How to open a company in hungary

How to open a company in hungary at full potential

Embarking on the journey of establishing a company in a foreign country can be both exhilarating and intimidating. Hungary, situated in the heart of Europe, offers a compelling destination for entrepreneurs and businesses seeking to expand their operations. Hungary presents numerous business advantages with its strategic location, highly skilled workforce, and a competitive corporate tax rate of only 9%. This all-encompassing guide provides a detailed roadmap to help you navigate the crucial steps and factors to consider when establishing a company in Hungary. By following the outlined procedures, you can take advantage of this country’s benefits and ensure a successful start-up experience.

Importance of correct procedures in company formation

Following the correct procedures in company formation is crucial for the smooth and successful establishment of your business. Proper adherence to local regulations and legal requirements can prevent delays, legal issues, and additional costs. This guide aims to provide you with all the necessary information to navigate the company formation process in Hungary efficiently.

Advantages of starting a company in Hungary

Hungary offers several advantages for entrepreneurs, including a low 9% corporate tax rate, strategic geographical location, and a well-qualified workforce. Additionally, the country provides a fast and easy process for company registration, cost-effective setup, minimal starting capital requirements, and a competitive tax system.

Understanding local legislation and business opportunities

Overview of Hungary’s key industries

Hungary boasts a diverse economy with significant contributions from heavy industry, automobile production, energy production, and the chemicals sector. These industries provide a wide range of business opportunities for both local and foreign investors.

Benefits of starting a business in Hungary

Geographical Advantage

In the heart of Europe, Hungary’s strategic location is a pivotal gateway for businesses seeking to tap into the vibrant Western European markets and the burgeoning Eastern European economies.

Fast and Easy Process

In Hungary, the registration procedure for establishing a company is efficient, allowing for a typical completion time of five business days.

Cost-Effective Setup

Compared to other European countries, Hungary presents a relatively lower cost for both living and business endeavours.

Minimal Starting Capital

The minimum share capital requirement for a limited liability company (Kft.) is just HUF 3,000,000.

Competitive Tax System

With a corporate tax rate of only 9%, Hungary is one of the most tax-friendly countries in Europe.

Gathering information on taxation, accountancy, and civil regulations

Detailed information on taxation and accountancy requirements

To ensure compliance and optimise business operations in Hungary, it’s fundamental to grasp the intricacies of taxation and accountancy requirements. Hungary offers a competitive corporate tax rate of 9%. However, staying informed about other taxes, including value-added tax (VAT), personal income tax, and social security contributions, is imperative.

Overview of civil regulations affecting businesses in Hungary

Civil regulations in Hungary encompass various aspects of business operations, including employment laws, contract laws, and property regulations. Familiarising yourself with these regulations will help you navigate the legal landscape and avoid potential issues.

Company details decision

Choosing the legal form, address, name, owners, and CEO for your company

Selecting the appropriate legal form and deciding about your company’s address, name, owners, and CEO are critical steps in forming. Hungary offers several types of business structures:

Limited Liability Company (kft.)

Due to its limited liability characteristic, this option is frequently chosen by small and medium-sized businesses.

Joint Stock Company (rt.)

Suitable for larger businesses that require significant capital and have the potential to go public.

General Partnership (bt.)

Ideal for businesses where partners are willing to share unlimited liability.

Limited Partnership (kkt.)

Combines features of both general and limited liability partnerships.

Foreign Entity Branch Offices

It allows foreign enterprises to operate within Hungary without forming a distinct legal entity.

Preparing documents

Necessary documents

To register a company in Hungary, you will need the following documents:

• Personal ID
• Address proof
• Tax ID
• Incorporation documents

Steps to register a company

• Preparation of corporate documents: Draft the articles of association and other necessary documents.
• Obtaining a registered office address: Secure an official address for your company.
• Signing constitutive documents: Execute the articles of association and other required documents.
• Company registration and obtaining a tax ID: Submit the documents to the court of registration and apply for a tax ID.
• Opening a business bank account: Open a Hungarian bank account to facilitate company operations.

Signing documents and forming the company

Options for signing documents

You have two main options for signing documents and forming your company in Hungary:

• Travelling to Hungary: Physically visiting Hungary to sign the documents.
• Authorising via power of attorney: Appointing a representative to sign documents on your behalf.

Mandatory registration

Registering with local authorities

After forming your company, you must register with several local authorities, including:

• Local tax office
• Central Tax Office (NAV)
• Chamber of commerce
• Statistical Office (KSH)

VAT registration is also mandatory.

Appointment of an accountant

Hiring a local accountant is crucial for managing your company’s financial records and ensuring compliance with Hungarian tax laws.

Opening a Hungarian bank account

Requirements for opening a bank account

Opening a Hungarian bank account is a legal requirement for company operations. Assistance is often provided to help navigate the account opening process.

Company capital

Requirements for initial capital

The minimum share capital required for a limited liability company (Kft.) is HUF 3,000,000. This capital can be contributed in various forms, including cash, property, or equipment, allowing for flexibility in the investment process.

Naming and registered office

Rules for choosing a company name

Choosing a unique and compliant company name is essential. The name should not be similar to existing companies and must comply with Hungarian naming regulations.

Selecting a registered office or virtual office

Your company must have a registered office in Hungary. Many businesses opt for virtual offices to meet this requirement cost-effectively.

Organisational structure

Roles and responsibilities

Understanding the roles within your company is essential for effective governance. Key roles include:

• Members’ meeting: The highest decision-making body.
• Managing directors: Responsible for day-to-day operations.
• Owners: Shareholders who invest in the company.
• Auditor: Ensures financial transparency and compliance.

Confidentiality and business shares

Maintaining confidentiality and understanding the rules regarding business shares are vital for protecting your company’s interests.

Cost of incorporation

Cost ranges

The cost of incorporating a company in Hungary ranges from €2,500 to €5,000, depending on the package and services chosen.

Government assistance

Incentives available

The Hungarian government offers various cash and tax incentives to support new businesses. Exploring these options can provide financial benefits and support your company’s growth.

Timeframe for registration

Typical completion time

Hungary’s company registration process is efficient, typically completed within five working days.

Additional services required

Comprehensive support

To streamline the company formation process, consider utilising additional services such as:

• Incorporation assistance
• VAT registration
• Bank account opening
• Accountancy and bookkeeping
• Registered office and virtual office services
• Consultancy services

Following the correct procedures and understanding local regulations are crucial for successfully opening a company in Hungary. Professional assistance can simplify the process, ensure compliance, and maximize the benefits of starting a business in this strategically located and economically favourable country. For further details, visit the respective consultancy services mentioned above.

FAQs

What is the minimum share capital amount necessary to establish a company in Hungary?

The minimum share capital required to start a limited liability company (Kft.) in Hungary is HUF 3,000,000. This capital can be contributed in cash or in-kind, such as property or equipment.

How long does it take to register a company in Hungary?

The company registration process in Hungary is relatively fast and can typically be completed within five working days, provided all necessary documents are in order.

What types of business structures are available in Hungary?

Hungary offers several types of business structures, including limited liability companies (Kft.), joint stock companies (rt.), general partnerships (bt.), limited partnerships (kkt.), and foreign entity branch offices.

Are there any tax incentives available for new businesses in Hungary?

The Hungarian government provides various cash and tax incentives to support new businesses. These incentives can offer financial benefits and support your company’s growth.

Do I need to open a Hungarian bank account for my company?

Opening a Hungarian bank account is a legal requirement for company operations. Assistance is often provided to help navigate the account opening process, ensuring compliance with local regulations.