Company formation in Hungary
To supplement our Hungarian bookkeeping services we are at our partners’ disposal in the following fields:
- complete company formation in Hungary
- founding Hungarian branches
- amending company register records in Hungary
- the preparation and the review of contracts
- legal representation in Hungary
- Hungarian legal attorney, Hungarian lawyer
During the years of our operation we have executed and managed more than 100 company formations, alterations and acquisitions from the smallest limited partnerships to the Hungarian branch of a large multinational.
Beside our Hungarian and Slovak clients numerous Western and Northern European investors have entrusted our firm with the formation of their Hungarian company. The quality of our work in the field of company formation in Hungary and the filing of changes in Hungarian company register records along with our global connections are guaranteed by our MGI membership.
Prompt and reliable company formation in Hungary
- specific, simple form of taxation
- the current tax legislation is expected to remain in effect in the long-term
- only 9% corporate tax
- 16 % dividend tax if the owner of the Hungarian company is a foreign citizen
- 0 % dividend tax if the owner of the Hungarian company is a legal person seated abroad (e.g. a limited company based in the UK)
- 27% vat
- 2% local business tax (based on revenues-value of goods procured-mediated services)
- online communication with government offices
- company formation in Hungary in under 2-3 days including European vat identification number
- The most common form of company in Hungary is the kft (korlátolt felelősségű társaság = limited liability company). The minimal registered capital to establish a Hungarian kft is 3 million HUF (cca. 7560 GBP, 9660 EUR or 12078 USD).
- The lines of business of a Hungarian firm need to be lain down accurately. For example, it is not enough to state “wholesale and retail”, but the company register records are required to define exactly what commodities the company will be dealing in.
- The process of company formation in Hungary and that of claiming a Hungarian tax identification number is simpler and quicker compared to Slovakia. The documents needed can only be signed in the presence of an attorney. We simply need to supply the Hungarian attorney or the Hungarian tax adviser with the needed data (company name, legal seat, registered capital, personal data of owners and executives, lines of business)
- No extracts from the criminal records need to be supplied during the process of company formation in Hungary.
signing the documents, in a couple of days the Hungarian companies court registers the company. Hungary has a single-window system, which means you do not have to separately apply for a business licence, the lawyer takes care of the whole process electronically at the companies court. In this way the Hungarian company gets registered within 2-3 days this way and by this time it will also have a European vat identification number.
- Important tax related decisions need to be made right at the time of company formation, so it is advisable to consult a Hungarian tax adviser or a Hungarian accountant beforehand.
- For example, there is an option to apply for a vat number (and a European vat number) right away as part of the process of company formation in Hungary, without any further applications or bureaucracy. This will be automatically and simultaneously registered by the Tax Office and the Hungarian company can start its activities as a registered vat payer.
- After company formation in Hungary we need to fulfil our obligation to register at the Tax Office and the local authority. In common practice these tasks are carried out by our commissioned Hungarian accountant.
- Prompt company formation in Hungary with customer service in English, German, Hungarian, Slovak
Company formation within Hungary in 2-3 days. Reliable Hungarian accountant.
The question of choosing the best form of Hungarian company might emerge. Should we choose “Kft” (LLC) or “Rt” (PLC)? The answer is simple. As Hungarian tax advisers we highly recommend you to choose Kft, the private limited company form, because its founding and operation are less bureaucratic, thereby the costs are lower compared to the public limited company form.
In the case of a Hungarian public limited company the minimal registered capital is much higher, shares need to be issued, a board of directors and a supervisory board need to operate.
You do not need to tackle these problems with a private Hungarian company, a Kft.
The legislation concerning the Hungarian Kft and its operations is very similar to those of private limited companies worldwide. In the case of Hungarian companies, the liability of the members is limited to the extent of the property taken into the company.
Important accountancy note: In Hungary, the regulation of invoicing is very inflexible, compared to other countries, for example in neighbouring Slovakia. The law requires businesses to issue invoices exclusively using so-called strictly numbered invoice blocks or using invoicing software that complies with the regulation of the Hungarian Ministry of Finance.
As Hungarian accountants we are in a position to say that the financial discipline is very strict. (petty cash, cash manipulation, invoicing)
- Prompt company formation in Hungary
- Chartered Hungarian tax adviser
The changes in the Hungarian taxation system experienced in the past years have been very positive, especially for small and medium businesses.
The Hungarian company income tax rate is at 10%
up to 500 million HUF (cca 1,7 million euros) of profits.
A 2% local business tax also needs to be paid to the local authorities (based on revenues-value of goods procured-mediated services).
If the profits of a Hungarian company are paid out in dividends, then the natural persons who receive the dividends must pay the aforementioned 16% dividend tax, the legal person receivers need not pay any dividend tax (0%).
Besides these there exist several specialised, simplified forms of taxation for the Hungarian businesses.
According to government statements, the reforms of the Hungarian taxation system are now complete; further substantive changes are not planned. It seems the present tax legislation is here to stay.
The legal basis of doing business (the forms of contracts used) is similar to
other countries in the region (e.g. Slovakia). Business culture, negotiating habits, business protocol
is also similar. English and German is spoken more and more. A few emphasised elements of the Hungarian business environment:
- the opportunities to gain EU subsidies are available to Hungarian companies to a substantially higher degree
- well educated workforce readily available at affordable prices, in several cases Government is greatly promoting employment by means of massive discounts (under 25s, entrants, above 55s, those returning from maternity leave, unskilled workers)
- banking fees are higher compared to Slovakia, but in return the banks provide a high standard of services (a domestic bank transfer is completed within 4 hours)
- most matters with the government offices, Tax Office, can be arranged electronically
- real estate prices have still not recovered from their decline during the crisis, so it is highly recommended to invest either into industrial or administrative buildings
Last but not least, if we enter a foreign country in the pursuit of tax benefits, that country can at the same time be a new potential market for our products, services. .
Reliable Hungarian accountant