The landlocked Central European country is a popular destination for business owners looking to relocate or expand their companies. With a population of around 10 million people, the export-oriented economy of Hungary is the perfect choice for business activities that rely on trading their goods around the world.
A member of the EU, Hungary offers various direct investment opportunities in the automotive and agriculture industry for large companies to benefit from. Whether you start a new business venture or open branches in the country, you can take advantage of the thriving electronics and services sectors.
Hungary’s friendly investment policies and favorable tax system welcome foreign investors with open arms. With the low corporate tax set between 10% and 19%, this country truly has more to offer than just the natural beauty of the Danube River.
CompyCo helps you leverage the amazing investment opportunities that await you in Hungary. By working with us, your foreign company can gain instant access to Hungary’s highly-trained, well-educated workforce at affordable rates and hit the ground running with profit-generating ventures.
Forms Of Companies In Hungary
- KFT “korlátolt felelősségű társaság” —limited liability company
- RT “részvénytársaság” —joint stock company
- BT “betéti társaság”—limited partnership
- FT “külföldi vállalkozás magyarországi fióktelepe” —branches
- KI “kereskedelmi képviselet”—representative offices
What is the difference between KFT and RT companies in Hungary?
The two most common types of Hungarian companies are the KFT and RT companies. The former refers to limited liability companies, while the latter corresponds to either public or private joint stock companies. Some of the main differences between these two popular company types are explained below.
Limited liability companies are ideal for those people looking to start a small-scale business in Hungary. The Hungarian government requires a lower incorporation cost for this type of business and has set a minimum share capital amount of only 3 HUF.
A Hungarian private joint stock company (ZRT) is liable for the fulfillment of the company’s obligations with all its assets. The minimum share of the company’s assets is 5 million HUF. This type of company can have one or more founding members and must be overseen by a board of directors.
The main difference between Hungarian private (ZRT) and public (NYRT) joint stock companies is the value of the mandatory deposit of shares. With a higher requirement for NYRT companies, the demand is for 20 million HUF. Every public joint stock company must have a management and supervisory board overseeing its activities.
Fundamentals Of A Limited Liability Company
Corporate Tax in Hungary
VAT in Hungary
Fundamentals of limited liability companies in the Hungary
|Limited liability company||KFT|
|Minimum Share capital||min 1 EUR|
|Registered office required||Yes|
|Physical office required||No|
|Min. number of Shareholders||1|
|Min. number of Directors||1|
|Local Director required||No|
|Bank signatory must travel||In most cases yes|
|Timescale for company formation||2 weeks|
|Timescale for bank account opening||7 days|
|Timescale for obtaining VAT number||7 days|
|Statutory audit requirements||No|
|Shelf companies available||Yes|
How can I set up my company in Hungary?
Establishing a business outside your jurisdiction can be daunting, but CompyCo is dedicated to making the process easier for you.
Those looking to set up a company in Hungary should fulfill these three key requirements:
- Have a legal address in the country
- Hire an accountant, preferably one that’s competent in English
- File for your company’s registration with the Hungarian Trade Registry
When starting your company in Hungary, it’s mandatory for companies to acquire a social security number using an online form. In some cases, a VAT number might business be required a well.
After the company has been formed, CompyCo will register it with the local tax office, The central tax office, Chamber of Commerce, Statistical office (KSH).
The requirement for the company is also to have local Hungarian bank account. We will schedule a meeting in the bank for you. This will require visit for 1 day.
Many foreign investors find it easier to look for other, simpler alternatives to setting up a company and starting their business activities in Hungary. Purchasing a pre-incorporated self-company is one such viable alternative. What makes this such a popular choice amongst foreign business owners is that these companies are relatively lower-cost options in Hungary compared to other countries in the Eurozone.
Setting up a wholly foreign-owned company in Hungary is a fairly simple process if you have the right, experienced professionals guiding you along the way.
As the 35 largest export economy in the world, Hungary has a lot to offer businesses that want to expand into foreign markets.
CompyCo provides tailor-made solutions that are personalized to your business’s unique needs. We offer consultations with our experts, help with determining the ideal company structure, helping you choose the type of company, and a range of other services to make the process hassle-free.
Our experts make the registration and licensing process easier with our concierge-style services. We’re developed strong relationships with professionals all over the world who serve as points of contact when setting up your Hungarian company.
Bank Account Opening
By law, all Hungarian companies are required to open a bank account within 8 days of their company’s incorporation. Since this is a crucial and time-sensitive process, it’s important to work with experts who’ve been doing this for years!
Work with CompyCo and leverage the insight our extensive network of contacts in financial institutions have to offer. While we can act as a liaison between you and the bank so you can avoid traveling for just an interview, some banks don’t allow you to open a Hungarian bank account remotely. In these cases, your Power of Authority cannot complete this part of the registration for you. An in-person interview is necessary for the process to continue smoothly.
Not only does our team of experts help you with the documentation and processes of Hungarian financial institutions, but we also help you find a suitable banking service for your needs. Depending on your country of origin, intended business activities, and existing bank accounts in other countries, we’ll guide you to the most viable option.
Need more information about opening a bank account? Head over here.
Accounting & Taxation
Here are a few accounting and taxation obligations to take into consideration:
- The tax year is the calendar year in Hungary.
- Taxation in Hungary has progressive rates. Many double tax treaties are in place so that a company doesn’t need to pay taxes in several EU countries. Hungary’s corporate income tax is 10% on all income up to 500 million HUF and 19% on income greater than 500 million HUF.
Hungary has a standard VAT of 27%, but lower rates of 18% and 5% are applicable depending on the type of goods and services sold by your company. Hungarian companies are issued VAT numbers with the format of the country code HU followed by a 9-digit number which ends with a letter.
How can you employ staff in Hungary?
Hiring the right people to your new business venture is essential to ensuring business success, especially if you’re not always present in the country and they’re familiar with businesses in the jurisdiction.
Hungary has a large, expertly-skilled, and highly-educated workforce that you can employ as a foreign business owner.
CompyCo takes care of all your employee registrations, writes employment agreements, PEO or direct employing, recruiting, payroll, and other services you might need in a foreign country.
We take care of all aspects of employment so you can solely focus on your business activity. If you want to gain a deeper insight into the employment requirements for foreign business owners, we can set up an account with our unique software to help you understand your HR and payroll obligations. Every country operates according to its own unique set of regulations and our extensive experience makes us the perfect partner to outsource your HR functions.
CompyCo aims to give you complete control of your functions as an employer, while making time-consuming processes easier for you!
Have any questions? Take a look at our HR services page for more information about our International HR services!