Company Formation Hungary Everything You Need to Know
There are many benefits of choosing
Hungary to form a company:
Company registration in Hungary is easy and fast. It takes only 1 business day.
The standard corporate income tax rate in Hungary is only 9%, which is the lowest corporate tax rate in the entire European Union.
By having a business in Hungary you get an EU VAT number and are eligible to trade with other EU countries free of VAT.
The minimum share capital you need to start your business is low (3,000,000 HUF) and does not need to be deposited.
Both foreign individuals and legal entities can establish a Hungarian company. A single member, only one managing director is required to open your own Hungarian business.
Hungary’s legal framework is stable and investor-friendly which allows you an easy and cost-effective registration and maintenance of your business.
When incorporating a company in Hungary, you will get access to a mostly high-educated workforce. The English language is widely spoken in the business areas.
The average wage is relatively low compared to the majority of other countries in the EU.
Hungary has a favourable geographical position due to its location in the middle of Europe. The country possesses a developed transport and IT infrastructure, as well.
Opening a company in Hungary offers you an opportunity to enter the European market as the country has been part of the European Union since 2004.
How can FirmaX help you
in setting up a business?
The complexity of the process of company registration in Hungary varies depending on the type of the company you choose.
Every company set up from abroad needs a legal representative – a Hungarian attorney. If you delegate the process, you can avoid the costs of multiple trips and prolonged stays in Hungary. Also, an attorney can help you with every step of the process.
There are many considerations to be made before company formation. Hungarian business laws, opportunities, and registration process specifications are among the most important. The process is generally straightforward and you can choose between several company types.
FirmaX core services include swift and precise company formation in Hungary at fair prices. FirmaX product portfolio includes ready-made company registration packages among which clients may choose the best option that fits their needs. Upon request, customized Hungarian company registration packages can also be provided. Services may also be requested on an individual basis.
FirmaX offers the following
company formation packages
FirmaX Basic
+ Express company formation
- company formation 24 hours
- legal fees
- registration taxes
- bilingual documentation
+ Tax registration
- Hungarian tax ID
- EU VAT ID
EUR 499*
*including registration fees
FirmaX Medium
+ Express company formation
- company formation in 24 hours
- legal fees
- registration taxes
- bilingual documentation tax registration
- Hungarian tax ID
- EU VAT ID
+ Company address
- registered seat in Budapest
- commercial address
- mail reception and dispatch
- mail scanning and forwarding
- client helpdesk and back office
+ Bank account opening
- wide range of banks available
- premium banking service
- EUR/HUF/USD/GBP accounts
+ Accounting registrations
- start-up registrations with the tax office
- registration of ’company-portal’
- tax and social security ID registration
EUR 1.499*
*including registration fees
FirmaX Complete
+ Express company formation
- company formation in 24 hours
- legal fees
- registration taxes
- bilingual documentation
+ Tax registration
- Hungarian tax ID
- EU VAT ID
+ Company address
- registered seat in Budapest
- commercial address
- mail reception and dispatch
- mail scanning and forwarding
- client helpdesk and back office
+ Bank account opening
- wide range of banks available
- premium banking service
- EUR/HUF/USD/GBP accounts
+ Accounting registrations
- start-up registrations with the tax office
- registration of ’company-portal’
- tax and social security ID registration
+ Accounting and tax services
- monthly bookkeeping
- monthly reporting to tax office
- yearly tax filing
- preparation of the financial statement
- submission of the financial statement
EUR 2.999*
*including registration fees
How does company formation work in Hungary?
1. Choose company name: we will check the availability of the desired company name at the Court of Registration. If the desired corporate name is already reserved by another company, we will suggest some alternative names based on your original idea.
2. Document preparation: once the company name is fixed, the company formation in Hungary requires the preparation and signing of the necessary incorporation documents.
3. Signing: if you are in Hungary, we will arrange the signing of the incorporation documents at our office. Since the documents do not need to be signed in Hungary, the signing may be completed in your home country as well. In this case, however, notarization of the company incorporation documents is required.
4. Registration of Your Company: Upon receiving the duly signed documents, they will be submitted to the Court of Registration, where the company formation process is completed. The registration itself takes 1 business day.
Please visit the download area in order to find more information about Hungarian corporate law and the Hungarian company registration. You can also download guides which will give you an insight into the necessary corporate requirements for the specific company forms in Hungary.
If you decided to register a company in Hungary, please fill out the below form with all the requested information and send it back to us via email or facsimile.
Types of Companies You Can Open in Hungary
If you’re interested in setting up a company in Hungary, there are several types of companies at your disposal. Each has its own advantages and drawbacks, as well as registration rules. Also, all company types have their limitations in regards to approved business activities.
Here is a brief overview of the main company forms a foreign company or individual can open in Hungary. The following company types all require a legal personality.
Limited Liability Company
If you’re looking to establish a medium or small business in Hungary, your best bet is to go with a limited liability company (Kft). In this case, you will need a starting share capital of 3,000,000 HUF.
Have in mind that the incorporation procedure might differ slightly depending on the type of business the company is involved with. You might need to get special licenses and permits. The owners are only liable for their share of the invested capital. This is one of the least risky options.
If this is not the best fit for your activities, there are other company forms available in Hungary.
Branch Office
Every foreign company can open a branch office (Fa) in Hungary. You will have to have a resident legal representative if you opt for a branch office that will submit annual returns. The registration fee is 50,000 HUF.
The main risk with establishing a branch office is that the parent company holds the full (unlimited) liability for all its activities.
Joint Stock Company
If you’re planning to establish a joint-stock company (JSC), you have two options – public (Zrt) and private (Nyrt). The minimum requirement for both types is that the company has at least one shareholder of any nationality. Each Hungarian company set up as a JSC company limited by shares, both private and public, needs to have a board of managing directors.
Where these two types do differ is the required capital at the time the company is registered. For the public option, it is 20,000,000 HUF (Hungarian Forint), while for the private it is 5,000,000 HUF.
If you opt for a JSC, you will need to have your annual financial statements and balance sheet audited by a professional accountant and submit them with your company register annually. When it’s time for company registration, in Hungary you will have to pay 100,000 HUF to register a private JSC and 600,000 to register a public one.
Limited Partnership
This type of company (Bt) must have one general (unlimited) partner and one limited partner. The former has unlimited liability, while the latter’s liability is determined by the size of their capital contribution. You don’t need starting capital to form a limited partnership.
In general, and if not specified otherwise in the articles of association, only the general (unlimited) partner can represent the company. When it comes to company registration, in Hungary you will have to pay 50,000 HUF to register a limited partnership.
A possible downside to registering this type of company is that the main partner is completely liable and bears the highest risk.
General Partnership
If you decide to establish a general (unlimited) partnership, all partners are fully liable and responsible for the company’s operations. You will need at least one partner other than yourself. There is no minimum in terms of the starting capital. To register the company, you will need to pay a registration fee of 50,000 HUF.
All partners can represent the company unless stated otherwise in the articles of association. There are no specific requirements in terms of management. You don’t need a board of directors or supervisory board to establish a general partnership.
In terms of risks, have in mind that you and your partner(s) are completely liable for all the losses and debts incurred by the company.
Documents You Will Need
Company registration in Hungary, though fairly simple, involves a certain amount of paperwork. Here’s what you’ll need:
- valid passport for the shareholder(s) and general manager(s)
- proof of address for the shareholder(s) and general manager(s)
- in case the shareholder is another company: original company extract apostilled and notarized
Taxation Highlights
- Regardless of where you live, if you own a company in Hungary, you need to follow the rules set up by the country’s tax authority. The Hungarian taxation system is favorable for foreigners having businesses registered in the country. The corporate tax rates of 9% are among the lowest in Europe. There is also a 0% tax on dividend for foreign business owners.
- Other than the corporate tax, there’s also a local tax. This is how municipalities collect money to contribute to municipality liabilities. The local business tax is payable after gross profit, and its basic calculation concept is net turnover – allowed expenses (material purchase and the cost of sold goods and services). Local tax varies between 0% and 2% and is levied by the town in which the company is registered.
- When selling to clients in Hungary or anywhere in the EU, you need to obtain an EU VAT number. This number registers you in the European Union’s tax system as a legal business owner. It then makes it easy to track your tax payments, tax credits, or the tax charged from customers. The VAT rate in Hungary is 27%, with a reduced 5% and 18% rate.
- A foreign company can register in Hungary for VAT without forming a local company known as non-resident VAT trading. You must obtain this number if you plan on importing and exporting goods in and out of Hungary, organize live events in Hungary, hold goods in the country’s warehouses, or distance sell to individuals in Hungary.
There are only three exceptions that entitle you to VAT-free trading:
-
- Doing business outside of the European Union
- Yearly price income lower than 24,780 EUR (8,000,000 HUF)
- Doing special activities such as real estate leasing or insurance broking
Things to keep in Mind
- After the digital transformation of Hungary’s administrative system, currently, the primary communication channel between companies and the administration is the Client Gate (Ügyfélkapu). It’s the country’s used eGovernment application serving as the official central electronic administration web portal. Through it, you can send messages directly to authorities, submit tax reports, make appointments related to social security, work permits, and suchlike.
- Similarly, the Company Gate (Cégkapu) is a web portal that lets you access a mailbox with emails sent to you by the Hungarian authorities. This application is essential in ensuring your company is compliant with regulations and receives all taxation and other important information. Also, only the person legally authorized to represent the company should complete the Company Gate registration.
- You will also have to register with the Chamber of Commerce. You can do this in person or authorize the attorney or your accountant to do it on your behalf.
- Every company registered in Hungary must also have a bank account in Hungarian forints. Foreign currency accounts can be opened, but they’re optional. Opening a bank account takes approximately one day.
- Additionally, every company registered in Hungary must have a registered office at a publicly available address. Therefore, you will also need to register a physical address for your company, which can be offered by FirmaX. Your attorney can do that for you, as well.
Highlights of Company Formation
- Getting in touch with FirmaX and we will advise on your regarding company formation;
- We will prepare and translate all the needed documents necessary for the registration of your new company;
- Your company will need a legal address in Hungary, which can be provided by FirmaX;
- Signing of documents possible both in our office or over a video call with our lawyers;
- Our attorneys then submit the application electronically to the Court of Registration, your company will be issued an electronic certificate of registration within 1-2 business days.
- Upon the registration is completed, the company is ready for business operation but don’t forget the obligation of tax reporting and accounting: don’t worry FirmaX is there to help!
Opening a company in Hungary is easier and simpler than in most other countries. However, you should thoroughly study the laws and requirements to avoid any potential trouble.
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Frequently Asked Questions:
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