Establishing a company in Hungary

Hungary is situated in Central Europe in the Carpathian Basin; it has borders with Slovakia to the north, Romania and the Ukraine to the east, Serbia and Croatia to the south, Slovenia to the southwest, and Austria to the west. It is a landlocked country with no access to the sea. Its biggest city is its capital – Budapest, its official language is Hungarian, and the local currency is the forint (HUF). It has a population of 10,000. This country was founded in the 9th century, and like many neighboring countries also underwent many political upheavals over the centuries, including a period as an important element of the Austro-Hungarian Empire that existed until the end of World War I. With the conclusion of World War II, it had a tough Communist regime under the direct influence of the Soviet Union that collapsed in 1989.

Hungary is a member of NATO, the OECD, and the EU, but is not part of the eurozone and maintains the forint as its local currency. Establishing a company in this country provides access to the growing local economy, as well as various markets in Central and Eastern Europe.

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Three things you did not know about Hungary:

  • Although for years under Communist domination directed primarily by Moscow, in 1968 Hungary decided on structural economic reforms that transformed its economy to a more liberal, open model. This was later termed as “Goulash Communism” for the traditional dish so associated with Hungary.
  • An important facet of Hungarian culture is its traditional cuisine. The Hungarian culinary art is famous the world over for its rich and unique goulash. The Hungarian kitchen offers a great variety of foods, and it’s a known fact that Budapest boasts some of the world’s best restaurants – just follow your nose.
  • Hungary has a wealth of warm, mineral-rich springs, and is often called the “land of spas”. The spa culture and natural hot spring recreational activities are an integral part of local culture, dating from the time this area was controlled by the Roman Empire.

Hungary’s economy

During the ‘90s Hungary began a series of reforms to establish a free-market economy, increase openness, and market competition. As stated, Hungary is a member of the EU, a fact that boosts local markets and enables further growth and development – an important consideration when deciding to establish a foreign company there. Its private sector contributes to over 80% of GDP, but foreign companies and investors are very common in the Hungarian business scene. Although Hungary has a developed and growing economy, it is still relatively traditional-industry based as compared to other European economies. Its main industries are mining, metallurgy, construction materials, processed foods, chemicals (pharmaceuticals), and textile. The 2008 economic crisis significantly impacted Hungary, but recent years have shown encouraging signs of weathering the storm. The financial sector is developing rapidly, and the government is actively establishing the necessary conditions to facilitate foreign company incorporation.

Mellius has a great deal of experience in providing solutions for clients wishing to establish businesses in Hungary, tailor-made to client needs and type of activity.

Additional information about establishing offshore companies in Hungary:

General
Type of company
Limited Liability Company (Kft.)
Relevant Companies Law
Act IV of 2006 on Business Associations
Offices
Law requires companies to provide a local office address
Language of original incorporation documents
Hungarian
Finance and Taxation
Currency
HUF
Corporate tax rate
9%
Standard share capital
3,000,000 HUF
Office Holders
Secretary
Obligation to appoint company secretary
Not required
Obligation to appoint local secretary
Not required
Type of entity that may function as company secretary
Individual and/or company
Director
Obligation to appoint company director
Required
Obligation to appoint local company director
Not required
Minimum number of directors
1
Type of entity that may serve as company director
Individual and/or company
Shareholders
Obligation to register shareholders
Required
Obligation to register local shareholders
Not required
Minimum number of shareholders
1
Type of entity that may register as shareholder
Individual and/or company
Type of shares
Registered shares
Accessibility of Information
Company registrar
Information regarding office holders is accessible to the public
Annual Assembly and Reporting
Obligation to hold annual assembly
Required
Obligation to prepare financial reports
Required
Obligation to submit financial reports
Required