Forming a company in Hungary comes with various benefits. Hungary not only has the lowest corporate tax rate in the EU but also, setting up a company takes only a few business days.
As a member of the European Union and Schengen Zone, Hungary is not only part of the biggest single market in the world, it is also one of the most prominent trading centers in the Central-East European region.
Company forms in Hungary
In Hungary, there are several company forms, from which you can select the most eligible for your business operations in Hungary, depending on the yearly turnover of your company, the number of your deals, and the number of your employees.
In Hungary, the types of business organizations and other entities used for business operations are legislated in statutes and one may only select from the regulated entities when considering opening a company in Hungary.
The following company forms are the most common in the business sector:
General partnership (Közkereseti Társaság or Kkt.)
A general partnership is a company that is founded in order to pursue joint business activities, and where the liability of the members for the responsibilities not covered by the company’s assets is unlimited.
Limited partnership (Betéti Társaság or Bt.)
A limited partnership is a company that is established to pursue joint business activities, where the liability of at least one member is unlimited, and joint with the other general partners, while at least one other member is only mandated to provide his/her equity contribution launched in the articles of association, but is not accountable, with exceptions stipulated in the relevant act, for the responsibilities of the company.
Limited liability company (Korlátolt Felelősségű Társaság or Kft.)
A limited liability company is a business structure with a legal personality that is established with an initial capital consisting of capital contributions of a pre-determined sum, and where the responsibilities of members towards the company are limited to the provision of their capital contributions. The company bears unlimited liability towards its debts with its own assets.
Private company limited by shares (Zártkörűen működő részvénytársaság or Zrt.) & Public company limited by shares (Nyilvánosan működő részvénytársaság or Nyrt.)
A company limited by shares is a company established with a share capital consisting of shares of a pre-determined number and face value, in the case of which the members of the company limited by shares are imposed to provide the face value of the shares to the company, but are not accountable unless otherwise stipulated in the law for the obligations of the company. A company limited by shares may be established privately or publicly; its method of operation may be a private company (Zrt.) or a public company (nyrt.) .
Sole proprietorship (egyéni cég)
An individual may be registered, upon request as a sole proprietorship. Sole proprietorships have no legal personality. The individual bears unlimited responsibility with all his/her assets for responsibilities originating from the company’s activity.
Representative office (Kereskedelmi Képviselet)
A representative office is an administrative unit established directly by the foreign parent company which has no individual legal personality. Its activity is mainly to negotiate contracts in the name of the foreign company, and to perform informative, advertising, and promotional activities, but it doesn’t perform any business activities.
Branch office (Fióktelep)
A Hungarian branch office of a foreign company is an administrative unit of a foreign company granted financial independence, which has no legal personality. The foreign company may perform entrepreneurial activities through a branch office registered in Hungary.
Generally, the establishment of all these company structures has to be announced to the eligible court of registry for registration, and such corporations are legally created by their registration in the company registry.
The most popular company form for investment in Hungary is the limited liability company, but, a private company limited by shares may be founded in case the issue of shares by the company is essential for any reason. Establishing a branch office is also a popular option for smaller operations or when the business presence in Hungary is essential for a limited time only.
Capital requirements
| Limited liability company (Kft.) | Private company limited by shares (Zrt.) | Hungarian Branch Office | |
| Minimum share capital | At least HUF 3 million (approx. USD 6,879) | At least HUF 5 million (approx. USD 11,465) | No minimum requirements |
| Form of capital contribution | Cash and/or in-kind(e.g assets) | Cash and/or in-kind(e.g assets) | Cash |
| Can it be established by a sole shareholder? | Yes | Yes | Yes |
The benefits of starting a company in Hungary are tremendous. Besides the lowest corporate tax rate, foreigners can also own 100% of the shares, and in some cases, the liability of its owners to the company extends only to their capital contributions.
Do you wish to establish your company in Hungary? – Let’s go ahead and contact your Damalion expert now.
