Starting a business in Hungary is a great idea for people who want to grow in the European market. Hungary has a good location, low taxes and an easy process for starting a company. It is a good choice for both local and foreign business owners. In this article we will explain everything you need to know about starting a company in Hungary like picking the right type of business and learning the legal and money rules.
Why Start a Business in Hungary?
Hungary is a great place to start a business because of its strong economy and good location. It is in Central Europe which makes it easy to reach other EU markets. This is perfect for businesses that want to sell to European customers. Hungary also has modern roads, railways and trade systems that make doing business easier.
One of the best things about Hungary is its low taxes. The corporate tax rate is only 9%, one of the lowest in Europe which helps businesses earn more profit. Hungary also has a stable economy and gives special benefits to foreign investors like residency options and money help for certain industries.
Understanding the Types of Business Entities in Hungary
Choosing the right type of business is very important to meet your goals. In Hungary the most popular choice is the Limited Liability Company (Kft.). You need at least HUF 3,000,000 (about EUR 8,500) to start this type of company. A Kft. is a good choice for small and medium businesses because it protects the owners from losing personal money if the company has problems.
For bigger businesses a Joint Stock Company (Rt.) is a better option. There are two kinds: Public (Nyrt.) and Private (Zrt.). Other options include Branch Offices which are good for foreign companies that don’t need a separate company in Hungary and Representative Offices which can only do things like market research and not sell products. Each type of business has its own benefits to fit different needs.
Step-by-Step Guide to Company Formation in Hungary
1. Choosing a Company Name
Start by selecting a unique company name that complies with Hungarian naming conventions. It should not conflict with existing businesses and must reflect the nature of your operations.
2. Drafting Articles of Association
The Articles of Association serve as the backbone of your company detailing its governance, operational rules and ownership structure. This document must be notarized and submitted during registration.
3. Registration Process
Submit your application to the Court of Registration including necessary documents like proof of share capital Articles of Association and tax forms. Upon approval your company will receive a tax number and if applicable a VAT registration.
Legal and Administrative Requirements
Following the rules during company formation Hungary is very important for running your business smoothly. All companies must register with the local Chamber of Commerce. This registration can also help you connect with other businesses and get useful resources. If you plan to hire workers you must register them in Hungary’s social security system.
You also need to keep proper financial records and send annual reports. Following tax laws and other rules is necessary to avoid fines and keep your business running without problems.
Costs and Time Frame for Setting Up a Business
The cost of starting a company in Hungary depends on the type of business and the services you use. For a Limited Liability Company (Kft.) you need at least HUF 3000000 as starting money. You may also need to pay extra for legal and administrative services.
Registering your company is quick and usually takes 4-5 business days. This fast process helps businesses start working quickly making Hungary a good choice for entrepreneurs who want to enter the market fast.
Banking and Financial Requirements
Opening a business bank account is an important step when starting a company. You will need documents like your ID, the company’s Articles of Association and the registration certificate. Hungarian banks offer business accounts with features like online banking and support for different currencies.
This account is used to deposit the starting money for your company and handle daily financial transactions. Picking a good bank that allows international transfers can make managing your business easier and help you reach customers around the world.
Taxation and Financial Compliance in Hungary
Hungary has very competitive taxes with a corporate tax rate of just 9%. Businesses also need to pay Value Added Tax (VAT) which is 27%. If your business sells locally, you might also have to pay a local business tax. This tax is between 0% and 2% depending on the area.
To follow tax rules, you need to manage your finances carefully. Hiring a local accountant or using professional accounting services can help you handle taxes and keep your business compliant with the law.
Last Words
By following this guide, you can start a business in Hungary and take advantage of the many opportunities it offers. With good planning and support your business journey in Hungary can be successful and rewarding. However there may be challenges like language barriers and complicated paperwork. Most official documents must be in Hungarian so you might need to use translation services.
