Setting up a company

How to set up a company in Hungary

Setting up a company in Hungary follows the same legal system that is currently used in EU countries. Read our guide to find out about the most attractive form of incorporation for foreign investors.

Foreigners and expatiates with a residence permit can pursue a business activity after obtaining a sole trader's licence. The time required to set up a company in Hungary is approximately 5 days, including all the procedures (i.e. consulting a lawyer, going to a registration court etc.).

The most attractive company forms for foreign investors are companies limited by shares (public or private) and limited liability companies.

Foreign investors can invest in 4 different types of enterprises in Hungary:

• KKT A General Partnership
  All the partners bear unlimited liability in all that concerns joint undertakings.
• BT A Limited Partnership
  At least one of the general partners has unlimited liability for the joint obligation, the other partners bear only limited liability (a partnership is not allowed to be a partner with unlimited liability in any other partnership).
• RT A Joint Stock Company
  A Joint Stock Company may be private or public and is traded on the Stock Exchange. It may have a single shareholder. Its board of directors must have at least 3 members but no more than 11. The shareholders in a private joint stock company may appoint a CEO instead of a board of directors.
• KFT A Limited Company
  As distinct from an RT company, a company of the KFT category may not raise capital from the public. The shareholders have limited liability. The minimum equity must be in excess of HUF 3 million.

To set up a partnership company in Hungary, at least two members are required. Limited liability companies and joint stock companies can be set up with only one member.

Registering a company in Hungary

All businesses must be registered in the commercial register at a competent district court.

Since 1 July 2008 all applications must be submitted digitally at the Commercial court by a lawyer (in an e-mail message). Copies of corporate documents should be attached. The e-mail must have a certified digital signature and be confirmed by a timestamp from a notifying lawyer.

On submitting an application to incorporate, the following details should be provided:

• A commercial license
• Documents of incorporation
• Business name of the company and the address of its registered offices or of its owners
• Documents of incorporation
• Business name of the company and the address of its registered offices or of its owners
• Location of the company's activities
• Type of activities
• Form of incorporation
• Approval for foreign workers

In addition the company must register with the following bodies:

• The Central Office of Statistics (KSH)
• National Income Tax Authority (APEH)
• Regional Income Tax Authority
• The (Regional) Court of Registration
• The Institute of National Insurance

Entrepreneurship in Hungary

Hungary has a very low entrepreneurial activity in comparison to other EU countries. Most Hungarians prefer being an employee to being self-employed. Self-employed Hungarians tend to choose this option for economic reasons rather than for the freedom and independence it entails.

Hungary Income Taxes and Tax Laws

Hungary operates a sliding scale taxation system (the higher the income, the higher the rate of tax payable). In 2009 the tax rates in Hungary for an individual ranged from 18% to 36%. There are reduced tax rates for certain income earners.

Corporate tax in Hungary in 2009 was fixed at 16%. There is an additional 4% solidarity tax.
Corporate tax for incomes up to HUF 50 million is 10%. The tax year in Hungary is the calendar year.

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Also in this section

• Setting up a company: How to set up a company in Hungary
• Business etiquette: Doing business in Hungary

Comments from other users

• Significant changes in Hungary

  Since 1 January 2010 most of the taxation rules changed in Hungary (e.g. corporate income tax base 19%, individual tax base 17% and 32%, etc.), and further changes are expected during 2010.
  
  If you are seriously planning to set up a business in Hungary, send your questions to the following e-mail address for further information:
  Reply Peter Kovacs, 13 May 2010
   Thank you. Your comment will be published once it has been approved by the moderators.

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