Introduction

Hungary offers a business-friendly environments in Central Europe for foreign investors looking to establish a company. With its strategic location, skilled workforce, competitive tax rates, and membership in the European Union, Hungary has become an attractive destination for international businesses. This comprehensive guide outlines the legal requirements, procedures, and essential steps for foreign clients to successfully establish a company in Hungary.

Why Choose Hungary for Your Business?

Hungary provides numerous advantages for foreign investors:

  • EU Market Access: As an EU member state, Hungary offers unrestricted access to the European Single Market

  • Competitive Corporate Tax: Hungary maintains one of the lowest corporate tax rates in the EU at 9%.

  • Strategic Location: Central European location with excellent logistics connections.

  • Skilled Workforce: Highly educated and multilingual talent pool.

  • Investment Incentives: Government grants and tax incentives for qualifying investments.

  • Stable Legal Framework: Well-established commercial law system aligned with EU regulations.

How to Establish a Company in Hungary

Types of Business Entities in Hungary

Foreign investors can choose from several business structures when establishing a company in Hungary:

Limited Liability Company (Korlátolt Felelősségű Társaság – Kft.)

The Limited Liability Company (Kft.) is the most popular choice for foreign investors due to its flexibility and limited liability protection. Key characteristics include:

  • Minimum Share Capital: 3,000,000 HUF (approximately €7,500).

  • Liability: Limited to the amount of capital contribution.

  • Management: Managed by one or more managing directors.

  • Suitable for: Small to medium-sized businesses and subsidiaries

Private Limited Company (Zártkörűen Működő Részvénytársaság – Zrt.)

The Private Limited Company is ideal for larger businesses with higher capital requirements:

  • Minimum Share Capital: 5,000,000 HUF (approximately €12,500).

  • Shareholders: No maximum limit, but shares cannot be publicly traded.

  • Liability: Limited to share capital.

  • Management: Board of Directors or CEO.

  • Suitable for: Larger businesses and holding companies

Public Limited Company (Nyilvánosan Működő Részvénytársaság – Nyrt.)

For companies planning to go public or raise capital from public investors:

  • Minimum Share Capital: 20,000,000 HUF (approximately €50,000).

  • Shareholders: Unlimited, shares can be publicly traded

  • Liability: Limited to share capital

  • Management: Complex governance structure required

  • Suitable for: Large corporations and public companies

Branch Office

Foreign companies can also establish a branch office in Hungary which is suitable for testing the Hungarian market or specific project activities

Step-by-Step Company Formation Process

Step-by-Step Company Formation Process

Step 1: Company Name Selection

Before beginning the registration process, you must choose your desired company name:

  • Name Check: Verify name availability through the Hungarian Company Registry

  • Name Requirements: Must be different with 3 characters from existing company names.

  • Language: Can be in Hungarian or other languages with Latin characters

Step 2: Prepare Required Documentation

Gather and prepare all necessary documents for company registration:

For Individual Shareholders:

  • Valid passport or EU ID card

  • Proof of address

  • Hungarian Tax Number

For Corporate Shareholders:

  • Certificate of incorporation

  • Articles of association

  • Translation of the above documents

Consultation with accountant:

  • Have a consultation with an accountant to choose the taxation rules applicable for the company which suits you best for your business plan.

Step 3: Registered Office Address

Every Hungarian company must have a registered office address in Hungary:

  • Physical Address: Must be a real, physical address (not a P.O. Box).

  • Documentation: Provide lease agreement or declaration on the title to use the seat of the company.

  • Virtual Offices: Permitted for administrative purposes.

  • Address Changes: Can be changed later through official amendment procedures.

Step 4: Company Registration

Submit the registration application to the competent Court of Registration:

  • Capital Deposit: Deposit the minimum required share capital.

  • Filing Location: Local court based on registered office location.

  • Required Documents: Complete documentation package to be drafted by your legal representative.

  • Processing Time: Typically, 1-3 business days with electronic filing.

Step 5: Bank Account and other to-dos

  • Bank Account Opening: Open a company bank account at a Hungarian bank.

  • Requirements: Some banks may require physical presence for account opening.

  • Open a Government Gate portal: This is a must to be able to arrange your business electronically with administrative offices (tax office, etc.)

  • Mark the business name on your address / on your postal box.

Legal Requirements and Compliance

Corporate Governance

Hungarian companies must maintain proper corporate governance:

  • Managing Director: At least one managing director required for Kft.

  • Shareholder Meetings: Annual general meetings mandatory

  • Minutes: Maintain records of all corporate resolutions

Accounting and Financial Reporting

All Hungarian companies must comply with accounting requirements:

  • Accounting Standards: Follow Hungarian Accounting Standards or IFRS

  • Annual Accounts: Submit annual financial statements

  • Audit Requirements: Companies exceeding certain thresholds require external audit

  • Filing Deadlines: Annual accounts due by May 31st following fiscal year-end

How to Establish a Company in Hungary

Conclusion

Hungary offers excellent opportunities for foreign investors looking to establish a European business presence. With its favourable business environment, competitive tax rates, and strategic location, Hungary continues to attract international companies across various industries.

While the company formation process is relatively straightforward, the legal requirements and documentation can be complex. Working with experienced Hungarian legal professionals ensures smooth company establishment and ongoing compliance with all applicable laws and regulations.

For personalized assistance with your Hungarian company formation, contact our experienced legal team. We provide comprehensive services from initial consultation through complete company establishment and ongoing legal support.

This article provides general information about company formation in Hungary and should not be considered as specific legal advice. Laws and regulations may change, and individual circumstances may require different approaches. Always consult with qualified Hungarian legal professionals for specific legal guidance.