Hungary is a jurisdiction with a strategic European location, a well-developed economy, many qualified employees, where hiring is not associated with astronomical costs. At the same time, it provides favorable conditions for foreign investors. This country can be potentially promising for setting up a business here in view of many other advantages associated with the country in question.
Advantages of Jurisdiction
A business decision related to the establishment of a company in Hungary is also related to the potential use of the following advantages that this jurisdiction offers to investors and local businessmen:
Reputation of an existing stable and favorable investment framework
Abundance of business opportunities, including in such well-developed sectors of the economy as technology, services, renewable energy, logistics, etc.
Qualified people for employees
Modern and convenient infrastructure
Well-developed banking system with many options for opening an account for non-resident enterprises
Many opportunities to enter various European markets at a moderate price
Low corporate tax rates (among the lowest in the European region), many agreements to avoid double taxation and incentives for businessmen (for small and medium-sized enterprises, various tax breaks, for research and development, for example).
If you would like to receive more precise information about the benefits you can expect to receive in your areas of activity or interest after registering a company in Hungary, feel free to contact the lawyers at Smart Startup UK to obtain of a more detailed evaluation.
Forms of legal and business presence
The decision to establish a company in Hungary or formalize your local commercial presence in another way can be put into practice using one of these options:
Private limited liability company – a local legal entity that can be established by both residents and non-residents (foreigners), individuals or legal entities, with an authorized capital of HUF 3,000,000 (8000 Euro). All financial responsibilities of the founders to the company and creditors are limited exclusively to the invested amounts). What is specific to this type of legal entity is that the restriction on the transfer of shares must be stipulated in its statutory documents (in particular, the founding agreement) - they cannot be freely transferred by default to third parties.
Private company limited by shares – a legal entity in which the shares can be distributed among the participants and cannot be freely offered or sold to third parties. The authorized capital of this legal entity must be a minimum of 5,000,000 HUF (13,000 Euros). All shareholders will bear limited liability for the results of the activity of this legal entity - only within the limits of the amounts invested in this enterprise.
Public limited liability company – this is a more complex business structure that requires a minimum authorized capital of 20,000,000 HUF (51,000 Euros). A distinctive feature of this type of legal entity is that its shares can be freely offered to third parties for subscription and sold by shareholders without any restrictions. Since its securities are tradable, this legal entity is suitable for attracting external financing.
General Partnership – a much simpler option for dealing with business matters where all partners assume unlimited liability for all debts and liabilities arising out of these joint business activities – even their personal assets can be taken to cover potential losses. However, this form is more flexible and easy to regulate than any type of company established in Hungary. However, a partnership requires closer interaction between the partners. Their rights, duties and obligations are regulated in the partnership agreement.
Limited partnership – another variety for carrying out joint commercial activities (simpler than opening a company in Hungary) where there can be (1) a so-called “general partner” who takes on management tasks in this business formation, but bears the risks for the results of the joint commercial activity in full - even with his own property, and (2) the so-called "limited partner", who does not participate in the performance of management activities, but is responsible for any debts and losses only within the limits of the provided funds.
Branch - this is the easiest option for a foreign company to start operations in Hungary with certain restrictions, however - a foreign legal entity is allowed to carry out only those types of commercial activities that it is allowed to carry out transactions only abroad. This can start after completing the local registration procedure.
These are common company forms in Hungary that can serve well to start a business in the country in question. The exact choice of a variant of business presence or legal organizational form is carried out taking into account the types and peculiarities of the activities subject to the transaction. Smart Startup UK lawyers are ready to give you some advice on the matter after receiving initial details from you, as well as to develop a specific registration plan suitable for your registration case and to implement it in practice.
Registration Requirements and Steps
The process of setting up a company in Hungary can go through the following approximate steps in advance:
Choosing commercial priorities and types of business activities you plan to conduct through a local legal entity.
Develop your business plan.
Development and verification of a name for the expected legal entity, taking into account the rules applied for determining company names in Hungary. Save final selection.
Filling and arrangement of all necessary personal (for individuals) and registration (for legal entities) data by the founders. Request for additional data on beneficiaries and managers of the future legal entity.
Renting an official business address in Hungary for the future legal entity.
Formation of authorized capital of the future Hungarian legal entity.
Compilation and formalization of all necessary registration and statutory documents for a new Hungarian company.
Collection of all necessary forms and other documents requested for consideration with their further submission to the Hungarian Court of Registration at the Ministry of Justice. Including details of a newly registered legal entity in the Hungarian commercial register.
Registration for the purpose of paying taxes and hiring employees.
Searching for banks, negotiating details for opening company accounts in Hungary.
Additions to grant additional licenses and permits that may be required to commence operations in certain sectors.
This is a rough outline of how the company registration process works in Hungary. The lawyers at Smart Startup UK will be able to develop a detailed and individualized action plan for the establishment of a legal entity in your particular case.
Legal and Regulatory Framework
Local business and regulatory provisions have been studied to be suitable for quick and easy starting and doing local business, including by foreign investors. The country offers equal opportunities to both residents and foreigners who wish to explore local entrepreneurial opportunities. Such opportunities are open to businessmen in the fields of industry, services and commerce - all of which are well developed in the state. In addition, foreign investors can receive certain incentives in certain sectors. This results in a consistently high rate of foreign investment in the local economy. The ease of the company registration process in Hungary adds points to this jurisdiction. Setting up a company in Hungary does not take much time and the position of local authorities is business-oriented – the process lacks bureaucratic formalities for the benefit of interested businessmen. Among all the advantages offered by this jurisdiction, the absence of withholding tax on dividends to be paid to foreign investors should be noted. It is therefore necessary to bear in mind that local legislation is fully adapted to European standards, including in terms of compliance. All applicable requirements, including those regarding the prevention of money laundering, must be strictly observed by the company registered in Hungary. The most important legal acts, the provisions of which extend their force to enterprises carrying out transactions at the local level, are the Hungarian Civil Code, the Business Associations Act, the Corporate Tax and Dividend Tax Act, the Accounting Act and the Labor Code. Among the government authorities that foreign businessmen are likely to encounter while starting and operating through the company in Hungary are the Hungarian Court of Registration of the Ministry of Justice (maintains the Hungarian business register), the Hungarian Financial Supervisory Authority and the National Bank of Hungary.
Tax system in Hungary
Every company registered in Hungary must pay taxes applying the following rates:
Corporate income tax rate (generally applied CIT rate) – 9%
Personal income tax rate (generally applied rate) – 15%
Value added tax rate – 27%
Withholding tax rates applicable to foreigners - not provided
Tax rates on capital gains – (1) corporate – see general income tax rate on income and (2) personal – see general income tax rate on income. There are also specific provisions applied to determine the amounts of tax payable in certain cases.
CREATE A COMPANY
Checking and maintaining a company name in the Court of Registration of Companies (Cégbíróság)
Registration of a company in the form of KFT (LLC), including state fees
Statute (Alapító Okirat)
Certificate of company registration (Cégkivonat)
Company registration in NAV
Assistance in obtaining a residence permit
Set of statutory documents of the company in electronic form
Opening a corporate bank account at MKB Bank, Raiffeisen Bank
Contribution to the authorized capital of the company
VAT registration
Local Director for one (1) year
Obtaining a Foreign Investment Permit
Free consultation
Help with online trading and opening an account at viva.com for online trading
Accounting services - 12 months
Annual renewal (payable from the second year)
*Within 30 days
IMPORTANT! We can provide you with the initial share capital (if the amount is over EUR 5,000) for the registration of your company in the form of a loan from our company.
Please, if you are interested, make an inquiry to us.
What is the procedure!
1. You submit a request for company registration using the request form.
2. We check if the registration company name is free and eligible for registration.
3. Choose a bank that suits your company's needs from a list of Smart Startup UK partner banks provided.
4. We send you a proforma payment invoice to pay to our bank account + the initial capital amount of your company.
5. You receive all necessary company documents for verification.
6. You receive details of your newly opened bank account.
7. In the specified period (for Hungary it is 30 days), you receive all the services included in the package.
8. You can manage through our platform all the services included in the package, as our team works 24/7 and you can get help from us within up to 30 minutes. We have built an internal ticketing system for our customers through which we process your every support request.
All services like management, accounting, request to open bank accounts, licensing, filing tax returns, paying taxes and more are done through your account on our platform, it makes it easy managing your business!
