Business Opportunities in Hungary
Hungary lies in the heart of Europe and offers a lot of business. The main business opportunities and sectors in Hungary are listed as follows:
Heavy industry
Heavy industries in great demand, such as metallurgy, mining, and steel production. Hungary is famous for this, and any business setup in heavy industry has to win to be prosperous in Hungary.
Automobile production
The business of automobiles has never seen a shortage in Hungary. Hungary is famous for producing automobiles exported to the rest of Europe. Hence, making it a great business opportunity.
Energy production
Energy production is a great business to do in Hungary. Few companies deal in energy; hence it can be an excellent opportunity for new startups to capture the market.
Chemicals
Extracting chemicals and manufacturing essential pharmaceuticals is prevalent in Hungary. New companies looking to advance in the chemical industry will likely prosper in Hungary.
Benefits of Starting a Business in Hungary
Foreign investment in Hungary has tremendously increased, especially since 2019. It has proven very beneficial for individuals to start a business in Hungary as foreign investment is a significant force in elevating Hungary’s economy. Hungary has a very welcoming environment for accommodating new businesses in their country.
Setting up a company in Hungary can offer the following benefits:
Favorable geographical business location
Hungary lies in the heart of Europe as it is the central location. Traveling to different parts of the continent is easy as it has excellent connectivity. The prime geographical location is one of the main advantages of doing business in Hungary. Additionally, Hungary, a member of the European Union, makes it convenient for business owners to travel, export, and import in a viable manner.
Fast and easy
The procedure to start a business in Hungary is one of the easiest and quickest. The time required for setting up a company in Hungary is generally 4 to 5 business days. The only major documentary required is identity proof, such as a passport of the person who wants to set up a company there.
Cost-effective
The country offers a cost-effective way of setting up a business in Hungary. Financial services and real estate are cheaper when compared to the other fraction of Europe. This is because the tax rates are business-friendly, and hiring top talent is challenging. The tax rate for local businesses is a maximum of 2%, which is almost negligible. Despite all these advantages, a new business can still enjoy the Cosmopolitan benefit.
Enormous starting capital is not necessary
Hungary offers a very liberal check Capital requirement for new businesses. The minimum share capital needed for a limited liability company in Hungary is €8,300. The share capital can be evenly split between operations, office rent, management, maintenance, etc. The minimum Capital requirement for a corporation is €18,000.
Competitive tax system
Getting a VAT number for the newly established company is a must. Hungary issues a VAT number instantly and free of cost. The company does not have to wait as the VAT number is generated automatically from day one.
Lowest corporate tax in Europe
Hungary’s business incorporation is in demand as it has the lowest corporate tax in the continent, which is 9%. The flat tax rate system benefits small and medium size businesses and corporations in Hungary.
Requirements for Starting a Business in Hungary
Company incorporation in Hungary can benefit individuals who want to start a new business. However, they are following requirements that need to be fulfilled. Hungary company incorporation requirements include the following essential documents:
Domestic and foreign passport
Individuals must have a domestic and a foreign passport to prove their identity and nationality. Passports are one of the basic requirements to do business in Hungary. Hence, individuals must possess valid passports.
European health insurance
Every citizen in Hungary should have European health insurance to start a business in Hungary. It is required, and the company can only be formed with European insurance.
Valid Schengen visa
Individuals who aim to start a business in Hungary must possess a Schengen visa. A Schengen visa allows foreigners to stay in Hungary and travel to any Schengen area. It offers a stay of up to 90 days for business and travel purposes.
Resident permit
Offshore company registration in Hungary requires a resident permit to show that such an individual has resided there for quite some time. Generally, recent utility bills are enough to prove an individual’s residence in Hungary.
Corporate document package
The corporate document package includes short information about the prospective business areas, suggestions for the company name, the name of the shareholders of the company and the amount of capital they have contributed, other legal documents, and a registration certificate.
Types of Business Structures in Hungary
The different types of business structures in Hungary are enumerated as follows:
Limited liability company
A Limited Liability Company means which has a predetermined share capital at the time of incorporation. Limited liability company incorporation in Hungary is a popular one where shareholders have obligations under the contribution of their share capital. However, the company’s members will not be liable for the company.
The dividend rates and voting rights vary according to the contribution of shareholdings. Features of a Limited Liability Company in Hungary are stated as follows:
- The minimum requirement for share capital is HUF 30,00,000.
- Share capital contributions can be calculated based on cash and kind.
- General meetings and executives are the two obligatory bodies in an LLC.
- A bank account and disclosure of annual financial reports are mandatory.
- Mandatory requirement of performance of the annual audit.
Joint stock company
Joint stock company incorporation in Hungary can be private and public, depending upon the division of shares. However, the minimum share Capital requirement of a private joint stock company is 5 million HUF, whereas a public joint stock company requires a minimum share capital of 20 million HUF.
A joint stock company has to have a board of directors that are the company’s stakeholders and monitor all the activities. The features of a joint stock company can be stated as follows:
- A public joint stock company must have a board of directors, a general shareholders meeting, a supervisory body, and an audit committee.
- An audit committee is a must for a public joint stock company.
- A private joint stock company may or may not establish a supervisory body.
- A minimum of 5% of voting rights is provided to all the shareholders in a private joint-stock company.
General partnership
In cases where individuals own a business and do not want to form a large board as owners, they generally enter into partnerships. To know how to start a company in Hungary, it is also essential to know the features of a general partnership, which are listed as follows:
- The partners have joint liability, which is unlimited.
- If one partner does not oblige to the agreement, that partner may lose his partnership rights.
- They have a general liability regarding the assets and properties of the business.
- There is no bar on minimum share capital.
- In a general partnership, one founding member is the minimum requirement.
Limited partnership
The limited partnership requirements to do business in Hungary are enumerated as follows:
- At least two founding members are required to form a limited partnership.
- Partners have limited liability following capital contribution, but at least one partner should have unlimited liability.
- There is no minimum share capital requirement in a limited partnership.
Enterprises of foreign entity branch offices
Many businesses work based on opening branches in different cities and countries. However, this is not the formation of a new company but only the opening of a new branch of an existing company in a new city or country. Setting company in Hungary with foreign entity branches includes the following features:
- The existing company will be liable for the activities of the branch.
- It misses out on having a legal personality, which is why the business operations are carried as an extended part of the founding members.
- The foreign entity branch office has to be registered with the Court of Companies.
- The appointment of a head of the branch office is compulsory, preferably someone of Hungarian nationality.
Company Registration Process
Acquiring a company registration for starting a business in Hungary is mandatory. The process of establishing a legal entity for a company to carry out transactions in a business is known as the registration process. Company registration in Hungary includes the following steps:
Pre-registration
Gather all the corporate documents, prepare them properly, and decide on a name for your company. Then wait for the approval.
Registration
The procedure for incorporation of a company in Hungary has a minimum standard of registration that needs to be done. The company registration process in Hungary includes the following essentials:
- The companies’ permanent office addresses are required for seat registries.
- Mandatory documents that constitution the details of the company should be signed in the presence of a lawyer or through Skype.
- The following requirement is to register the company portal or client gate.
- Obtaining the Hungarian Personal tax number is entirely the discretion of the company.
- Following these, the company will be registered under the Court of Registration of Hungary to achieve the EU tax ID.
- Disclosing the authorized share capital and opening a company bank account by the shareholders.
- Registration agreement is to be signed in the presence of a local accountant who is qualified to provide accounting support.
- Obtaining the registered and authorized document from the Chamber of Commerce and Government Municipality.
Post-registration
After a waiting period of 4 to 5 days, the company will receive an electronic document containing the following information:
- The corporate contract by company by-laws
- List of the company shareholders
- Signatures of the company officers
- A bank statement as proof of the charter capital
- A letter of consent from a local agent
- A document certifying the company’s registered legal address
- A designated GLS Hungarian letter
The procedure for incorporation of a company in Hungary is relatively simple compared to the other States in the continent.
How Much Does it Cost to Incorporate a Company in Hungary?
Hungary’s new company incorporation is very cost-effective as it only has the lowest and most affordable corporate tax of 9%. This is the lowest corporate tax in the European continent, making Hungary’s business incorporation very affordable and cost-effective.
The cost of incorporating a company in Hungary ranges from 2500 to 5000 Euros. This amount excludes the additional charges of opening a bank account, accounting cost submission of corporate documents, etc. The cost of such services may vary from company to company.
Are Foreigners in Hungary on Certain Passes Allowed to Start a Business in Hungary?
The general Hungary company incorporation requirements apply to non-Hungarian citizens as well. Foreigners can start a business in Hungary with the required documents, as mentioned earlier.
The only additional permit foreigners must possess is the sole trader’s license. With the sole trader’s license, foreigners can set up any business. With a valid resident permit, one can quickly get a sole trader’s license, after which establishing a business is valid.
Government Assistance for Foreign-owned Businesses
The Hungarian government provides grants for starting a business in Hungary. Two forms of government assistance are:
- Cash incentives: The government of Hungary provides financial incentives with three primary objectives, which are; job creation, employee training, and investment implementation.
- Tax incentives: Tax incentives are available for future business transactions. Before initiating, grant applications must be submitted to the concerned Hungarian authority.
How Can Multiplier Help?
Foreign individuals who want to set up a business in Hungary can take the help of Multiplier to make the process convenient for themselves. We have all the infrastructure and means of employing talent in more than 150 countries. We provide business assistance so you don’t feel tangled in the company incorporation process.
Multiplier is an excellent means for attracting a talented workforce at a cheaper cost. We help SMEs in the following areas:
- Generation of employment contract
- Grants, insurance, and benefits
- Assistance for startups
- Multi-country payroll
- Multi-currency payments and many more