Company Registration In Hungary in 2023-24
Hungary is one of the most ideal locations for business incorporation. With a corporate income tax rate of 9%, the nation has the lowest tax in the European Union, which attracts entrepreneurs from all over the world. The 55th biggest economy on the planet is that of Hungary, and the nation is also ranked 41 globally in terms of GDP per person as
calculated using purchasing power parity. The country’s economy is substantially influenced by the automobile, telecom, computers, food manufacturing, textiles, and chemical industries. Approximately 50 percent of the GDP and nearly 65 percent of the workforce were employed in the services sector. The tourism sector of the nation greatly contributed to the nation’s development. This makes company registration in Hungary a favorable choice for entrepreneurs.
The process of setting up a business in Hungary is covered in this article. Additionally, the documents, criteria, advantages, and cost for Hungary company registration are also briefly covered.
Procedure for company registration in Hungary
The steps below must be taken in order to register a company in Hungary:
Choose the legal entity
The initial step for Hungary company registration is to select your company’s legal structure. An entrepreneur can set up a sole proprietorship, an LLC, a branch office, or any other form of business.
Decide on a business name
The selected business name should be recognized, and genuine, and should not violate the rights of another individual or entity.
Prepare the company documents
Based on the type of firm, the entrepreneur can prepare the necessary documents required for company registration in Hungary such as the article of association, the statutory documentation, etc.
Open a business bank account
An entrepreneur has to open a business bank account and deposit the required share capital in the bank.
Register with the Court of Registration
All firms in Hungary have to register with the Court of Registration and submit the required documents along with it.
Register with the tax authorities
Getting enrolled with the tax authorities and the social security system is a requirement for all firms in Hungary.
Acquire business licenses
Organizations should also apply for various business licenses depending on the industrial sector in which the firm will operate.
Documents to register a company in Hungary
Here is the documentation needed for the Hungary company registration:
- Name and activity of the business
- Proof of paid-up share capital
- Information about the registered office address
- Memorandum of association
- Article of association
Types of business for company registration in Hungary
The various business entities for company registration in Hungary that an entrepreneur can use if they wish to register their corporations are discussed below:
Limited Liability Company
A Hungary LLC can be created with just one shareholder and one director, both of whom can be from any country and are not obliged to live in Hungary on a regular basis. In a Hungary LLC, entrepreneurs may possess all of the stock. The required share capital to form an LLC is 3,000,000 HUF.
General Partnership
People who want to engage in business activities can form general partnerships. In a general partnership, the partners’ responsibilities are shared and unlimited. There is no minimum amount of capital required to incorporate a general partnership.
Limited Partnership
In Hungary, a limited partnership must have 1 general partner and 1 limited partner. For a limited partnership to be incorporated, there should be at least two participants. At least one partner has a responsibility that is only capped at the amount of his investment, whereas the other member has unlimited responsibility.
Joint Stock Company
In Hungary, a joint stock company can be either private or public, depending on whether or not its stocks are offered to the general public. A JSC needs at least one shareholder, who may be from any country. For a private JSC incorporation a required share capital of 5 million HUF is necessary. Similarly, a public JSC with a required share capital of 20 million HUF is needed.
Branch Office
The branch office may be appropriate for international corporations who wish to establish a presence in Hungary and meet the criteria for carrying complete responsibility for the branch. Although a branch office lacks legal identity, it is permitted to conduct commercial operations in Hungary as a subsidiary of its parent corporation. The enrollment cost for a branch office is 50,000 HUF.
Eligibility criteria for Hungary company registration
Here are the criteria that must be fulfilled for company registration in Hungary:
- Shareholder: To register a company in Hungary, at least a minimum of one shareholder is necessary.
- Director: To register a company in Hungary, at least a minimum of one director is required.
- Registered business address: It is essential to have a registered office address in Hungary.
- Bank account: The business needs to have a bank account in Hungary.
- Minimum required capital: At least a capital of 3M HUF is needed for Hungary company registration.
Taxation structure in Hungary
Firms incorporated in Hungary have to enroll with the appropriate tax authorities and pay the necessary taxes.
The numerous taxes that companies in Hungary are expected to pay are mentioned below:
- Corporate income tax (CIT): The rate of CIT in Hungary is 9%.
- Personal income tax(PIT): Hungary levies a 15% tax on personal income.
- Value-added tax: The rate of VAT in Hungary is 27%, however, lower rates of 18% and 5% are also applicable to certain products.
- Dividend tax: Additionally, there is no dividend tax for proprietors of overseas corporations.
Cost for company registration in Hungary
The different costs involved in the incorporation procedure must be taken into account whenever an entrepreneur considers starting a business. For Hungary company registration, an entrepreneur has to consider the business incorporation expenses, registered office address cost, fees for enrolling with the tax authorities, etc.
Here are the various costs for company registration in Hungary:
- Limited partnership firm filing fees are HUF 50,000.
- Limited liability companies and privately held companies with a share capital must pay about HUF 100,000 to register as a business.
- The required capital that is necessary to be deposited in the bank is 3,000,000 HUF.
Why register a company in Hungary?
- Hungary has the lowest rates of business taxes in the European Union at just 9%.
- In Hungary, operating a business is much less expensive than it would be in the UK or other parts of Europe.
- Hungary’s economy is based on exports. Automobiles, medicines, plastics, hospital instruments, and rubber products make up the majority of its exports.
- Hungary offers affordable business establishment costs.
- In comparison to Western Europe, Hungarian salary and wage levels are quite modest.
Advantages of Hungary company registration
The numerous advantages of Hungary company registration are listed below:
Tax advantages
With a corporate tax rate of about 9%, Hungary has one of the lowest rates in the European Union. In addition to that, the nation has several double taxation treaties with almost 80 countries in order to avoid being taxed twice. Neither businesses nor private persons are subject to any withholding taxes or dividend taxes.
Affordable and skilled workforce
In contrast to the majority of other EU countries, Hungary’s average salary is quite low. The workforce in Hungary is often well-skilled and better qualified. In the corporate world, English is a commonly used language.
Lower maintenance cost
In comparison to the UK or Western Europe, Hungary has much lower maintenance costs for businesses. This implies that you may retain the central location and cosmopolitan ambiance of Budapest while hiring top personnel for less money than you would be required to pay somewhere.
Gateway to Europe
Hungary is a part of the EU and is ideally situated in the center of Europe. It is still a significant commercial and social center in the region and served historically as a bridge between Eastern and Western Europe. Opening a company in Hungary gives immediate access to all of Europe.
Conclusion
With access to approximately 450 million consumers in the European Union, Hungary is a great location for company incorporation. Company registration in Hungary also provides additional benefits to an entrepreneur, such as decreased maintenance expenses, double taxation accords, and no withholding taxes on dividends, interests, or royalties paid to non-individual beneficiaries.
If you want to register a company in Hungary, you can reach out to our professionals in business formation at Odint Consultancy. Our team of experienced specialists at Odint Consultancy is committed to assisting you at every stage of the Hungarian business registration procedure. We are prepared to help you promptly acquire the required paperwork and will further make sure you meet all eligibility requirements. After that, we will carefully prepare and submit your application for business registration to the relevant Hungarian regulatory body.
FAQ’s
All firm in Hungary has to register with the Court of Registration and submit the required documents along with it.
- With access to approximately 450 million consumers in the European Union, Hungary is a great location for company incorporation.
- Company registration in Hungary also provides additional benefits to an entrepreneur, such as decreased maintenance expenses, double taxation accords, and no withholding taxes on dividends, interests, or royalties paid to non-individual beneficiaries.
The rate of corporate income tax in Hungary is 9%.
It takes approximately 5 days to 1 week to register a company in Hungary.
The benefits of establishing a business in Hungary are:
- Numerous tax advantages
- Affordable and skilled workforce
- Lower maintenance cost
- Gateway to Europe
- Limited Liability Company
- General Partnership
- Limited Partnership
- Joint Stock Company
- Branch Office
