Similarly to other East European countries, Hungary provides foreign investors with the opportunity to incorporate a company without difficulty. Also a big advantage for those willing to open a company in Hungary consists in the short period of time required to set up a Hungarian company. Nevertheless, in order to achieve this, certain steps must be followed.
STEPS FOR COMPANY FORMATION IN HUNGARY
1) First of all, the client must provide the denomination of the company about to be opened in Hungary, information on the shareholding structure and on the activities that the future company will conduct. Concurrently, the tax numbers of the shareholders who will open the company in Hungary have to be reported; should they not have such a number in their country of residence, then such numbers can be obtained from the Hungarian authorities. In order to prepare the company’s documents, the client must provide information related to the following: duration of the company, duration of the directors’ mandate, share capital, etc.
2) The following steps for the incorporation of a company in Hungary will be opening the company’s bank account in order to inject the share capital amounting to 500,000 HUF and signing the required documents in front of a Hungarian Public Notary. This can either be done in person or through a Power of Attorney if the shareholders will not travel to Hungary.
3) The final step is to register the company with the Trade Register. Once all the company formation related documents have properly notarized as per the legislation when opening a company in Hungary, they will be filed with the Trade Register for approval. The company is considered dully operational, once these steps are complete and the registration documents are issued.
The biggest advantage in forming a company in Hungary represents the short period of time necessary for registration. The whole process takes 5 to 7 days to complete.
REQUIREMENTS FOR COMPANY FORMATION IN HUNGARY
- Any person of any nationality or residence can be director or shareholder in a Hungarian company;
- the shareholders of a company established in Hungaria can be both natural persons or legal entities;
- In case of foreign founders, a delivery agent is needed and therefore a Hungarian person must be appointed.
- a company opened in Hungary must hold a local registered office (service provided by BridgeWest)
- the minimum capital for establishing a Limited Liability Company in Hungary amounts to HUF 500,000, i.e. approximately EUR 2.000.
SERVICES PROVIDED FOR COMPANY INCORPORATION IN HUNGARY
> drafting the Articles of Association (necessary for the company incorporation in Hungary);
The Articles of Association of the Hungarian company can be signed through Power of Attorney (the same applies to Public Notary proceedings, a step required by Hungarian Law).
> drafting all other documents required for the incorporation of the Hungarian company;
These documents include: Specimen Signatures, Special Forms provided by the Company Registration Office in Hungary, passport copies etc.
> arranging Public Notary procedures (The procedures for incorporating a company in Hungary have to be done through a Hungarian Public Notary);
> offering a Registered Office in Hungary for your company (if required);
The registered office may be any address where the Hungarian company declares to have its headquarters. The registered office will be public.
> setting up a bank account for your Hungarian company.
This refers both to an initial share capital account as well as a current bank account after the company is formed.
> recommending an accountant in Hungary;
Accountancy services are recommended for any new business registration in Hungary.
BridgeWest provides formation of the following types of companies in Hungary:
Korlátolt Felelosségu Társaság – “Kft.”(Limited Liability company) This type of Hungarian company can have one shareholder and one director and must maintain a local address (office) and a minimum share capital of 0,5 million HUF (2,000 EUR).
Részvénytársaság – “Rt.”(Joint Stock company) This type of Hungarian company can have one shareholder, one director and must maintain a local address and a minumum share capital of 5 million HUF (20,000 EUR) .
Other types of Hungarian Entities:
- Hungarian Limited Partnership (LP, or BT in Hungary, added after the name of the Partnership)
The members of a LP undertake joint business activity and at least one general partner has unlimited liability for the obligations of the company. The Limited Partnership has no legal status and has limited partners which expose their liability to the extent of their capital contribution, monetary or non-monetary. According to the Hungarian law, only the general partner is entitled to represent the partnership, unless the company's articles of association state otherwise. The partnership may evolve, and transform into a Limited Liability Company.
- Hungarian General Partnership, or unlimited Partnership (GP, or KKT in Hungary, added after the name of the Partnership). In a General Partnership the liabilities of all members are unlimited for the partnership's obligations, as all members who make monetary or non-monetary contributions are considered general partners and have the right, given by Hungarian law to represent the company, unless the articles of the company's association state otherwise. A General Partnership does not have a legal status, is not required a minimum capital and must have at least two members.
HUNGARY KEY FACTS
> The Hungarian corporate tax for any type of company is 10% for an income up to 500 million HUF (approximately 2 million EUR). If the income exceeds this amount, the rest of it is submitted to a 19% tax rate.
> VAT is not fixed for all types of business. For products and services, the VAT rate is 25%, while for basic food and accomodation, the VAT is 18%. As far as the medicines are concerned, the VAT is only 5%, as well as for books and newspapers.
> Hungary is tax free when it comes to dividends paid to foreign companies.
> Overall, Hungary provides an attractive and welcoming business environment.
BridgeWest is also able to offer ready-made Hungarian companies and VAT registration.
Please contact us for more information about how to open a company in Hungary and prices.
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Call us now at +44 203 287 0408 to set up an appointment with our lawyers in Budapest, Hungary. Alternatively you can incorporate your company without traveling to Hungary.
As a BridgeWest client, you will beneficiate from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Hungary.