Hungary company registration

DOING BUSINESS IN HUNGARY IN 2017

Since 2003, Healy Consultants PLC has assisted Clients with business registration in Hungary. Our services include i) Hungary company registration ii) corporate bank account opening iii) employee recruitment iv) employee visa strategies and v) office space rental solutions.

SummaryLLCFast business setup solutionPrivate limited companyPublic limited companyLLPRepresentative officeBranch office
Also known asKftKftzRtnyRtBtKiFa
Best use of company?All products and servicesClose a customer deal nowLarge projectsTo secure public fundingProfessional servicesMarketing & researchSpecific projects
How soon can you invoice Clients/sign sales contracts?2 weeks2 weeks4 weeks4 weeks4 weeks5 weeks5 weeks
How soon can you hire staff?2 weeks2 weeks4 weeks4 weeks4 weeks5 weeks5 weeks
How soon can you sign a lease agreement?ImmediatelyImmediatelyImmediatelyImmediatelyImmediatelyImmediatelyImmediately
How long to supply corporate bank account numbers?6 weeks2 weeks8 weeks8 weeks8 weeks9 weeks9 weeks
How long to supply company registration/tax numbers?2 weeks2 weeks4 weeks4 weeks4 weeks5 weeks5 weeks
Corporate tax rate on annual net profits for below €1.5mil?9%9%9%9%0%0%9%
Corporate tax rate on annual net profits for above €1.5mil?19%19%19%19%19%0%19%
Limited liability entity?YesYesYesYesNoNoNo
Resident director/partner/manager/legal representative required?NoNoNoNoNoYesYes
Minimum paid up share capital?€1€1€16,000€65,000€0NoneNone
Can bid for Government contracts?YesYesYesYesYesNoYes
Corporate bank account location?Raiffeisen BankOPT BankUniCredit BankErste BankBudapest BankK&H BankCIB Bank
Can secure trade finance?YesYesYesYesYesYesYes
VAT payable on sales to local customers?27%27%27%27%27%None27%
Average total business set up engagement costs?€9,990Inquire proposal€9,990€9,990€10,990€9,860€10,260
Average total engagement period?7 weeks6 weeks9 weeks9 weeks9 weeks3 weeks3 weeks

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Accounting and tax considerationsLLCFast business setup solutionPrivate limited companyPublic limited companyLLPRepresentative officeBranch office
Statutory corporate tax payable on annual net profits for below €1.5mil?9%9%9%9%0%0%9%
Statutory corporate tax payable on annual net profits for above €1.5mil?19%19%19%19%0%0%19%
Legally tax exempt if properly structured?NoNoNoNoYesYesNo
Group HQ tax incentives?YesYesYesYesYesNoYes
Must file an annual tax return?YesYesYesYesYesYesYes
Must file annual financial statements?YesYesYesYesYesYesYes
Must appoint an auditor?NoNoNoNoNoNoNo
Withholding tax on payments to foreign shareholders?0%0%0%0%0%None0%
Company RegistrationLLCFast business setup solutionPrivate limited companyPublic limited companyLLPRepresentative officeBranch office
Resident director/partner/manager/ legal representative required?NoNoNoNoNoYesYes
Minimum number of directors/managers?1133111
Minimum number of shareholders/partners?11111Parent companyParent company
Minimum statutory paid up share capital?€1€1€16,000€65,000€0NoneNone
Security deposit to be kept with Government?NoNoNoNoNoNoNo
Shelf companies available?YesYesYesYesNoNoNo
Time to incorporate a new entity?2 weeks1 week4 weeks4 weeks4 weeks3 weeks3 weeks
Can easily convert to a PLC?YesYesYesYesNoNoNo
Public register of shareholders and directors?YesYesYesYesYesYesYes
Can have preference shareholders?YesYesYesYesYesNoNo
Business ConsiderationsLLCFast business setup solutionPrivate limited companyPublic limited companyLLPRepresentative officeBranch office
Good entity for trademark registration?YesYesYesYesYesYesYes
Can secure an import and export license?YesYesYesYesYesNoYes

Sponsorship by a local citizen required?No
Our Client needs to travel to Hungary for business set up?No
Temporary physical office solutions available?Yes
You need a local resident as bank signatory?No
Maximum shareholding for foreigners?100%
Can be wholly foreign owned?Yes
Government approval required for foreign owners?Yes
Government grants available?Yes
The entity will likely be regulated by?Hungarian Court of Registry
Monthly VAT reporting to the Government?Yes
Must sign an office lease agreement during incorporation?No
Shareholders & directors documents to be attested/translated?Yes
Each foreign director needs a personal income tax number?Yes
Foreign director needs a residence visa?Yes, if non-EU national
Maximum number of staff allowed?No maximum number for any entity
Expatriate to local staff ratio?1:20
Can secure residence visa for business owner?Yes
Other useful information
What will be included in my customer sales invoice?Click link
This country has signed free trade agreements?Yes
This country is a member of WIPO/TRIPS?Yes
This country is a member of the ICSID?Yes
Access to double taxation treaties?Yes
Average custom duties suffered?3.60%
Government foreign investment approval required?No
Average monthly office rental? (€ per sq m)22
Minimum statutory monthly salary?412
Average monthly € salary for local skilled employees?622
€ deposit interest rate? (1 year average)0.20%
Overseas remittance currency controls?None
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Excellent
Crowd funding available in this country?Yes

Press the link headings below to read detailed, relevant, up to date information.

  • Advantages and disadvantages

    Advantages of Hungary company registration

    Hungary business registration advantage

    1. A Hungary company is an excellent global holding company because:
      • Dividends received by a Hungarian company from a foreign company will be exempt from corporate tax if i) the foreign company does not derive most of its income from Hungary and ii) pays an effective tax of more than 10%. Also, dividends paid to all non-resident entities is withholding tax exempt;
      • Interest payments and royalty payments to all entities will be completely withholding tax exempt;
      • Capital gains resulting from sale of an investment will be completely tax exempt if a Hungarian national has been a 10% shareholder in the company for at least 1 year;
      • Hungary has signed double taxation agreements with 70 countries including Australia, Canada, China, India and USA;
      • Only 1 director and 1 shareholder are required, who can be of any nationality.

    2. A Hungary company is an excellent EU trading company because:
      • Following the EU principle of free circulation, all goods originating in and trading within the EU will be exempt from customs duties. Also, goods dispatched from one VAT registered business to another will be exempt from VAT;
      • Companies do not require an audit if i) their average annual revenue for previous two years is less than €325,000 and ii) they hired less than 50 fulltime employees;
      • Companies are allowed to carry forward their losses for a period of up to 5 years and offset these losses against up to 50% of the profit in another financial year;
      • Foreign companies enjoy a 80% corporate tax rebate for 10 years if they invest at least €321,000 in projects relating to i) environmental protection ii) broadband internet service iii) movie production iv) infrastructure for existing food production and storage facilities and v) R & D;

    Disadvantages of Hungary company registration

    1. A Hungary business will be required to contribute 9% of the employee’s gross salary for social security purposes;
    2. Hungary has a VAT rate of 27%, which is the highest in the world;
    3. Hungary was ranked 47th in the world in the corruption perception index for the year 2014. The country was also ranked as the 39th best country out of 130 countries to register intellectual property;
    4. Despite being in the EU, Hungary has its own local currency – Forint, which can be volatile;
    5. Hiring non-EU citizens can be a challenge in Hungary. Entrepreneurs will need to prove that EU citizens weren’t denied a work opportunity;
    6. In Hungary, English is only spoken by 12% of the population. Consequently, foreign entrepreneurs might find it difficult to communicate with local customers and suppliers.
  • Best uses for a Hungary company

    1. Hungary is an excellent EU manufacturing and distribution base because:
      • The Government will pay 40% of annual interest on a loan for resident SMEs if the amount borrowed is used for purchasing or manufacturing tangible assets;
      • A foreign company investing at least €1.6M in one of 47 Hungarian free entrepreneurial zones enjoys a 50% corporate tax rebate for 10 years;
      • Firms investing in infrastructure and R & D projects which result in creation of new jobs (dependent on the industry) can receive corporate tax credit of 80% for 10 years;
      • IT SMEs receive refund on i) 25% of payroll costs of software developers and ii) 10% of direct R & D costs for 4 years;
      • Hungary’s EU membership offers benefits including i) free movement of capital and labor ii) access to the vast European market of 500 million and iii) absence of withholding tax on payments to other European countries;
      • Hungary’s central location and its vast network of well-developed roadways, railways, waterways and airports make it a good choice for product distribution within Europe;
      • There are no capital or exchange controls imposed by the Hungary Government. Consequently, it is easy to convert foreign currency into Hungarian Forint (HUF).

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Company registration

  • Time to incorporate: Two weeks
  • Cost to set up: €9,990
  • Minimum capital: €1
  • Physical office required: No

Required appointments

  • Shareholders: 1
  • Directors: 1
  • Company secretary: No
  • Resident director: No

Key facts

  • Corporate tax rate: 9%
  • Corporate tax base: Worldwide
  • Shelf companies: No
  • Main company type: KFT

Frequently asked questions

Contact us

For additional information on our company registration services in Hungary, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Petar Chakarov, directly:
client relationship officer - Petar