Hungary company registration

During the past 20 years, Hungary has seen positive economic changes which bring strategic foreign investments into the country. Located in central Europe, borders seven countries including Croatia, Serbia, Austria, Romania, Slovenia, Slovakia, and Ukraine, Hungary is an ideal location for a regional headquarters. There are many advantages to setting up a company in Hungary:

1.    Hungary has been a member of the European Union (EU) since 2004 and has a stable economic and political system.

2.    A Hungary company is not perceived as an offshore corporate structure in a tax haven, however, it has advantageous tax incentives including low, or no, tax on corporate capital gains and dividends at company level;

3.    If properly structured, Hungary business setup is a tax-efficient solution. Corporate tax ranges between 10% and 19%. Since 2010, the solidarity tax of 4% has been removed;

4.    Hungary incorporation can be efficient for formation of a holding company. Corporate income tax is relatively low compared to other European Union jurisdictions and there are the key incentives of no tax inbound and outbound dividends, foreign or domestic;

5.    Only one shareholder and one director is required to fulfil business setup requirements;

6.    Company formation in Hungary can be fully owned and controlled by international directors and shareholders. There is no requirement to appoint local shareholders and directors;

7.    There is no limitation on the inflow or outflow of funds for remittances of profits, debt service, capital, capital gains, returns on intellectual property, or imported inputs. The official currency is the Hungarian Forint (HUF);

8.    Literacy rate in Hungary exceeds 97% and according to the English Proficiency Indexreport, Hungary has a high English proficiency, being ranked in position 8 out of 54 countries included in the study;

9.    Paid royalties are considered expenditures and can be deducted from Hungary corporate profits. Withholding tax is 0% for Hungary incorporation;

10. Details of the beneficial owner of the company are not available for public viewing;

However, investors who are planning to do business in Hungary should consider the followings:

1.    Hungary company formation is subject to corporate profits tax on its worldwide income. 

2.    Hungary is negatively ranked as the world’s 48th freest economy in the Heritage Foundation’s 2013 Index of Economic Freedom, a measure of freedom enjoyed in business, trade, monetary, financial, investment and labour markets;

3.    The minimum capital required for company formation, based on a Limited Liability Company, is HUF500,000 or approximately €1,800 (US$2,300);

4.    Hungary is Negatively ranked as the 46th least corrupt country in the 2012 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians;

5.    Hungary is also ranked poorly on the World Economic Forum’s Global Competitiveness Report 2013 – 2014, at a low 63rd position.

6.    A company is required to register for Value Added Tax (VAT) following Hungary company incorporation;

In conclusion, Hungary has one of the most competitive tax systems within the EU area. In addition, with its strategic location, Hungary offers an excellent gateway to enter the European market. With its developed infrastructure including public road and freight network, the country will continue to attract more foreign investments in the near future.