Moderate terms and price are not the only pluses.
There are other benefits too:
- Low taxes;
- The favorable location of the country and full membership in the EU;
- The white and reliable reputation of the country;
- Ease of doing business;
- Loyalty to non-resident and foreign directors;
- Opportunity to obtain a European residence permit on the basis of a company.
Income tax in Hungary is one of the lowest in Europe – 9%, for comparison, in the neighboring Czech Republic it is 19%. At the same time, for 2019, there are no active bills in the government and even public discussions about raising the rate. It is possible to reduce taxes to 0% when it comes to taxes on dividends, you will learn more about this below on the page.
Full membership in the EU is an advantage both for your business and for you personally. When you employ yourself in your own company, you have the right to obtain a visa, and then a residence permit for company formation in Hungary.
Let us warn you right away that the jurisdiction is not as loyal as, for example, Montenegro, to those who wish to move to Europe for a company. The applicant needs to pay social and insurance taxes from the minimum wage, but all this is real.
Along with all the delights, the country is also very loyal to foreigners and non-residents. This is expressed both in the absence of serious bureaucratic obstacles for doing business and in simple everyday relations. You will surely fall in love with Budapest and other cities for the attitude of the people and the mentality of the Hungarians if you decide to visit the country in person.
How to register a company in Hungary
There are two ways: on your own and with our help. The first method attracts with its free, but in most cases it is imaginary. The time, and most likely the money, that you will spend in the case of self-registration is unlikely to be comparable to the professional help from our side. The second is usually more profitable.
We specialize in European jurisdictions and are ready to help you at all stages of registering a Hungarian company. Contact us today.
Business Forms
There are a number of forms of legal entities in the jurisdiction, ranging from an analog of a private entrepreneur to joint-stock companies, corporations, and funds.
The most popular choice for a foreign business is a limited liability company. In Hungarian, this form of ownership is called Korlátolt Felelosségü Társaság, which is often abbreviated as KFT. In addition to the LLC analog, some other forms are available to foreigners:
- Limited Liability Partnership (BT);
- Partnerships with unlimited liability (KFT);
- Joint Stock Company (RT).
Each form of ownership has its own characteristics, and St Vincent company formation is not an exception. For example, in partnerships (in all forms) there is no requirement for a minimum amount of authorized capital, and in an LLC, the authorized capital cannot be less than 3,000,000 forints (approximately 10 thousand euros).
Let’s take a closer look at closed limited liability companies since in our practice they are not only the most popular choice, but indeed in most situations, they are best suited.
Features of opening and owning a company in Hungary
The company is registered in 2-3 weeks, in some cases it may be reduced. It all depends on the workload of the Registration Chamber. At the same time, the citizenship and tax residency of the owners does not play any role.
After registration, the owner of the company is obliged to open a bank account within 15 days.
The founders draw up and sign two documents when creating a company:
- company charter;
- memorandum of association.
In the first document, the main provisions of the company are prescribed, and in the second, according to the law, the activities of the company are reflected.
Unlike jurisdictions where Anglo-Saxon law applies, in Hungary the owner must list each activity separately. For the convenience of businessmen, all this is grouped and you need to choose from a ready-made and already existing list.
When registering, you can specify a larger number of species, and then some of them will not be carried out in reality. You can specify more in order not to make a change in the future. Since, according to the law, when a new activity appears, it must be entered into the contract, which implies its change.
Also, according to the law, you can open a company in Hungary and leave it “until better times” or freeze activities for a while. No one will close or take away the company, since the conduct of activities is not required by law, and any legal entity has the right to submit zero reporting. However, ongoing accounting is required.
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