Registration of a company in Hungary is a unique opportunity to create a business in Europe, because the country is interested in foreign investors, as evidenced by the constant implementation of new reforms, flexible tax legislation and the availability of preferential rates, an understandable procedure for obtaining a residence permit.
Benefits of registering a company in Hungary
Hungary is a continental state in Central Europe with a developed economy showing annual GDP growth of 5% and an advantageous position as a railway hub between the CEE countries. This is one of the most attractive low-tax jurisdictions in the European Union for business activity of both non-residents and residents of Europe, an absolute leader in attracting foreign investment. Thanks to the high reputation of Hungarian companies in the Western European community, full membership in the EU is ensured.
The tax system in Hungary is quite flexible, and tax rates are among the lowest in the European Union. For example, the corporate tax is set at 9%, and there is no tax on dividends at all, which makes the jurisdiction attractive for the creation of holding structures. In addition, an entrepreneur gets a legal opportunity to avoid double taxation thanks to a wide network of relevant agreements with a number of countries (65 in total).
When opening a company in Hungary, it is important to take into account the presence of a language barrier and the weak spread of the English language. Official documents are kept in Hungarian. However, the adaptation is not difficult: it will not be difficult to sign up for language courses, hire a translator or use the services of legal and accounting support for business from Silver Office.
Forms of company registration in Hungary
Before registering a company, you should decide on the organizational and legal form of the enterprise, taking into account the level of responsibility of the founder and the size of the authorized capital. The most common in Hungary are Korlatolt Felelossegu Tarsasag and Reszvenytarsasag.
The most optimal is the establishment of Kft - an analogue of LTD. The registration process is accompanied by the signing of a memorandum and charter of the company, and the appointment of a director. The company is registered only with a valid Hungarian address.
The minimum authorized capital is stipulated in the amount of 3 million forints, which is equivalent to 10,000 euros. The funds are deposited prior to submission of documents to Companies House and are confirmed by a bank statement. The contribution is not only money, but also other assets, however, subject to their independent assessment.
When registering a company in Hungary, it is important to clearly define the planned activity, since, unlike most European countries, the choice of a wide range of activities is unacceptable. However, you can choose several types of activities or amend the constituent documents in the future, adding new items to them.
Regardless of whether the company operates or not, there must be at least 1 director, who can be an individual or a legal entity. The number of managers is not limited, there are also no requirements for citizenship, nationality and place of residence of the manager.
Other organizational and legal forms of companies:
- Public limited company, Reszvenytarsasag, Rt. The minimum statutory capital required by law is 5 million forints or 20 thousand euros. At the time of establishment, 1/3 of the indicated amount must be paid. The minimum number of shareholders is 1; in general, their number is not limited. There should also be 1 leader, who is a private person. The liability for the debts of a company in Hungary is limited to a shareholder contribution. This form is recommended for large business entities.
- Limited Liability Partnership, Beteti tarsasag, Bt. The number of participants is 2 or more, one of which (the general partner) bears unlimited liability for the obligations of the company, and the second - limited liability within the framework of its contribution. Manages the partnership and represents the company by the general partner. The legislation does not establish the size of the authorized capital, the profit is distributed proportionally according to the contributions.
- Partnership with unlimited liability, Kozkereseti tarsasag, Kkt. The amount of the authorized capital is not legally regulated. The number of participants is 2 or more. The obligations and responsibilities of the founders in this case are not limited to contributions to the statutory fund. All members who have made cash and other contributions are entitled to represent the company.
Steps of Hungarian company incorporation:
- Selection of a unique name. For approval, it is necessary to propose 3 names of the enterprise, which will be checked for duplication and compliance with the established rules. It should not resemble existing firms and contain the words "Hungarian", "Budapest", "National", "State". The name ends with an indication of the form of the company, for example, Kft.
- Choosing a legal address. The organization is registered with the appropriate branch of the Companies House, taking into account where its address is located. If you plan to work in Budapest, then you need to open a company in Hungary through the local office in Budapest. According to the law, the legal address does not have to be the same as the physical one. You can rent a room to receive letters from the tax and banks, conduct business correspondence with partners. The option of using a virtual office is also available.
- Preparation of constituent documents. It is carried out with the participation of a local lawyer authorized by the state, who oversees the signing of the articles of association, articles of association, the application for registration of the company and the assumption of the director. If a meeting with a Hungarian specialist is impossible for any reason, the documents are notarized and legalized with an apostille.
- Enrollment of the authorized capital. Before registering a company, it is required to form a charter capital and credit funds to an account. As a general practice, it is possible to pay in cash to the director. He is required to declare that the authorized capital in the amount envisaged by the legislation is with him.
- Company registration in the Commercial Register. After depositing the share capital, the local lawyer submits the documentation to Companies House. And depending on its workload, the process of registering a new enterprise in Hungary takes 1-2 weeks. The result is a decision where the company name, address, registration and temporary tax number are indicated.
- Registration with the tax office. A Hungarian company goes through the registration procedure with the tax office, which results in obtaining a tax number and a VAT number, including a European one, if necessary. At the same time, the IRS checks the submission of the request to Companies House.
- Registration with state social insurance agencies. The procedure is carried out within a week after the first employment contract was concluded.
- Opening a permanent bank account. Within 15 days after registration in the register, the director of the enterprise must open a permanent bank account. Thus, a Hungarian company must have at least 1 account in a local bank; in general, their number in Hungary and abroad is not limited.
The cost of setting up a Hungarian company starts from 2000 euros.