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Company registration in Hungary

Inteliumlaw » Business registration abroad » Company registration in Hungary

Located in the heart of Europe, Hungary offers a strategic location, a skilled workforce, and a business-friendly environment. Whether you're a startup or an established enterprise, our tailored solutions cater to your specific needs.

Our dedicated team of legal experts navigates the intricate landscape of Hungarian regulations, ensuring a smooth and compliant setting up a company in Hungary. From handling paperwork to liaising with local authorities, we take the hassle out of the process of company incorporation in Hungary.

At the core of our services is a commitment to transparency and efficiency. We prioritize clear communication, providing you with a comprehensive understanding of each step. Our goal is to empower you with the knowledge needed to make informed decisions for your business.

Why Hungary Company Formation?

Company formation in Hungary provides you with a blend of strategic advantages and a business-friendly environment.

Strategic location

Hungary's central position in Europe and membership in the European Union provide unparalleled access to diverse markets, making it an ideal hub for businesses seeking strategic connectivity.

Business-Friendly Environment

Hungary's commitment to creating a conducive business environment is evident. The country's legal framework allows individuals and entities, both local and foreign, to open a company in hungary and operate without unnecessary restrictions, except in specific sectors like agriculture.

Favorable Tax System

Hungary boasts a tax system that encourages business growth. 9% corporate tax rate is the lowest amongst OECD countries. Local business tax rate aligns with the specific location of Hungarian company and ranges from 0% to 2%. Dividends, interest, and royalties paid to resident or non-resident legal entitles are tax-free. Personal income tax rate is 15%. Hungary's corporate structure is not considered an offshore haven, and the country's policies promote transparency and compliance.

Skilled Workforce

Hungary takes pride in its workforce – highly trained, multilingual professionals whose salaries remain competitive, offering cost-effectiveness compared to many other EU countries.

Main advantages of company incorporation in Hungary

Types of Hungarian Companies

Hungary company formation involves strategic choices in company structures tailored to your objectives. Explore the diverse types of Hungarian companies available to both local and foreign entrepreneurs.

Opting for a representative office presents an alternative route. While lacking the ability to engage in commercial activities, a representative office plays a pivotal role in supporting the parent entity. This includes assisting in contract preparation and providing advertising services. Registration with the Hungarian Court of Registration is a prerequisite.

Services Provided by InteliumLaw

Our services related to the assistance with company formation in Hungary usually include:

Process of company registration in Hungary

Legal requirements for company registration in Hungary

Documents required to company formation in Hungary

Document requirements vary based on the chosen business structure. Whether you opt for a sole trader, partnership, or a limited liability company, we're here to streamline the process for you.

In general, the following documents should be provided:

- Memorandum and Articles of Association. These documents delve into crucial details such as shareholder information, director appointments, share capital, legal address, and the primary object of activity.

- Documents certifying identity of all shareholders and general managers.

- Utility bills of all shareholders and general managers.

- Resolution of founders or article of foundation.

Official translation of the documents with notary certification and apostille/legalization could be also required.

Taxation and Accounting

CIT and LBT. Resident companies in Hungary are obligated to pay 9% income tax on their global earnings, while non-resident companies are taxed solely on income generated within Hungary. Hungarian companies generally enjoy an income tax exemption on dividends, except those distributed by a controlled foreign company.

Additionally, Hungary's unique Local Business Tax (LBT) system allows municipalities to levy LBT, which is capped at 2%. LBT is deductible for Hungarian CIT purposes.

Duty to Support Innovations. A levy of 0.3%, based on the municipal business tax base, supports innovations. However, medium and small businesses are exempt from this levy.

Capital Gains. There is no separate tax on capital gains. Capital gains are integrated into the taxable base of income tax. Capital gains from the sale of shares by a shareholder of a Hungarian real estate company, resident in a treaty-absent country, are taxed at 19%.

VAT. The standard VAT rate stands at 27%, with reduced rates of 18% and 5% applicable to specific goods and services.

WHT. Non-resident companies are not subject to withholding tax on dividends, interest, and royalties. For non-resident individuals, the tax rate may reach 15%, unless reduced under a double taxation treaty.

CFC rules. Controlled foreign company (CFC) rules are applicable to foreign companies subject to a tax rate less than half of Hungary's rate. Exceptions apply, especially if the taxpayer demonstrates that the foreign company's income isn't related to tax evasion.

Accounting. Financial year in Hungary starts on 1st January and ends on 31st of December. Accounting rules are set forth by Hungarian Accounting Act, intricately woven with Hungarian Accounting Standards.

The obligation to appoint an auditor arises when a company surpasses certain thresholds. Specifically, if a company's average annual net sales revenue surpasses HUF 300 million for two successive business years, or if the average number of employees exceeds 50 over the same period, the appointment of an auditor becomes mandatory. However, in instances where these criteria are not met, the appointment of an auditor remains an optional, strategic decision for the company.

Ongoing Compliance and Support

Registering a company in Hungary is just the beginning. Ensuring its ongoing compliance with Hungarian regulations is an equally crucial aspect of long-term success. At InteliumLaw, we go beyond the initial registration phase, offering a comprehensive suite of ongoing compliance and support services.

In the ever-evolving legal landscape, staying informed is paramount. InteliumLaw keeps a vigilant eye on regulatory changes and updates, ensuring that your company remains well-informed and proactive in adapting to new requirements. We provide timely alerts and insights to navigate any shifts in compliance standards.

InteliumLaw offers ongoing legal support to address any queries, concerns, or legal challenges that may arise during the course of your operations. Our experienced legal team is just a message or call away, ready to provide guidance and solutions.

Why choose InteliumLaw to register a company in Hungary

To open company in Hungary, you definitely need a partner who not only understands the intricacies of the legal landscape but also prioritizes your unique business needs. At InteliumLaw, we offer a suite of unparalleled services designed to make the process smooth, efficient, and tailored to your success.

Expertise

InteliumLaw boasts a team of seasoned professionals well-versed in Hungarian corporate law, ensuring that your company registration adheres to all regulatory requirements.

Personalized guidance at each step

We recognize that every business is distinct, and your journey should be treated as such. Our team provides personalized guidance from the inception of the registration process to its successful completion. Whether you are a startup or an established enterprise, we tailor our approach to meet your specific requirements.

Efficient process

InteliumLaw takes pride in its streamlined and efficient processes. We understand the value of time in the business world, and our goal is to expedite your company registration without compromising on precision. Our well-defined procedures ensure a hassle-free experience for our clients.

Comprehensive support

Our commitment to your success extends beyond the registration phase. InteliumLaw offers comprehensive support, providing insights and assistance on various aspects of business operations in Hungary. From compliance to ongoing legal support, we stand by you every step of the way.

FAQ

How much does it cost to open a company in Hungary?

Company formation Hungary fees depend on a chosen type of legal entity and supporting services. We will be pleased to provide you with our commercial offer tailored to your needs.

How long does the company formation process typically take in Hungary?

It takes up to 15 days following the preparation of required documents to open company in Hungary.

Can I set up the company as a subsidiary to my existing business?

Yes. A subsidiary can be registered as a new legal entity in Hungary with foreign parent company being its sole shareholder. Also, foreign businesses could consider registering a branch or representative office.

A branch, duly registered with the Court of Registration, operates as an extension of the parent company. While maintaining ease of administration, it does require adherence to Hungarian law, including the necessity of a business license. Unlike a legal entity, a branch doesn't mandate a minimum share capital, offering flexibility in structuring your business presence in Hungary.

Opting for a representative office presents an alternative route. While lacking the ability to engage in commercial activities, a representative office plays a pivotal role in supporting the parent entity. This includes assisting in contract preparation and providing advertising services. Registration with the Hungarian Court of Registration is a prerequisite.

Why do I need a client gate in Hungary?

The Client Gate serves as your exclusive gateway, connecting you to a spectrum of essential services. More than just a portal, the Client Gate is a key tool maintained by the Government to streamline various administrative tasks crucial to your business operations.

From the submission of tax reports to the scheduling of residency and work permit appointments, the Client Gate is a multifaceted platform designed to enhance your administrative efficiency. Beyond tax-related functions, this portal also provides a seamless entry point to the Company Gate, a hub where company-related issues can be addressed and resolved with ease.

Opening the Client Gate is a personalized process that necessitates your physical presence, either in Hungary or at the Hungarian Embassy in your chosen city.

Do I need to deposit the share capital amount to my company’s bank account?

No. There is no requirement to deposit the amount of the share capital, while you are setting up a company in Hungary. The share capital can be paid within 2 years.

What are the tax implications for a foreign-owned company in Hungary?

Dividends, interest, and royalties paid by a Hungarian company to its foreign parent company are not subject to withholding tax in Hungary. In case the shareholder are non-resident individuals, withholding tax rate may reach 15%, unless reduced under a double taxation treaty.

Do I need to be a resident of Hungary to form a company there?

No. The country's legal framework allows individuals and entities, both local and foreign, to operate without unnecessary restrictions, except in specific sectors like agriculture.

Can InteliumLaw help with opening a corporate bank account in Hungary?

Yes. InteliumLaw simplifies the process by guiding you to the right banking institution. Whether you need a business account for daily transactions or require specialized services, we facilitate a smooth banking experience.

What is the minimum share capital required for a Hungarian company?

The minimum share capital for a Hungarian LLC (Kft.), currently amounts to 3 million HUF (around EUR 7,900). The minimum share capital for a Hungarian Joint Stock Company (RT) currently amounts to 5 million HUF (around EUR 13,100). There is no requirement to deposit the amount of the share capital.

Can InteliumLaw provide accounting and tax services after company formation?

InteliumLaw can assist with finding suitable accounting and tax services providers by referring you to our partners in Hungary.

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