profit Organisations, and Act V of the Civil Code of 2013, which contains relevant provisions for some social economy entities such as foundations and associations.
Institutions
The Ministry for National Economy and the Ministry of Interior currently share primary oversight of social economy in Hungary. Other ministries, such as the former Ministry of Human Resources and Ministry of Human Capacities, engaged with policy relevant to social economy when aligned with their other policy mandates (OECD CFS, 2023[2]).
Competence
Different ministries cover specific aspects to the social economy. The Ministry for National Economy co-ordinates EU-funded programmes which target social enterprises. This includes the ESF+-backed Human Resources Development Operational Programme Plus. The Ministry of Interior hosts the Social Co-operatives Co-ordination Department which oversees registration and support for co-operative initiatives. Since 1 July 2006, it has been possible to establish social co-operatives in Hungary. Act X of 2006 established social co-operatives as a specific form of co-operatives and Act CXLI of 2006 on Social Co-operatives specifically regulates social co-operatives and defines them as non-profit-oriented businesses aimed at social inclusion and employment.
Other ministries have competencies in terms of monitoring and support but these are only employed when they align with their primary mandates. For example, the former Ministry of Human Resources previously spearheaded the MarketMate Hungarian National Priority Project (PiacTárs), which developed monitoring tools for social enterprises’ impact assessments (Interreg Europe, 2018[4]).
Institutions
Hungary is a unitary state with a centralised administrative structure. It is divided into 19 counties (vármegyék) and the capital city, Budapest, which holds a special status. These counties are further subdivided into 174 districts (járások). Budapest itself is divided into 23 districts, each headed by its own mayor (European Committee of the Regions, n.d.[5]).
In 2012, significant reforms reduced the autonomy of local governments, re-centralising many responsibilities to the central government (Hungarian Government, n.d.[6]). Counties now primarily focus on regional and territorial development, while municipalities handle basic services such as local healthcare, social protection, and environmental management.
There is no specific information indicating that subnational authorities in Hungary oversee such policies independently. The national government is responsible for social policies, including welfare, pensions, and family policy through dedicated ministries such as the Ministry of Culture and Innovation.
Competence
Regional competence on the social economy in Hungary is largely steered by EU-funded initiatives. For example, the LEADER Programme is a rural development initiative under the European Union’s Common Agricultural Policy (CAP), specifically within the EU’s Rural Development Programme (RDP) (EU Cap Network, 2024[7]). It is co-financed by the European Agricultural Fund for Rural Development (EAFRD) and the Hungarian government, and it aims to support local rural economies and improve local governance by funding small-scale projects, encourage innovation and entrepreneurship and promote social inclusion by helping disadvantaged groups.
Local Action Groups (LAGs) operate across Hungary to develop and implement LEADER projects, select beneficiaries and support local development. A variety of LAGs can be found such as the Homokhátság Development Association, Bakony and Balaton Keleti Gate Association and the Zemplén Mountain Development Association.
Institutions
There is limited evidence of designated local frameworks for the social economy. Many municipalities benefit from the activities of the above noted LAGs, which operate regionally to support local development. Additional strategies that are aimed at rural development are evident in the municipality of Alsómocsolád.
Competence
The Act CLXXV of 2011 on Non-Profit Organisations enables local governments to delegate social service delivery to non-governmental organisations under public procurement agreements. Aside from this, public procurement is centrally organised by the Public Procurement Authority, the Ministry of Finance and the Hungarian State Treasury.
There is limited evidence of the competence of municipalities in Hungary to support social economy. Some examples of initiatives that may be relevant to social economy can be found. For example, the municipality of Alsómocsolád developed a smart village strategy as an innovative approach to rural development that leverages digital technologies, community engagement, and sustainable practices to improve the quality of life in rural areas (SmartRural21, 2021[8]). The strategy sets up social cooperatives as a key feature of community-driven economic development and includes economic strategic programming such as "Eating Our Own Bread" Economy Development Program to focus on agricultural production, small-scale business development, and local food supply chains.
Within the framework of the LEADER programme, Hungarian Local Action Groups (LAGs) cover all rural areas. The action of Hungarian Local Action Groups (LAGs) resulted in the implementation of 105 LAG Local Development Strategies, fostering community-led rural development.
A notable gap exists in interministerial co-ordination, as other departments engage with social economy components only when aligned with their policy mandates.
Across multiple public authorities and/or levels of government
The LEADER programme aims to foster co-operation among municipalities, civil organisations, and businesses. This programme is a European-wide initiative which is administered both nationally and regionally in Hungary.
PiacTárs is a consortium that brings together non-profit organisations and the Ministry for National Economy (former Ministry of Finance) to operate as a pre-evaluation system for social enterprises. Its primary objective is to facilitate access to non-refundable grants under Hungary’s Economic Development and Innovation Operational Programme (EDIOP), co-financed by the European Social Fund (ESF) and the European Regional Development Fund (ERDF). The programme offers a combination of financial and non-financial support, incorporating a pre-certification scheme to ensure investment readiness and enhance the sustainability of supported enterprises (OECD; European Union, 2021[9]).
With social economy representatives
The National Federation of Social Co-operatives (SzoSzöv) aims to promote the activities of social co-operatives and support the development of a co-operative network. Funded by the EU, it provides information, advice, document samples to social co-operatives across the country. It is a representative of social co-operatives in the country.
The Coalition of Hungarian Social Enterprises represents and advocates for the interests of social enterprises in Hungary. They unite all organisations that achieve their social goals through their business activities. The Coalition has established a partnership with national policy makers to advance the recognition of social enterprises and ensure their inclusion in government support programs and enterprise development initiatives (Coalition of Hungarian Social Enterprises, 2023[10]).
International organisations play a key role in the social economy ecosystem in Hungary. Ashoka Hungary, Impact hub and NESsT Hungary all provide support services in the form of physical spaces for social entrepreneurs to co-work, events for social economies to network and connect, as well as tailored financing and incubation. These organisations, however, either operate primarily independently from government, or cooperate on an ad-hoc basis with relevant national bodies through EU-funded or municipal projects.
Note: While the LEADER Programme is an initiative for local and rural development, it is administered at a national level by the Ministry of Agriculture.
Source: See (EU Cap Network, n.d.[11]) for the full registry of LAGs.
Strategies, plans and legal frameworks
Hungary does not have a unified national strategy or comprehensive legal framework dedicated exclusively to the social economy and social enterprises. Instead, the sector is governed by a series of individual legislative acts addressing specific components, such as co-operatives and various civil society organisations.
However, objectives related to the social economy appear in other national policy documents, signalling growing awareness and interest in the sector. For instance, the Hungary’s SME Development strategy recognises the role of social enterprises in the mainstream economy. (Coalition of Social Enterprises in Hungary, 2024[12]) (Government of Hungary, 2024[13]). Social economy themes are also integrated in broader strategic documents related to social inclusion and rural development.
Support from the public sector
Various ministries are responsible for different areas of the social economy sector. For instance, the Ministry of National Economy oversees EU co-funded programmes that support social enterprises, while the Ministry of Interior has a department dedicated to co-ordinating social cooperatives.
Since Hungary does not have national funding programme dedicated exclusively to social enterprises, there are bodies and instruments that are accessible to these entities. The Hungarian Development Bank (MFB) provides funding for a wide range of businesses, including cooperatives and non-profit organisations, particularly in underdeveloped regions. Through its national network MFB Pont Plusz, MFB grants preferential loans and offers tailor-made financial products that promote operational stability and growth for enterprises, including social enterprises (MFB, n.d.[14]).
Sector-specific grant initiatives have also been introduced to address targeted needs. For instance, the Ministry of Agriculture announced tenders to support the development of agriculture-related social enterprises, aiming to engage socially and professionally disadvantaged communities and groups in agricultural activities through social farming (National Chamber of Agriculture, 2024[15]) (NIOK Foundation, n.d.[16]).
Other public agencies, though not specifically established to support social economy entities, contribute to the sector through targeted initiatives. For example, the Hungarian Economic Development Agency (MGFÜ) facilitates business development programmes, fosters networking opportunities, and provides advisory services that enhance small-medium enterprises (SMEs) capabilities in areas such as digital transformation, sustainability and market expansion. While its core mandate focuses on SMEs, social enterprises can also access its tools and resources, contributing to the long-term success of businesses across Hungary (MGFÜ, n.d.[17]).
Support from the private sector
The ecosystem of private and civil-society support for social economy in Hungary is vibrant, particularly in the absence of dedicated state structures. The Coalition of Hungarian Social Enterprises, for instance, seeks to represent the general interests of social enterprises across the country. It advocates for more favourable environments for social enterprises and promotes the development of the certification system to enhance public recognition and visibility, through close collaboration with national policy makers (Coalition of Social Enterprises in Hungary, n.d.[18]).
Member-led networks also advocate for their respective sectors and offer practical support. The National Federation of Social Cooperatives (Szociális Szövetkezetek Országos Szövetség), established in 2010, serves as principal representative body of social cooperatives in the country, with a mission to promote autonomous, sustainable communities under the cooperative principles. The National Federation of Social Enterprises (Társadalmi Vállalkozások Országos Szövetsége), founded in 2015 with 67 members, represents various social enterprises, including social cooperatives, associations, foundations and non-profit organisations. Another example is the Hungarian Social Farm Federation (Magyar Szociális Farm Szövetségp), created in 2016, which aims to promote social farming initiatives by providing training, organising conferences, facilitating international networking opportunities and engaging in public relations and lobbying efforts.
International non-profit organisations have established local branches in Hungary to support and nurture the development of social entrepreneurs. Ashoka Hungary, NESsT Hungary and Impact Hub Budapest are prominent examples, each offering incubation, mentorship and networking opportunities tailored to social entrepreneurs and social innovators (European Commission: Directorate-General for Employment, Social Affairs and Inclusion, Juliana Kiss and Melinda Mihály, 2019[19]).
Private entities establish grant programmes to support social economy organisations. For example, the International Visegrad Fund (IVF), an international donor organisation established by the Visegrad Group (Czechia, Hungary, Poland and Slovak Republic, also known as the V4), offers financial support for social enterprises in Hungary (Visegrad Fund, n.d.[20]). Badur Foundation is another important player, financially supporting grassroots organisations and social enterprises, while also building long-term partnerships and offering holistic support to these entities (Badur Foundation, n.d.[21]).
Impact investment has gained momentum in Hungary’s social economy ecosystem in recent years. A prime example is the launch of Impact Ventures III in 2024, a EUR 40 million venture capital fund backed by the European Investment Fund and Hungary’s National Capital Holding (The Recursive, 2024[22]). Managed by Budapest-based Impact Ventures, this fund provides equity financing to early-stage start-ups and SMEs that can deliver measurable social or environmental benefits alongside financial returns. It focuses on scalable sectors (e.g. health-tech, education, green technologies) with clear impact criteria for each investment.
Various commercial banks have developed dedicated programmes to social economy entities. Erste Bank, in particular, promotes the Social Banking initiative which offers loans for social economy entities, educational programmes, as well as strategic and financial training (Erste Bank, n.d.[23]). The MagNet, Hungary’s largest independent bank, offers specialised financial services to non-profit organisations and social enterprises, including tailored account management, fundraising support and digital solutions (MagNet Bank, n.d.[24]).
Support from the public sector
Local public support for social economy organisations in Hungary tends to be integrated into general local development efforts. For example, the Budapest Business Agency (BVK) is a city-level public support centre, which offers free business consultations, mentorship services, training workshops and networking events, some of which specifically target social enterprises and entrepreneurs (Budapest Business Agency, n.d.[25]).
In rural Hungary, public support for the social economy is offered through the local implementation of national programmes. The transformation of public employment programmes into social cooperatives is a notable example, where village municipalities – often in partnership with the Ministry of Interior – helped former public workers create cooperatives to produce local goods or services. For instance, the Hernádszentandrás Social Cooperative, located in north-eastern Hungary, managed public employment programmes and sold products it produced, evolving into sustainable business that provides permanent employment and wages for local residents (Patel, n.d.[26]) (Lipták, 2023[27]).
Support from the private sector
Private and non-profit actors are increasingly active in supporting local social entrepreneurship. A noteworthy example is the MOL New Europe Foundation, a corporate foundation, which in 2022-23 ran a grant scheme to stimulate community businesses in several of the “Catching-up” rural localities (Mol Group, 2021[28]). Recognising the value of socially innovative interventions, the MOL programme provided funding for projects that modernise traditional livelihoods (for example, introducing new horticultural production or craft workshops in underserved villages). Such corporate-sponsored initiatives complement public efforts by injecting flexible resources and business expertise at the community level.
Impact investment communities are emerging, such as the Hungarian Social Impact Investors Association (THBE). THBE is a membership-based organisation that aims to advance social impact investing in Hungary, as well as Central and Eastern Europe, bringing together various stakeholders, including investors, foundations and professionals that are creating social and environmental impacts.
Innovation hubs, though not specifically designed for social economy organisations, also play a supportive role in the sector. The European Institute of Innovation and Technology’s (EIT) Community Hub Hungary provides funding opportunities, capacity-building programmes and networking services for entrepreneurs, including social entrepreneurs. The Hub also connects Hungarian innovators with the EIT’s extensive network of Knowledge and Innovation Communities (KICs) (EIT Community, n.d.[29]).
Definition of public interest
Hungarian tax law provided for preferential tax treatment for certain social economy entities, particularly those classified as “public benefit” organisations. These entities must serve a public interest objective and meet specific legal criteria under both civil and tax legislation (Philea, 2024[30]).
Entities eligible for preferential tax treatment include the following types of organisations, provided they are registered as public benefit organisations under Hungarian law:
Foundations, including public interest and trust foundations
Associations
Social co-operatives
Church legal entities
Entities must be registered in the court as public benefit organisations to access preferential tax regimes, primarily under Act CLXXV of 2011 on the Right of Association, Public Benefit Status, and the Operation and Support of Civil Society Organisations (National Assembly, 2011[31]), and Act LXXXI of 1996 on Corporate Tax and Dividend Tax (National Assembly, 1996[32]).
The concept of “public benefit” is defined in Section 2(20) of Act CLXXV of 2011 (Philea, 2024[30]). An organisation is deemed to serve public interest if its activities align with a public service traditionally provided by state or municipal bodies and are accessible to a broad segment of society, or to disadvantaged groups.
Eligibility for public status requires the fulfilment of specific operational, financial, and accountability criteria, such as:
Performing activities that promote public interest purposes (listed in the Annex to Act CLXXV of 2011, for instance: health care and disease prevention, cultural and heritage preservation, social services and support for disadvantaged groups, education and training).
Not distributing profits and reinvesting income
Operating under democratic governance structures
Meeting publicity and reporting obligations
Having sufficient resources to meet societal needs
Demonstrating measurable public support
Public interest trust foundations carrying out public functions are governed by Act IX of 2021, which includes an annex naming specific foundations designated by law to fulfil public tasks. The Act provides a legal basis for their establishment, mandates, and role in managing state assets and delivering public services.
Economic activities
Under Hungarian law, economic-business activity is defined and regulated by several legal texts:
Civil Act: Economic-business activity refers to regular, income-generating business operations.
VAT Act: Economic activity refers to the continuous performance of activities aimed at earning remuneration, conducted independently.
An organisation is primarily engaged in economic-business activity if 60% or more of its annual revenue derives from such activities.
According to Act CLXXV of 2011 on the Right to Association, Public Benefit Status, and the Operation and Support of Civil Society Organisations, civil society organisations (e.g., associations or foundations) cannot be established for profit-making purposes. They may only engage in economic activities as a supplementary function, provided these do not interfere with their primary statutory objectives. Furthermore, economic activities aligned with their public benefit purposes or statutory goals are not considered business activities under civil law, even if they involve the charging of fees.
According to Act V of 2013 (Civil Code), Section 3:379(1), foundations are not established primarily for economic activities but may conduct such activities if they are directly related to achieving their public interest objectives and do not endanger those objectives (Philea, 2024[30]). Economic activity must remain ancillary.
Trust foundations, established under Act XIII of 2019, represent an exception. These entities may be established with the primary purpose of pursuing economic activities. Public interest trust foundations are explicitly authorised to manage economic assets and state-owned institutions (notably in higher education), often with significant capital endowments (minimum HUF 600 million, approximately EUR 1.5 million, as of 2024).
In Hungary, social economy entities are subject to specific reporting and transparency requirements, particularly when they receive preferential tax treatment or public funding. These obligations are primarily set out in Act CLXXV of 2011 on the Right of Association, Non-profit Status, and the Operation and Support of Civil Organisations (National Assembly, 2011[31]), and Act C of 2000 on Accounting, as well as model transparency regulations and government decrees.
All registered entities, including associations, foundations, co-operatives, and non-profit companies, must submit annual financial reports containing a balance sheet, profit and loss statement, and explanatory notes. These reports are filed with the Court of Registration or relevant authorities and are generally publicly accessible. Entities exceeding certain thresholds or receiving public funds may also be subject to external audit requirements.
Organisations with public benefit status (közhasznú szervezetek) must prepare an additional public benefit report, detailing their activities, use of public funds, and outcomes related to their public interest objectives. This report must be published to ensure public accessibility.
All entities must also submit annual tax returns to the National Tax and Customs Administration (NAV), justifying any applicable tax exemptions or deductions. Those receiving state or EU funding must provide detailed financial and operational reports to the granting authority.
Furthermore, organisations must promptly report any changes to their statutes, leadership, or activities to the Court of Registration. These requirements aim to ensure accountability, especially when public resources or tax advantages are involved.
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← 1. Certain public interest activities carried out by non-profit and public benefit organisations (e.g. healthcare, social care, education, sports) are exempt from VAT under Act CXXVII of 2007 on VAT (National Assembly, 2007[35]), particularly Sections 85–87. However, general VAT obligations may still apply for other economic activities or cross-border transactions exceeding the EUR 10 000 threshold (Section 20(2)).
← 2. There are partial social contribution tax reliefs (Szochó) for employers hiring persons from specific groups (e.g. persons with disabilities, long-term unemployed) under Act LII of 2018 on Social Contribution Tax. Employers fulfilling quotas for hiring persons with reduced work capacity are exempt from the Rehabilitation Contribution. No general exemption exists for all social economy entities.
← 3. Under Act XCIII of 1990 on Duties, associations, foundations and public benefit organisations are exempt from gift and inheritance duties when assets are received for public welfare purposes. This includes donations, public fundraising and inheritances dedicated to scientific, educational or cultural purposes.