Business registration in Hungary is becoming an increasingly attractive option for entrepreneurs due to its favorable tax environment, strategic location in the heart of Europe, and transparent company formation process. Whether you plan to start a small business or expand an existing one, Hungary offers a range of benefits, including access to the European market, a skilled workforce, and support from government institutions. In this article, we will discuss the most common types of companies in Hungary and how to start a company in Hungary.
In what forms can you start a company in Hungary?
Limited Liability Company (Kft) – the most popular form of business in Hungary.
A Kft is best suited for small and medium-sized businesses, startups, and family enterprises, as it is easy to set up, does not require mandatory auditing up to a certain threshold, allows for attracting investments, and is simple to manage.
The founders of a Kft can be one or more individuals (both natural and legal persons, residents and non-residents). Each founder is only liable up to their contribution to the company’s share capital.
The minimum share capital is 3 million forints (about 8,000 euros).
If the Kft’s annual turnover exceeds 120 million forints (approximately 308,000 euros) for two consecutive years or it has more than 50 employees, a financial audit of the company is mandatory.
Joint Stock Companies, which can be closed (Zrt.) or open (Nyrt.)
This type of company is suitable for large businesses with many shareholders and for companies that want to sell their shares on stock exchanges.
Advantages of a joint-stock company in Hungary include:
- The ability to raise capital by selling shares, issuing securities, and bonds
- Shareholders are only liable up to their contribution
- A joint-stock company is considered more prestigious than a Kft., but it is more complex in terms of registration and management
A joint-stock company can have one or more founders.
The minimum share capital requirements are: closed joint-stock company – 5 million forints (about 12,900 euros), open joint-stock company – 20 million forints (about 51,400 euros).
Engaging an auditor is mandatory for a joint-stock company.
Limited Partnership (Bt.)
This form of entrepreneurship is less popular than the previous two. It is suitable for small businesses and for professional partnerships with special services (legal, accounting, architect services).
The minimum number of partners is two. At least one partner must be a general partner with full liability for the partnership’s obligations, and at least one must be a limited partner. Only the general partner has the right to represent the partnership.
There are no requirements for minimum share capital, nor is there a need for auditing.
General Partnership (Kkt.)
Very similar to a Bt., but the difference is that all partners are equal and have full liability for the partnership’s obligations.
Taxes for companies in Hungary
- Corporate tax: 9% of profits
- Dividend tax: 15%
- Value-added tax (VAT): standard rate 27%, reduced rates 18% and 5%
If you have a small business or are thinking of starting a business in Hungary you may also be interested in KATA which is a simplified tax system.
Company registration process in Hungary
Company registration in Hungary is done only through a lawyer.
The process consists of the following steps:
- Determining the desired legal form of the company
- Choosing a company name and checking its availability
- Preparing the founding documents
- Opening a bank account
- Submitting documents to the Hungarian Registration Court
- Registering with the tax office, the chamber of commerce and industry
- Obtaining licenses for activities if needed
The registration process takes about 2-3 weeks.
You will get the following advantages if you start a company in Hungary
- Favorable tax climate: 9% profit tax, incentives for certain types of activities, a residency-based taxation system.
- Access to the EU market: free movement of goods and services, 450 million potential consumers.
- Qualified workforce: high level of education, competitive labor costs.
- Government support: programs for small and medium-sized businesses, grants, and funding.
- Strategic location: the center of Europe with excellent transport connections.
Conclusion
Hungary presents a highly favorable environment for business registration, offering numerous advantages such as a competitive tax rate, strategic location in the heart of Europe, and a straightforward company formation process. Whether you aim to establish a small business or expand an existing enterprise, Hungary provides access to the European market and robust government support. By leveraging these benefits and working with a professional legal team, you can successfully navigate the registration process and capitalize on the opportunities Hungary has to offer.
If you have decided to start a company in Hungary this European jurisdiction can be a very attractive option for you. Entrust the registration to a professional legal team, and we will be happy to help!
