Citizens and residents of Hungary, as well as applicants from other European Union countries and third countries, can start their own businesses in Hungary. To become the owner of a Hungarian company, you must have enough funds to contribute to the authorized capital, if required, and to develop the company. You must also come up with a name for the company and register its activities with the Registration Chamber. The entire process takes no more than 15 days. Hungarian business owners can obtain a residence permit, which may lead to EU citizenship.
The Hungarian government actively encourages foreign entrepreneurs by offering cash subsidies, tax incentives, low-interest loans, and other tools to promote business growth. Additionally, Hungary’s central European location makes it a fitting base for cross-border business development. The country is also attractive to entrepreneurs due to its economic stability and the readily available industrial sites, offices, and technology parks.
Doing business in Hungary: regulations for foreigners
The laws governing business formation and operation in Hungary are outlined in the Companies Act, the Civil Code, and the Act on Individual Entrepreneurship for sole proprietorships. These official documents establish guidelines similar to those in other EU countries. Any individual residing in Hungary or outside the country has the right to establish a business in Hungary. The main obligation of foreigners doing business in Hungary is to submit regular accounting reports. Companies with a turnover of less than EUR 795,800 over the last two years and fewer than 50 employees can avoid an audit.
One advantage for foreigners doing business in Hungary is the opportunity to obtain a residence permit. After five years, an entrepreneur can obtain permanent resident status if their business is profitable and they have paid all taxes correctly. After eight years, they can apply for EU citizenship. Foreign businesspeople have the opportunity to receive government support in the form of benefits, subsidies, and financing of startups from state funds. The government can also issue subsidies for hiring local residents.
Should one buy a ready-made business or start a new company?
There are two ways for potential entrepreneurs to profit from the growth of the Hungarian business sector: they can start their own company or purchase an existing one. Buying a company is less risky than founding one, especially for beginners with no business education who have only heard about entrepreneurship in Hungary from colleagues, the internet, and other sources.
The main advantages of buying a company include the ability to immediately generate profit without independently developing: a client base, relationships with suppliers, or a product to bring to the market. It is often easier and more reliable to buy a ready-made business with an established staff and all the necessary equipment than to deal with these issues independently, thus minimizing one’s own risks. The total cost of buying a company may be lower than starting a new one.
The most important task for an entrepreneur is to thoroughly investigate a company before buying it. This includes verifying the authenticity of all documents, calculating economic indicators, determining tax debt, and ensuring that the company’s activities comply with local laws. Auditors, professional accountants, and lawyers who understand all the subtleties should be involved in the process. Business brokers can help you find a suitable ready-made enterprise to purchase.
A disadvantage of buying a company is establishing relations with employees. For example, existing staff may not accept the new management, causing disagreements in the professional sphere. Businessmen, especially those with no prior experience in a particular industry, may have questions about management. If the business is not thoroughly audited beforehand, the buyer may face losses due to tax debts or other issues.
When it comes to opening a Hungarian company, there are many advantages to consider. First, there are numerous options for development according to an individual strategy. Second, there is the opportunity to assemble a team of employees from scratch and build a reputation from the ground up. The company’s head can choose new premises and equip them at their discretion. On the downside, it takes a lot of time and money to develop your brand from scratch, bring it to market, and find new customers.
Get a Hungarian residence permit if you want to:
- Live and work freely in Hungary;
- Travel visa-free to EU and Schengen countries;
- Open bank accounts in European banks;
- Study at Hungarian universities at affordable prices.
Leave an application and get a consultation with an immigration specialist
How to open a company in Hungary: step-by-step guide
- The future entrepreneur comes up with a name for his company. The name should consist of Latin characters and be unique. The entrepreneur also determines the number of partners, the amount of investment capital, the form of ownership, and most importantly, the type of business activities.
- Visa processing. A foreigner who intends to register a business can apply for a short-term Type C visa, which allows them to stay in the country for up to 90 days. Citizens of several foreign countries can visit Hungary without a visa for a similar period if they have a biometric passport. This period is sufficient to attend to business matters.
- Drafting the contract. A professional lawyer will draw up a memorandum of association that includes all participants, the number of partners, financial contributions, the type of activity, and the legal address of the firm. This document will be essential for the company’s future operations. Additionally, opening a corporate bank account and depositing the authorized capital is necessary.
- Document collection. At this stage, it is necessary to gather all the founders’ dossiers and company documents, which must be translated into Hungarian and notarized.
- Within a month of signing the founding document, the lawyer will submit the application for company registration to the authorized state body, the Registration Chamber. Individual entrepreneurs independently register their activities online with the government portal.
- Registration certificate. A few days after submitting the application, the founder receives a temporary certificate. The permanent certificate is issued after confirmation of successful registration (within two months). The company will also be assigned a tax number.
- Bank account opening. To open a bank account, confirmation of the tax number from the new Hungarian company is required. This account would be necessary for the company’s future financial operations.
To avoid confusion regarding the steps involved and to ensure that the documents are properly filled out and signed, you can seek assistance from who provide comprehensive support and detailed advice on any issues that may arise.
Different aspects of company registration
The most unusual aspect of registering a business in Hungary for foreigners is that the entire process must be carried out through a Hungarian lawyer. A lawyer strictly supervises the preparation of documents, application to the relevant authorities, and signing of the memorandum of association.
Legal forms of business activities
There are several types of organizations that can be opened in Hungary, all of which have their own features:
- Cooperative. This business structure unites seven or more participants, including companies and/or individual entrepreneurs. There are no requirements for the minimum amount of authorized capital when registering a cooperative. All founders have the same rights. The cooperative has a chairman and a board; all important issues are decided by voting. This form of registration is most suitable for medium-sized businesses.
- Limited liability company (Kft). Authorized capital should be at least three million Hungarian forints (HUF), which is about EUR 7,900. This type of company is popular among small and medium-sized businesses. It can be managed by one person as a sole proprietorship. Kft shares are not available for public sale.
- Joint stock company with limited liability (Rt). Rt registration is best suited to large companies. The board of directors must consist of at least three people, headed by a chairman. The number of shareholders is unlimited. An Rt can be private or public. Securities are distributed among shareholders according to their investments. Authorized capital ranges from HUF 5,000,000 (approx. EUR 13,200) for a private company to HUF 20,000,000 (approx. EUR 53,000) for a public company.
- Partnership with unlimited liability (Kkt). A Kkt is a company established by at least two partners. Rights are distributed equally among all shareholders. All issues are addressed at general meetings. The minimum amount of authorized capital is not fixed by legislation. Each Kkt participant is liable for the company’s obligations with their property.
- Limited liability partnership (Bt). This type of partnership is registered by at least two founders. The board consists of general and limited partners. The former bear the financial risk with their own funds; the latter are responsible only for the amounts of their contributions to the share capital. There are no requirements as to the amount of the share capital.
- Individual enterprise (Ev). A self-employed individual registers the firm and bears full responsibility for it with their own assets. The Ev is suitable for small businesses, such as coffee shops, retail outlets, and consumer service providers. There are no requirements for the amount of authorized capital.
Required documents
The complete list of documents required to register a company in Hungary is provided by licensed attorneys and authorized government agencies. A foreigner may need to provide the following:
- A passport;
- Proof of residence in Hungary;
- The name of the company (multiple options);
- Information about the company’s scope of activities;
- A list of founders and the amount each has contributed;
- Articles of Association;
- Memorandum of Association;
- The legal address of the company;
- Power of attorney for a lawyer to register the company.
Processing times and costs of opening a Hungarian company
It takes about 15 days from the moment the lawyer submits the documents to register a business in Hungary. It may take an additional week to collect the dossier, depending on the individual and the circumstances. Thus, on average, an entrepreneur can expect to legally establish his business activity in Hungary in about three weeks.
When registering a company, it is important to consider the associated costs, which are summarized in the table below.
| Cost item | Amount, € |
|---|---|
| Notary and lawyer services | from 500 |
| Registration fee (depending on the form) | 50–250 |
| Registration authority fee | 20 |
Business taxation in Hungary
Hungary is considered to have one of the most favorable tax systems in Europe. The profit tax rate is fixed. The VAT rate depends on the type of goods sold.
| Tax | Rate, % |
|---|---|
| Corporate income tax | 9 |
| VAT | 5, 18 или 27 |
| Income tax for sole proprietors | 15 |
What kinds of businesses to start in Hungary?A list of ideas
All sectors of the Hungarian economy are well-developed, offering opportunities to start a successful business in almost any field. The most popular sectors are related to tourism and manufacturing. Foreigners also have the opportunity to open businesses such as:
- Souvenir store. Since Hungary is a tourist country, entrepreneurs will find it easy to develop a souvenir store. These stores can be opened in all major cities and popular tourist destinations. No qualifications are required for employees since their activities do not require any special skills. You can sell items yourself or hire locals. The main costs are purchasing goods and renting premises.
- Car wash. Since almost every European family has a car, car wash services will always be in demand. Consider opening a car wash at the entrance to a large city. A car wash is best suited for Kft ownership or sole proprietorship. Also, an existing service can often be profitably purchased as a ready-made business.
- Beauty salon. A beauty salon can be opened as a sole proprietorship or as a Kft. You can work there yourself or simply be the owner and rent places to professionals. Such services will be in demand among both locals and tourists, so it is better to choose large cities, where there are more prospects for development and higher profitability, though competition is also much more intense than in small towns.
- Textile manufacturing: In the case of a large factory, a form of ownership such as an Rt will be suitable. The main expense will be the purchase of equipment. Production can take place in small, rented premises. A small workshop with one or two production machines can be registered as a Kft.
- Food processing plant. This business idea requires large investments, mainly for purchasing equipment. The Kft form of ownership, which allows the sale of company shares, is suitable for such an enterprise. However, establishing a factory requires a plot of land or the lease of large premises.
Business immigration: how to obtain a residence permit through company registration
Entrepreneurs who decide to develop their business in Hungary can choose from two options for obtaining a local residence permit. The first option involves applying for a residence permit and a business visa at a Hungarian consulate in their home country. The second option is to visit Hungary within the visa-free regime and submit an online application.
Along with the application, a dossier must be submitted that includes a standard list of documents (copies of all passport pages, an income certificate, proof of medical insurance, and an address registration in Hungary), as well as official evidence that the migrant has established a company:
- Business plan;
- Employment contracts of employees;
- Company address;
- Company certificate;
- Invoice;
- Registration certificate (for sole proprietorships).
A fee of EUR 110 is collected when submitting the dossier to the consulate. On the territory of Hungary, the fee is about EUR 64. The application processing time is 21 days.
A residence permit is issued for up to three years. If the entrepreneur pays all taxes correctly, the permit can be extended. After five years, the foreign entrepreneur has the right to obtain permanent residence. After eight years of living in the country following business immigration, the entrepreneur is eligible for EU citizenship.
Assistance with obtaining Hungarian legal residency
constantly monitor changes in legislation and analyze probable causes of refusal to help you avoid them.
Our lawyers specialize in international law and can advise you on how to correctly submit documents for Hungarian residency. They can also help you understand and navigate the business emigration procedures from third countries. As a client-oriented company, iWorld takes a personalized approach with each client, depending on their circumstances and future plans.
