Company Formation in Hungary

What should you prepare to register a company in Hungary

The experts of LegalBison will assist you throughout every step of it once you decide to register a company in Hungary:

• Initial consultation and agreement;
• Payment of the full invoice;
• [IF REMOTELY]: Notarization of POA by client;
• Preparation of registration documents;
• Document signed at the notary;
• Official register validity: immediately.

How long does it take to form a company in Hungary?

It takes about 1 week to incorporate an LLC in Hungary. Note that this duration period is also dependent on the swiftness of providing the necessary documents.

Can I form a company in Hungary remotely?

The whole incorporation process can be conducted remotely. No travel is necessary. However, the notarization of documents is necessary.

• A Power of Attorney (POA) from (all) partners/shareholders is needed;
• The POA is sent to you by us based on the services you want;
• You have to certify the POA by a notary and, in some cases, legalize it by apostille (some countries need full legalization);
• Once you have the POA on you, we double-check, and you send us the original form (physical document) via courier to our address;
• Hungary is part of the Hague Convention of the Apostille.

Required documents to provide to register a company in Hungary

The following documents are typically required from entrepreneurs willing to form an LLC in Hungary:

• Passport copies of directors and shareholders;
• Proof of address;
• Desired company name and contact details;
• Business activity codes (based on NACE classification);
• Personal details such as the city of birth and the mother’s maiden name.

Every Hungarian LLC has to get a VAT number (included in our services)

Hungarian companies are automatically registered for VAT upon registration, and, as soon as they get their Hungarian VAT number, they can also immediately obtain their EU VAT number.

• The VAT rate is 27%;
• Whether there are business activities or not, VAT reporting must be done monthly;
• A VAT refund is possible. For the first-time VAT refund, the refundable amount must be at least 1 million HUF. All other succeeding refunds can be obtained regardless of the amount.

Required documents to provide to register a company in Hungary

• Passport copies (scans) of shareholder/s and director/s, as well as beneficiary owner, if applicable;
• A Power of Attorney (in case of a remote company registration);
• Certified company documents (in case at least one of the shareholders is going to be a foreign company).

Note: The minimum capital requirement depends on the structure of the company you intend to register, but for the more popular structure, a Limited Liability Company (Kft.), the requirement is at least HUF3 million (about 10,000 EUR).

Taxation of companies in Hungary

Resident companies are taxed on all income, regardless of whether it’s derived domestically or internationally. All companies are taxed at a flat rate of 9% for corporate income tax.

• In addition, there is also a 0-2% municipal tax on all profits depending on the location of registration of the company and/or where its business activities are conducted;
• Dividends, however, are not taxed except for those derived from sources that are in low-tax countries. In this case, the dividend tax is 9%.

Note: the municipal tax of the city of Budapest is 2%, making the effective income tax rate 11%. Currently, LegalBison only offers company registration in Budapest.

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DTAA signed by Hungary for companies

Since Hungary is a member of the EU, it has entered into different agreements with different jurisdictions to avoid double taxation.

To date, it has ongoing agreements with Albania, Armenia, Australia, Austria, Azerbaijan, Bahrain, Belarus, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hong Kong, Iceland, India, Indonesia, Iraq (ratified, not yet in force), Iran, Ireland, Israel, Italy, Japan, Kazakhstan, Kosovo, Kuwait, Latvia, Liechtenstein, Lithuania, Luxemburg, Macedonia, Malaysia, Malta, Mexico, Moldova, Mongolia, Montenegro, Morocco, Netherlands, Norway, Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, San Marino, Saudi Arabia, Serbia, Singapore, Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Taipei, Thailand, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uruguay, Uzbekistan, and Vietnam.

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Accounting and audit requirements for a company in Hungary

In Hungary, companies must maintain accounting records in Hungarian and comply with double-entry bookkeeping methods. A financial report is filed annually regardless of whether there were business activities or not. All financial reports are signed by the director and the accountant

For newly registered companies, an audited annual financial report may not be required, but after two years of operation, filing of an audited annual financial report is required, except in the following cases:

1. Your average annual net sales revenues for the 2 prior financial years did not exceed HUF300 million (USD1 million) on average;
2. The average number of people employed did not exceed 50 people on average for the 2 prior financial years.

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Economic substance and residency requirements for companies in Hungary

• Regardless of the company structure sought to be registered, no residency restriction is mandated in Hungary;
• A company may even be fully foreign-owned and managed.

LegalBison offers help with all of the above requirements. We assist and are local on the ground. Speak now for free with one of our consultants to get your business started.

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