Foreign investment is an important part of Hungary’s economy, and Hungarians are aware of its impact. So as a result, the business environment in Hungary is welcoming and accommodating to foreigners. From low taxes, amazing business location, and ease of business setup to cost efficiency, Hungary has a lot to offer investors and entrepreneurs looking to start a business in Hungary.
Which types of corporations to setup your business in Hungary?
The major forms of business vehicles used in Hungary are:
General Partnership (Közkereseti Társaság or Kkt)
The partners of a Kkt agree to bring in the capital required for its activities. They have joint and numerous liabilities for the obligations of the Kkt that are not covered by the partnership’s assets. Establishing a Kkt is free of registration and publication fees.
Limited Partnership (Betéti Társaság or Bt)
The partners of a Bt agree to jointly bring in the capital required for its activities. There must be at least one general partner and one limited partner in a Bt. General partners are jointly and severally responsible for the Bt’s obligations that are not covered by its assets. Limited partners are not liable for the obligations of the Bt unless given otherwise. Bts are generally used for small enterprises and family businesses. Establishing a Bt is free of registration and publication fees.
Limited Liability Company (Korlátolt Felelősségű Társaság or Kft)
Kfts are established with an initial capital including capital contributions of a pre-determined value. The responsibility of the members is restricted to the provision of their initial capital contribution, and of other contributions stated in the memorandum of association. The members of a Kft are not responsible for the Kft’s obligations unless the Civil Code provides otherwise.
Kfts are the most popular business vehicles in Hungary, as their organizational structure is simple and the member’s liability is limited. Establishing a Kft is free of registration and publication fees.
Private Company Limited by Shares (Zártkörűen Müködő Részvénytársaság or Zrt)
Zrts are established with a share capital consisting of shares of a pre-determined number and share value. The shareholders’ responsibilities are limited to the provision of the share value or accounting value of their shares. The members of a Zrt are not accountable for the Zrt’s obligations unless the Civil Code provides otherwise. The shares of a Zrt cannot be listed on any stock exchange. Zrt is ideal for big enterprises.
Public Company Limited by Shares (Nyilvánosan Működő Részvénytársaság or Nyrt)
Burt is comparable to Zrt. The major difference between the two is that the shares of a Nyrt are listed on a stock exchange. To create a Nyrt, a Zrt must amend its corporate form from private to public. The organizational requirements and disclosure obligations that apply to Nyrts are more authoritarian than those applicable to Zrts.
All these business vehicles qualify as legal persons under Hungarian law.
How to register a company in Hungary
To establish a Hungarian company, it must be registered with the Hungarian Court of Registration. The registration process requires the involvement of a lawyer who countersigns the corporate documents and files the application for registration.
The primary steps of the establishment of a company in Hungary are as follows (note that company formation in Hungary may vary a bit at other structures):
- Deciding on the specifics of the company, such as the name, registered office, management, amount, and type of share capital.
- Composing and formalizing all mandated registration and statutory documents for the new Hungarian company.
- Collecting all essential forms and other documents requested for consideration with their submission to the Hungarian Court of Registry of the Ministry of Justice.
- Registering the company in the Court of Registration of Hungary and obtaining a (EU) tax ID.
- Registration for the purposes of paying taxes and hiring employees.
- Opening a bank account for the company in Hungary.
- Requests for extra licenses and permits that may be necessary for starting operations in certain sectors.
On average, it takes a few days to set up a company in Hungary. This includes time for all the legal processes including consultancy services with a lawyer and visiting the registration court.
If you are still unsure of how the Hungarian system works and you need assistance with your company formation in Hungary, let’s go ahead and contact your Damalion expert now.
