Opening of the company in Hungary

GLS Law Company Services: Company Formation in Hungary

Hungary as a jurisdiction for company registration presents an attractive option, as it offers one of the most favorable corporate income tax rates among all European countries. Additionally, establishing a company in Hungary provides access to the EU market and the opportunity to attract European partners. The benefits of Hungarian legislation allow for comfortable business operations, taking advantage of not only tax incentives but also the country’s developed infrastructure and economy.

Why Open a Company in Hungary?

Registering a company in Hungary comes with several positive features:

• Hungary’s advantageous geographical location in the center of Europe facilitates manufacturing and logistics for businesses operating within the EU;
• The country’s high reputation, not being considered an offshore jurisdiction;
• The possibility of remote registration without the personal presence of the founders, making it easy to open a company in Hungary;
• Hungarian banks are welcoming to foreign business clients;
• The jurisdiction boasts the most liberal corporate income tax rate;
• Business in Hungary can further lead to obtaining a residence permit.

Company Registration in Hungary: The Most Popular Form of Business Activity

The process involves choosing an organizational and legal form, with KFT (equivalent to an LLC) being the most popular choice today. Key aspects of this form include:

• KFT participants are liable for the company’s debts only up to their contributions to the share capital;
• The minimum share capital for a company is 3 million forints;
• Registering a company in Hungary requires at least one shareholder (either a legal or physical person, without residency restrictions);
• A KFT must have at least one director, responsible for managing the company’s affairs and signing documents on its behalf;
• If the company plans to open a bank account, hiring a local manager is advisable, especially if the founder and director are non-residents of Hungary;
• Companies in Hungary must maintain accounting records and provide financial activity reports.

Taxation and Business Registration in Hungary

Creating an offshore entity in Hungary is not feasible, as resident companies are subject to unlimited corporate income tax liability. Besides corporate taxation, there are several other taxes, including:

• Corporate income tax at 9%, though exceptions may apply for specific activities;
• The standard VAT rate is 27%. A reduced rate of 18% applies to certain products (e.g., milk, dairy products) and services (e.g., access to music and dance events). The minimum VAT rate in Hungary is 5%.
• The Hungarian dividend tax rate is 15%. The same rate applies to interest earned from loans and deposits, with special rules and rates applicable under certain circumstances.

From the information provided, company registration in Hungary offers numerous advantages for international business owners. The existing taxation system precludes the offshore Hungary strategy, but the proposed corporate tax rate is the lowest in Europe.

Opening a Company in Hungary: How to Order the Service

You can register a company in Hungary with the professional help of GLS. Our company’s prices correspond to the quality of services provided, so feel free to contact us by leaving a request on our website or through our contact phone numbers.