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 flat tax rate at 15%.
Corporate tax in Hungary, as of 2017, was fixed at 9%.