As a flourishing economy in Europe and a member of the European Union, Hungary provides incredible opportunities for foreign companies looking to invest and open a company in the country. Hungary has the lowest corporate tax rate in the EU which makes it a very impressive country to invest in.

Advantages of registering a company in Hungary

Hungary is a continental state in Central Europe with an advanced economy showing annual GDP growth of 5% and a favorable position as a railway hub between the CEE countries. In addition to the following advantages, it is one of the most desirable low-tax jurisdictions in the European Union for business activity of both residents and non-residents of Europe: 

• a single member is able to form a business in Hungary. 
• corporate income tax is 9%, the lowest in Europe. 
• local business tax ranges from 0% to 2%, subject to the location. 
• Tax on dividends is in most cases 0% in Hungary 
• an entrepreneur can avoid double taxation 
• reasonable and well-qualified workforce. 
• given its strategic location and its market potential, as well as its European Union membership and diplomatic ties, Hungary gives a wonderful opportunity to enter the markets of the developed EU Member States. 
• Hungary is a member of the Customs Union, enabling significant savings in time and administration when working with other EU Member States. 
• a satisfactory business and tax environment. 
• free flow of capital and labor within the European Union. 
• English language is generally used with the option of foreign language bookkeeping. 

Within the European Union area, Hungary is the country with the lowest tax rates for foreigners, along with Cyprus and Malta. 

Forms of company in Hungary 

Before registering a company in Hungary, it is highly recommended to decide on the organizational and legal form of the enterprise, taking into consideration the level of responsibility of the founder and the size of the legitimate capital. 

When registering a company in Hungary, it is vital to specify the planned activity, since, unlike most European countries, the option of a wide range of activities is unacceptable. However, you can choose different types of activities or amend the constituent documents in the future, putting in new items to them. 

Companies forms in Hungary

Limited Liability Company (Korlátolt Felelősségű Társaság or Kft.) 

Features: 

• A Limited Liability Company is established with a predetermined amount of initial capital that is HUF 3,000,000 provided by its Founders. 
• The liability of its members is limited to the provision of the company’s initial capital. 
• Members of a Limited Liability Company may not be solicited by public invitation. 
• The capital contribution of members is provided in the form of core deposits and Each member shall have one core deposit. 
• The members’ rights and their title to the company’s assets are represented by shares in the company. 
• No securities may be issued in respect of the business shares. 
• A Limited Liability Company could operate even having one member. 

Company Limited by Shares (Részvénytársaság or Rt.) 

Features: 

• This is the most regulated corporate form, which shows similarity to the English Plc. 
• There are two types of stock companies: Private Limited Company (Zártkörűen működő részvénytársaság or Zrt.) and Public Limited Company (Nyilvánosan működő részvénytársaság or Nyrt.) 
• A stock company is especially suitable to large business entities with several investors. 
• A Private Limited Company in Hungary shall be established with an initial capital consisting of a predetermined amount. 
• The amount of cash contributions at the time of establishment may not be less than 30% of the share capital. 
• The liability of its members is restricted to the provision of the nominal or issue value of the shares. 

Limited Partnership (Betéti Társaság or Bt.) 

Features: 

• In a Hungarian Limited Partnership, the minimum number of members is two, which is at least one general partner and one limited partner. 
• Only the general partners may oversee the partnership and represent the partnership in its transactions with third parties. 
• The profit distribution is commonly equal to the capital contributed, but the parties are free to agree oppositely. 
• It is against the law to exclude any partner from the distribution of profits. 

General Partnership (Közkereseti Társaság or Kkt.) 

Features: 

• In a General Partnership, the members of the partnership must agree to contribute to the partnership the capital contribution essential for its activities, 
• the liabilities of its members are joint and numerous for the partnership’s obligations. 
• every member is authorized to represent the partnership unless its articles of association state otherwise. 
• the partnership must have at least two members. 
• active participation of the partners in the conduct of the partnership’s business is legally required 
• no minimum capital is required to found and operate a General Partnership. 

Steps of Hungarian company incorporation

The important stages of registering a business company in Hungary include the following: 

• Choose the company name. The necessities are quite standard: suggest at least two names, and the suggested name shall be unique. Latin letters must be used and the company ownership type must be reflected in the company name, for instance, the name shall end in KFT if it is a KFT 
• Determine the company structure, directors, and stockholders. 
• Choose a legal address. 
• Formulate the distribution of the charter capital between the company owners. 
• Specify the spheres of business activities that the company is going to be engaged in. 
• Find out the provisional costs of registering a company in Hungary 
• Prepare the package of corporate application documents (this is possibly the most demanding stage and the document preparation should be handled with care) 
• Pass through the Due Diligence/KYC(know your customer) processes. 
• Register the company in the Hungarian Company`s Court. 
• Register the company with the tax authorities and obtain a taxpayer number. 
• Register the company with the Hungarian social security service. 
• Open a corporate bank account. 

Starting a business in Hungary as a foreigner or as a local indicates several phases, from selecting the most suited type of company for the business objectives to company registration. 

If you are ready to set up your company in Hungary, let’s go ahead and contact your Damalion expert now. 

Operating in Hungary after registration: banking onboarding, compliance calendar, payroll and VAT routines, invoicing controls, and governance housekeeping.

For founders, cross-border groups, family offices, and portfolio companies

Damalion facilitates post-registration setup: bank introductions, accountant onboarding, NAV registrations, document policies, and ongoing coordination with counsel.

Last updated: 13 September 2025

What changes after the company is registered?

Once the court issues the company number, the day-to-day work starts. A clear calendar prevents avoidable penalties and keeps cash movements predictable.

• Within week one. Confirm tax IDs, VAT profile, and accountant engagement; load signatories to the bank and set payment limits.
• By month-end. Choose the VAT period with your accountant, set invoice numbering, and activate real-time invoice reporting to the tax authority where applicable.
• Quarterly. Review municipal business tax exposure by location, check prepayments, and adjust advances if activity changes.
• Year-end. Approve financial statements, update corporate registers, and refresh beneficial-ownership data if there were changes.

How do Hungarian banks handle onboarding for new companies?

Each institution runs its own risk review. A concise file and a credible operating story shorten the process.

1. File quality. Group chart, director IDs, source-of-funds narrative, initial contract pipeline, and expected monthly volumes.
2. Identification. In-person or bank-approved video verification; align travel with account approval to avoid repeat visits.
3. Signatory matrix. Two-factor rules for payments above set thresholds help acceptance and internal control.
4. Foreign currency. Open HUF plus the currencies matching receivables and payables; document the hedging policy if relevant.

Which local filings and registers are easy to miss?

Small omissions create disproportionate friction. We keep a checklist so nothing is left behind.

• Beneficial-ownership updates. Keep owner data consistent with bank files and corporate records.
• Statistical notifications. Register activity changes promptly when the office requests updates.
• Real-time invoice data. Ensure invoicing software is connected to the tax authority’s online system where required; monitor error messages.
• Employment entries. Register hires before first salary payment and archive contracts and notices in the local personnel file.

What should employers organise before the first hire?

Plan the documents and the monthly rhythm in advance so the first payroll runs cleanly.

• Template employment agreements in Hungarian and English with probation, IP and confidentiality clauses.
• Time-sheet process and overtime approvals aligned with local labour rules.
• Expense policy with VAT treatment for travel, per diems, and company assets.
• Health and safety briefings and mandatory notices in the workplace.

How do VAT and invoicing work in practice?

Agree early on invoice formats, data fields, and the reporting channel to the tax authority.

• Choose monthly or quarterly VAT based on expected volumes; re-assess after the first quarter of activity.
• Implement e-invoicing or software integration capable of the required real-time data submissions.
• Set a short internal cut-off date so the accountant can file on time even when month-end is busy.
• Keep supplier onboarding simple: legal name, tax number, bank details, and contacts captured consistently.

How do we keep governance tidy without bureaucracy?

Light structure, strong evidence. Minutes and registers stay current, and signatures are predictable.

• Annual meeting calendar covering accounts approval, appointments, and material agreements.
• Signing rules documented once in the articles and mirrored on bank mandates and internal procedures.
• Contracts repository with renewal reminders and counterparties’ legal details.
• Simple related-party policy to support transfer-pricing reviews if the group grows.

What actually drives time and cost in the first six months?

Most overruns come from avoidable back-and-forth. We keep the moving parts aligned.

1. KYC gaps or inconsistent names across passports, signatures, and corporate records.
2. Unclear activity description leading to bank questions and contract re-drafts.
3. Invoices without mandatory fields causing VAT corrections.
4. Late payroll onboarding or missing personal data delaying registrations.

Post-registration essentials at a glance

Topic	Action
Banking	Set signatories and limits; document the purpose of payments above thresholds
VAT and invoices	Activate real-time reporting where required and lock invoice numbering
Payroll	Register hires before first salary and archive contracts
Registers	Update beneficial-ownership and corporate changes promptly
Reporting	Keep a one-page calendar for VAT, payroll, municipal, and annual filings

Plan the wider structure

When Hungary is part of a regional plan, these guides provide context for governance and banking.

• Switzerland — non-resident company setup
• Germany — company setup overview

Operational questions we handle for clients

Can payments start before the capital is fully deposited?

Yes, for routine expenses where the articles allow it and the bank is comfortable. Your accountant will track the capital position until fully satisfied.

How do we prove the purpose of large payments?

Attach signed contracts or invoices to the bank instruction and keep the underlying file in the contract repository.

What if our invoicing tool fails to send data to the tax portal?

Issue invoices, fix the integration, and submit corrections promptly. Keep an error log to demonstrate diligence.

How do we manage director changes mid-year?

Adopt shareholder resolutions, update the court record, notify the bank, and refresh specimen signatures on file.

Do we need bilingual employment contracts?

English plus Hungarian is common; the Hungarian version governs in case of conflict unless the parties agree otherwise within the legal limits.

When should we opt for monthly VAT instead of quarterly?

If invoice volumes or refunds justify faster cycles, move to monthly after an accountant review.

Can we keep accounting outside Hungary?

Books follow Hungarian standards and must be accessible; we coordinate local bookkeeping even if group consolidation runs elsewhere.

How do we document related-party services?

Use clear scopes, pricing logic, and board approvals. Keep timesheets or deliverable logs where relevant.

What evidence do banks ask for on cash deposits?

Source of funds narrative and traceable origin; avoid using personal accounts between company transactions.

How do we avoid municipal tax surprises?

Confirm “place of business” status in each locality where staff or facilities are present and budget prepayments accordingly.

What is a practical file naming rule for audits?

YYYY-MM-Vendor-InvoiceNo-NetAmount and the same convention for contracts and approvals.

How quickly must we update beneficial-ownership data?

Immediately after changes. Align the bank, accountant, and internal registers on the same day.

Can we run payroll without a local HR team?

Yes. We coordinate with a local payroll provider and keep approvals with directors.

When is it better to use a branch instead of a subsidiary?

Occasionally for project-based activity with limited contracts; your Damalion expert may outline pros and cons in the group context.

What does Damalion handle on an ongoing basis?

Damalion facilitates the operating cadence: calendars, bank liaison, accountant coordination, and the paperwork investors expect at diligence.