Business entities in Hungary in 2021
Healy Consultants will be happy to assist Clients with setting up businesses in Hungary. Foreign entrepreneurs have several options, the most common being the setting up of a Hungarian LLC. See below for an overview of Hungarian business entities.
Hungary limited liability company (Kft)
- Hungarian limited liability companies can be registered with i) a single shareholder and ii) a single director, both of whom can be of any nationality and are not required to be ordinarily resident in Hungary;
- All Hungarian LLCs are required to i) prepare annual financial statements and ii) file them in the Company Register every year.
Hungary joint stock company (JSC)
- A Hungarian JSC can be set up with one shareholder of any nationality;
- Other requirements include i) an initial share capital of at least €56,000 fully paid up at incorporation for a public JSC (at least €14,000 for a private JSC) ii) the appointment of at least three directors of any nationality and iii) the appointment of a certified accountant;
- In accordance with the Corporate Taxation Act, a Hungarian JSC is required to i) have its balance sheet and annual financial statements audited by a certified accountant and ii) file them with the Company Register every year.
Hungary branch office (Fa)
- Foreign corporations can enter Hungarian markets under their business name via a local branch office. However, this will subject the parent company to unlimited liability for losses incurred by the branch, as the latter is not considered a separate legal entity;
- Every branch must appoint a resident legal representative to file annual returns with the Company Register.
Hungary representative office (Ki)
- A Hungarian representative office can be 100% foreign owned, but cannot undertake any commercial activities in the country;
- This entity can only i) promote the business of the parent company ii) conduct market research and iii) undertake liaison activities.
- The formation of a trust in Hungary requires the appointment of a resident trustee, who is legally allowed to manage the assets transferred by the settlor;
- The settlor(s) and beneficiaries are not required to be residents of Hungary and there is no specific restriction regarding asset classes, amount or location which can be put under the custody of a Hungarian trust.
- In Hungary, private foundation registration requires i) a minimum capital of €1.7 million and ii) the appointment of at least three trustees comprising the Board. All trustees must be individuals and two must be resident in Hungary;
- The foundation must appoint an auditor and submit its annual financial statements to a statutory audit, before filing them with the Hungarian government.
Table of comparison between Hungary entities
|LLC||JSC||Branch office||Rep office|
|Also known as:||Kft.||Rt.||Fa.||K.i.|
|How long to set the company up?||2 weeks||4 weeks||3 weeks||3 weeks|
|How long to open company bank account?||3 weeks||2 weeks||2 weeks||2 weeks|
|Enjoys limited liability in Hungary?||Yes||Yes||No||No|
|Authorities pre-approval needed to incorporate the company with a single shareholder?||No||No||No||No|
|Minimum share capital?||€1||€16,400 (Private)|
|File annual tax return?||Yes||Yes||Yes||No|
|Corporate bank account options?||Raiffeisen bank||OTP Bank||Unicredit bank||Erste bank|
|Does our Client need to travel?||No||No||No||No|
|Resident director required?||No||No||No||No|
|Minimum directors allowed?||1||3||1||1|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes|
|Individual shareholders allowed?||Yes||Yes||No||No|
|Corporate director(s) allowed?||No||No||No||No|
|Hungary corporate tax rate?||10%||10%||10%||0%|
|Annual financial statements required?||Yes||Yes||Yes||No|
|Statutory audit required?||No||Yes||No||No|
|Allowed to issue sales invoices in Hungary?||Yes||Yes||Yes||No|
|Allowed to sign contracts with Hungary entities?||Yes||Yes||Yes||No|
|Allowed to import and export goods?||Yes||Yes||Yes||No|
|Can rent an office in Hungary?||Yes||Yes||Yes||Yes|
|Can buy Hungary property?||Yes||Yes||Yes||No|
|Can own equity in other Hungary companies?||Yes||Yes||No||No|
|Total Hungary business setup costs in Yr. 1||€10,990||€8,990||€9,260||€8,860|
|Subsequent annual costs (incl. accounting and tax fee)||€3,420||€3,420||€3,420||€3,420|
|Sample engagement fee invoice||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF|