Hungary is a state in Central Europe, which every year attracts an increasing amount of foreign investment. The popularity of the jurisdiction is largely due to minimal taxes and liberal legislation in general. Company registration in Hungary is a profitable option for anyone who wants to gain access to the EU market without suffering from state control.

 

Advantages of Company Formation in Hungary

Hungary creates favorable conditions for business development. Company formation in Hungary has numerous advantages, including:

 

  • Monetary subsidies (from EU funds and the government).
  • Tax incentives.
  • Low-interest loans.
  • The possibility of obtaining a residence permit.
  • Flexible requirements for share capital.

 

Foreign investors are crucial to the country’s economic growth, prompting the government to provide incentives for non-resident investors engaged in business activities.

 

The country has agreements to prevent double taxation and is not regarded as an offshore jurisdiction by many nations. A key advantage of the Hungary corporate registry is the widespread use of English in business transactions. Even if you do not speak Hungarian, this will not hinder successful business operations.

 

Strategic Location in Europe

Hungary is advantageous for starting business activities for both residents and foreigners. The country is located at the crossroads of trade routes in Europe, the Balkans, and Asia and is a member of the EU. Therefore, setting up a company in Hungary will provide you with access to a wide range of potential clients and a skilled workforce.

 

Favorable Tax System

The flexible tax system creates highly favorable conditions for conducting business registration in Hungary, although it has its nuances. On one hand, it has the lowest corporate tax rate among EU countries. On the other hand, high social contributions and the highest VAT in Europe are in place.

 

Depending on the nature of the business, firms can receive subsidies and incentives and benefit from a simplified tax system. The state has also created a favorable environment for intellectual property protection.

 

If you wish to set up a company in Hungary, our staff will consult you on this matter.

 

Advanced Infrastructure

Hungary has a developed transportation network. Major cities are connected to the capital via highways. In addition to road networks, there is good water transport, international airports, and an extensive railway system. Therefore, with company registration in Hungary, logistics issues can be excluded.

 

Stable Economic Growth

Comfortable conditions for business attract foreign investors and contribute to the country’s economic growth. To carry out the Hungary corporate registry, it is important to recognize that the most rapidly growing sectors in the country are energy, agriculture, automotive manufacturing, and the electronics industry.

 

Simple and Affordable Incorporation Process

Registering a company in Hungary is a quick process that doesn’t necessitate significant capital.The prices for financial services and real estate here are lower than in other European countries. Depending on the specific case, the registration process can take from 1 to 15 working days.

 

Before starting the registration process, it is necessary to decide on the company’s name, the primary area of activity, and financial capabilities regarding initial capital. These factors will determine the details of the registration process.

 

Our specialists will analyze the specifics of the firm’s activities and help you set up a company in Hungary in the shortest possible time while avoiding legal obstacles on the path to profit.

 

Forms of Business Entities in Hungary

Before conducting the Hungary corporate registry, it is essential to consider the structure of the future company. The company can take on the following forms based on its type of activity:

 

  • Sole Proprietorship.
  • General Partnership (KKT).
  • Limited Partnership (BT).
  • Private Limited Company (KFT).
  • Joint Stock Company (RT).

 

Each form of business organization has its specific characteristics in document preparation and minimum share capital requirements.

 

Sole Proprietorship

This type of company formation in Hungary lacks legal entity status. An individual entrepreneur has their own rights and obligations. They manage their own accounting and bear full personal liability for any debts arising from the firm’s activities.

 

General Partnership (KKT)

To establish a general partnership, a minimum of two participants is required. The legislation does not impose any requirements for minimum share capital. All founders are actively involved in the partnership’s operations and share equal responsibility for its liabilities. New participants in the company will also assume equal responsibility for the consequences of its activities.

 

Limited Partnership (BT)

The registration process for a limited partnership follows the same regulations as that of a general partnership. The legislation does not establish a minimum share capital requirement.

 

A minimum of two members is required for its establishment:

 

  • General director – bears full responsibility for the company’s obligations.
  • Limited partner – has limited liability.

 

If the company’s assets cannot cover its obligations, then the general director is liable with their personal property.

 

Private Limited Company (KFT)

You can set up a company in Hungary by pooling capital. The formation requires at least one individual or more.

 

The minimum initial capital amount is 3,000,000 HUF (approximately 7,900 EUR). This form of company organization is most advantageous for small and medium-sized enterprises. There are no specific requirements regarding the number of employees for this ownership type.

 

Meetings of the company members must be held at least once a year. The general director bears full liability for the organization’s affairs.

 

Joint Stock Company (RT)

A joint-stock company can be of two types:

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  1. Private limited company (Zrt).
  2. Public limited company (Nyrt).

 

For company formation in Hungary as a private joint-stock company, the minimum share capital must be 5,000,000 HUF. For registering a public joint-stock company, the required amount is 20,000,000 HUF.

 

A joint-stock company (both public and private) must have a board consisting of three managing directors and a certified accountant.

 

Procedure for Company Registration in Hungary

Company registration in Hungary is mandatory. The procedure takes place in an electronic format and is initiated upon the request of the company’s founder. The application for business registration must be submitted within 30 days from the date of signing the founding documents.

 

There are two methods of company registration:

 

  • Simplified submission. The registration court makes a decision within one day of receiving the application for registration and all necessary documents.
  • Standard electronic submission. The registration court renders a decision within 15 business days after receiving the application.

 

Moreover, business registration involves consultations, selecting a name, establishing the organizational structure, defining the main area of activity, preparing and signing the required documents, and opening an account with a Hungarian bank.

 

Choose a Business Structure

Before beginning company formation in Hungary, you should carefully consider the structure of your future business. This affects the type of taxes you will need to pay and the number of documents you will need to collect for business registration.

 

When choosing the structure of the company, it is necessary to consider the size of the share capital. For the establishment of a joint-stock company, the legislation specifies the amounts of share capital, while there are no such requirements for establishing a partnership.

 

Select a Company Name

To set up a company in Hungary, you should pay proper attention to the name. It must be unique (distinguishing it from the names of existing companies) and contain a description of the activity performed. The name should include the following components:

 

  • Keyword.
  • Activity (in Hungarian).
  • Legal form of the organization (in Hungarian).

 

The keyword is the element that will distinguish your organization from all others. It can be any word spelled with Hungarian characters. The second component, the activity, is optional, but if included, it must accurately reflect the organization’s area of operation. The last part is the description of the company’s legal form, which is mandatory.

 

Prepare Required Documents

For company registration in Hungary, the following documents need to be prepared:

 

  • Passport of the founder (translated into English and notarized).
  • Document indicating the local address.
  • Document stating the individual tax number.
  • Three name options for the company.
  • Description of the company’s area of activity.
  • Business plan.

 

If the firm is to be registered remotely, a power of attorney must be signed (a sample will be provided). This is a list of the main documents. The complete list depends on the chosen structure of the company. Our specialists will prepare the articles of association, organization protocol, and other documentation.

 

Open a Bank Account

To complete the Hungary company registration, you need to open an account at a state bank. For this, you must provide documents verifying your identity, proof of address (for founders and directors), and corporate documents. The national currency is the Hungarian Forint. You can open an account in either local or foreign currency.

 

Most local banks require the personal presence of the company founder to submit the application and sign bank forms. For additional information regarding current legislation and details about opening a bank account  in Hungary, please contact us.

 

Obtain a Tax Number

When registering a company in Hungary, obtaining a tax number requires submitting a sample application to the Hungarian tax authority. We will supply a template for the necessary application and guide you on the subsequent steps to address this matter.

 

Compliance with Local Regulations

The future legal obligations of the company will depend on its primary area of activity and its registered address in Hungary. Different business sectors in the country have varying taxation schemes. Certain municipalities may also impose taxes on business activities. The tax rate ranges from 0% to 2%, depending on the municipality.

 

It is important to note that some banks may require the presence of an office in the country or local partners. According to current legislation, companies are obliged to submit annual financial reports. Companies that have a turnover exceeding 300,000,000 HUF per year and employ more than 50 people for an extended period are subject to audits.

 

We will help you navigate the legal nuances and avoid risks when forming a company in Hungary.

 

What are the costs associated with setting up a company in Hungary?

To determine the exact cost of registering a company in Hungary, please send us a request. In general, the total price will be influenced by:

 

  • The number of documents that require translation, legalization by the Ministry of Foreign Affairs, bank approval, and Trade Registry submission;
  • The identities of the founders and directors, along with their respective locations.

 

The lowest costs occur when the founders (shareholders) and directors are individuals based in Hungary, whereas the highest costs arise when a foreign legal entity is among the owners.

 

The term of the procedure for registering a company in Hungary is from 3 to 9 working days. Based on the results of our legal support, you will receive an Extract from the Register, Articles of Association, Registration Protocol – all the necessary evidence of establishing a business in the Hungarian jurisdiction.

 

Features of registration in Hungary

Company registration in Hungary can take place in various organizational and legal forms, as local legislation imposes no barriers to foreign investments and organizations. The most advantageous structure is the Kft (similar to an LLC), which can be registered by both individuals and legal entities. The minimum authorized capital for a Kft is 3 million HUF, with at least 50% of this amount needing to be paid at the time of establishment.

 

To establish a company in Hungary, the founder must personally visit the country. The director is required to present a notarized translation of their passport (into English) and also open a bank account at a local bank.

 

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Alternatively, a company in Hungary can be registered remotely by providing a signed power of attorney to our representative.

 

With Lawrange’s assistance, you can prepare all necessary documentation and open a current account with one of the local banks in Hungary. However, the director and shareholder will need to visit the bank in person to submit the application form and sign the relevant banking documents.

 

Additionally, hiring an accountant is essential, with professional services starting at 80 euros per month. Lawrange will help you find a reliable professional for your needs.

 

What taxes do businesses pay in Hungary?

When forming a company in Hungary, it is important to familiarize yourself with the state taxation system. The main taxes in the country include:

 

  1. Corporate tax.
  2. Value-added tax (VAT).
  3. Dividend tax.
  4. Social tax.

 

The Hungarian legal framework outlines the following tax responsibilities for commercial enterprises:

 

  • income tax – 9%. For IT companies, there is the possibility of registering the IP BOX mode, which reduces the amount of the obligation by 50%;
  • VAT. The rate is 27% (for services and products). There are preferential terms under which the amount of the obligation is 5-18% (for example, for the production of medicines or books);
  • dividend tax. From 0 to 9%.

 

The municipality where the company is registered may impose a local tax (with a maximum rate of 2% of the tax base). Certain types of advertising services are also subject to taxation. Taxable advertising includes:

 

  • Advertisements published in Hungarian.
  • Advertisements published in another language but placed on a Hungarian website.

 

The entrepreneur pays not only employees’ wages but also social contributions. These funds are allocated for pension protection, employment funds, and health insurance.

 

Thus, company establishment in Hungary is beneficial primarily for advanced organizations that are associated with information technology and pharmaceuticals.

 

What do you need for registration?

You will need a notarized copy of your passport with a translation into English, three options for the name of the organization, a description of the activity and a questionnaire with a business plan. In the case of a remote company registration in Hungary, you will need to sign a power of attorney according to the provided sample. We handle the preparation of the remaining documentation ourselves (such as the Protocol, Charter, etc.).

 

Strengths of the Hungarian jurisdiction

Company registration in Hungary allows a business to enjoy the following benefits:

 

  • minimum taxation. If you do not become a VAT taxpayer, then the rates in Hungary are among the lowest in the EU;
  • membership in the EU. Guarantee of access to the world market;
  • prestige of the region;
  • lack of currency control;
  • no requirements for resident status.

 

If you’re looking to join a well-developed economic zone that offers numerous opportunities for personal and financial growth, establishing a company in Hungary is a wise choice. The Lawrange team is equipped to help you minimize your costs and save time in launching your business in the country.

 

Why You Should Contact Lawrange

The Lawrange team consists of experienced lawyers and attorneys. We understand the importance of ongoing professional support during the establishment of a business. Our experts provide objective information about the advantages and disadvantages of offshore, midshore, and onshore options.

 

By choosing our company, you will receive professional legal assistance throughout the entire process of setting up a company in Hungary.

 

Our specialists will advise you at all stages of business registration, assist you in preparing the necessary documents, and help you open a bank account.

 

Is your goal company formation in Hungary? Contact us, and we will save you time and ensure reliable legal support during the company registration process.

 

FAQ

Is it possible for a non-resident to establish a company in Hungary?

Yes, non-residents can register a company in Hungary. This includes:

 

  • Sole proprietorships.
  • Private companies.
  • Partnerships (both general and limited).
  • Joint-stock companies (both private and public).

 

The government is focused on attracting foreign investment, so it imposes flexible taxation requirements on commercial activities. Non-residents are exempt from paying corporate tax on their profits or dividends.

 

What is the minimum share capital required for different types of companies in Hungary?

For a limited liability company (Kft), the minimum share capital is set at 3,000,000 HUF (approximately 7,900 EUR). For a Hungarian joint-stock company (Rt), the minimum share capital is 5,000,000 HUF (approximately 13,100 EUR). There are no legislative requirements for minimum share capital when creating a partnership.

 

Are business permits or licenses required in Hungary?

In Hungary, the following areas of business activity are subject to licensing by national authorities:

 

  • Transport sector.
  • Pharmaceuticals and medical field.
  • Tourism services.
  • Insurance activities.
  • Financial sector.

 

If you decide to set up a company in Hungary, be sure to specify the main area of activity. If the key area of work requires permits and licenses from government authorities, you can only begin operations after obtaining them.

 

 

 

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