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If properly structured, Hungary company formation is a tax-efficient corporate solution for international entrepreneurs, especially for those operating in the European Union (EU). The following information will help you determine whether Hungary company formation is the optimum corporate solution to meet your international business objectives:

- Any person of any nationality or residence can be director or shareholder in a Hungarian company;
- the shareholders of a company established in Hungaria can be both natural persons or legal entities;
- In case of foreign founders, a delivery agent is needed and therefore a Hungarian person must be appointed.
- a company opened in Hungary must hold a local registered office (service provided by our Firm)
- the minimum capital for establishing a Limited Liability Company in Hungary amounts to HUF 500,000, i.e. approximately EUR 2.000.

Hungary is a member of the European Union (EU) and has a stable economic and political system.
Hungary company formation is not perceived as an offshore corporate structure in a tax haven.
If properly structured, Hungary company incorporation is a tax-efficient solution. Corporate tax ranges between 10% and 16%.
Dividends paid to any resident or non-resident person are legally tax-free.
Paid royalties are considered expenditures and can be deducted from Hungary corporate profits. Withholding tax is 0%.
Only one shareholder and one director are required to fulfil Hungary company formation requirements.
Corporate shareholders are permitted with Hungary company formation.
Investors considering Hungary company formation can take advantage of the double taxation treaties the country has signed with other states.
Details of the beneficial owner of the company are not publicly accessible.
Following Hungary company formation, the entity can be run from anywhere in the world.
It is easy to open global corporate bank accounts to support Hungary company formation. Our Firm works with internationally recognised banks to provide corporate bank account services.
A Hungary company can be fully owned and controlled by international directors and shareholders. There is no requirement to appoint local shareholders and directors.


The most common forms for foreign investors are the company limited by shares, which may be public or private, and the limited liability company. Other company forms open to foreign investment include a limited partnership or general partnership.

Hungary Public Company Limited By Shares (Nyrt)
The members do not bear liability for the obligations of the company.
The share capital is minimum HUF20m, and may also be established with in-kind contributions only.
Public companies limited by shares have legal status.

Hungary Private Company Limited by Shares (ZRT)
The members do not bear liability for the obligations of the company.
The share capital is minimum HUF5m, and may also be established with in-kind contributions only. It may be established also with just one member.
Private companies limited by shares have legal status.

Hungary Liability Company (Kft)
The members do not bear liability for the obligations of the company.
The liability of the members to the company is only their capital contributions.
The members may not be recruited through public offerings.
The minimum capital is HUF500,000, and may also be established with in-kind contributions only.
Limited liability companies have legal status

Hungary Unlimited Partnership (Kkt)
The member’s liabilities are joint and unlimited for the partnership's obligations.
The partnership must have at least two members.
There is no minimum initial capital requirement to set up a company.
The members are not required to take part personally in the activities of the partnership.
The unlimited partnership form has no legal status

Hungary Limited Partnership (Bt)
A limited partnership must have at least one general partner and at least one limited partner.
There is no minimum initial capital requirement to set up a company.
The general partner's liability is unlimited for the partnership's obligations.
The liability of the sleeping partners is limited up to the incidence of the subscribed capital.
The limited partnership form has no legal status.

A Kft (limited-liability company) may be formed by one owner. It is not permitted to solicit others publicly to become owners. Initial capital may not be increased until all quotas are fully paid. A Kft may not be filed for registration until at least half of each cash contribution (but at least Ft1m) has been paid and all in-kind contributions have been transferred. All outstanding cash contributions must be fully paid no later than one year from registration. For a single-owner Kft, all cash contributions must be paid before filing. There are no restrictions on the number of shareholders or founders, or on their nationality or residence. However, a single-member company may not be a single member of an Rt or Kft.

The amount of initial capital for a Kft may not be less than 500.000.- Huf (around 1800.- EUR) It is not required to pay up the initial share capital at the time of the registration of the company.

The capital contributions of members may be of varying value, but the value of each capital contribution may not be less than one-hundred thousand HUF (~ 350 EUR). Capital contributions shall be expressed in HUF and shall be exactly divisible by ten thousand. Each member shall have one capital contribution. However, according to the regulations of joint property, one capital contribution may have several owners.

The payment of the contributions: at the time of registration there is no obligation to pay up in full. (at least the half part of the capital and half part of the members individual contributions must be paid at the incorporation. Single member companies can start with only 100.000.- HUF (~ 350 EUR) capital contribution)

Contributions in kind constituting a part of the subscribed capital may be any marketable object or intellectual work of pecuniary value, or any right representing pecuniary value. Only such objects, intellectual works or rights which are subject to execution may be taken into account as a contribution in kind and which may be subsequently transferred by the business association without the consent (permission) of a third party.

If the full amount of contributions in cash was not paid up at the time of the foundation of the company, the method and due date of the payment of the remaining amounts shall be set forth in the articles of association. All contributions in cash shall be paid up within a period of one year following registration of the company, which shall be reported by the managing director to the court of registration.

Members of a company, who have knowingly had the contribution of any member approved by the company at a value exceeding its value at the time of the provision thereof, or who otherwise acted fraudulently in the course of the foundation, shall bear unlimited, joint and several liability for all resulting damages.

An Rt must have a supervisory board of at least three members, elected by the shareholders. For Kft a supervisory board of at least three members must be established if the capital of the Kft exceeds Ft50m, or the annual average number of employees exceeds 200. For a single-member Kft, the supervisory board is compulsory only in the latter case. If the annual average number of full-time employees exceeds 200, then one-third of the members of the supervisory board must be elected by the employees.

A director of a company must be an individual. It is not possible for a company to be a director. Managing directors for a Kft; members of the board of directors for an Rt: The same person may be elected as an executive officer in three companies at most. The person elected must inform in writing those companies of which he or she is already an executive officer within 15 days of acceptance of a new position. There are strict regulations on conflicts of interest. Except when acquiring shares in a public Rt, an executive officer may not acquire interest in another business association pursuing identical activities. Furthermore, no person may be an executive officer in another company pursuing an identical activity unless specified in the company’s articles of association approved by the supreme body of the company. A company’s supreme body may confer the right of general representation upon an employee appointed by it, as a so-called company secretary.

Rt: Management is conducted by the board of directors (igazgatosag), consisting of 3–11 members elected by the shareholders at the general meeting. The board is responsible for preparing financial statements and balance sheets of the company and for producing an annual report. No restrictions apply regarding nationality or residence of directors (except for banks, where at least two members of the board must be Hungarian residents for foreign-exchange purposes).

Kft: Management can be conducted by one or several managing directors elected by the members for a definite term; alternatively, the articles of association may provide that all equity holders are entitled to manage the Kft as managing directors. The same duties and restrictions apply as for an Rt.

Every Hungarian company is required to have a registered office and address in Hungary.

Resident companies are taxed on worldwide income; non-resident companies pay tax on Hungarian-source income only. Taxpayers are treated as resident for tax purposes if they are created under Hungarian law or (from January 1st 2005) if they are managed or controlled in Hungary. Tax is charged at a flat rate of 16%, and a special rate of 4% applied to the profits of Hungarian offshore companies was abolished on December 31st 2005. As of January 1st 2006, for up to HUF 5m taxable income, a lower tax rate of 10% was introduced.

A statutory auditor is required to be appointed by:
- an Rt.; a Kft., if the registered capital exceeds 50 million HUF, or if there is only one registered owner;
- the total net revenue of the company exceeds 50 million HUF in two years average;
- when any law requires (insurance companies, banks…).

In order to be appointed as an auditor, the individual person or audit company must be registered in the list of registered accountants. The auditor must be named in the Articles of Association and can be appointed for a period not exceeding five years. The auditor can be re-appointed following the end of his term of office.

Following closing of the books upon the end of the calendar year, companies are obliged to prepare a report based on the book- keeping records maintained in accordance with the law, representing the company s operations, assets, financial and profit situation.

Annual board meetings and shareholders meetings should be held at least once a year. The place of the meeting must be in Hungary, unless arranged otherwise.

Usually it is 10-15 working days.

The taxable income of Hungarian companies is subject to corporate income tax at a rate of 10% up to HUF 500 million tax base and 19% for the exceeding part. The corporate income tax rate applies to the taxable income of all business forms without distinction.

Dividends and liquidation proceeds received by corporations are exempt from taxes.

Moreover, tax regulations make it possible for the capital gain realized on certain investments to be tax exempt. Accordingly, if a taxpayer holds at least 30% of the registered share capital of a domestic legal entity or foreign entity for at least one year and reports such holding to the tax authority within 60 days following the acquisition or incorporation of the subsidiary, the amount of profit deriving from the sale of “reported shares” will decrease the corporate income tax base of the taxpayer. That is, the capital gain on the sale of such shares is tax exempt. The reported share rules may also apply to subsequent share acquisitions in the target company.

From 1 January 2012 a similar exemption applies to the gains realized on the sale of “reported intellectual properties”. Accordingly, if the taxpayer holds the intellectual property for at least one year and reports the acquisition or the creation of such intellectual property to the tax authority within 60 days following the acquisition or capitalisation, the gain from the sale of such property is exempt from corporate tax. The tax exemption is also available regarding the gain realized on unreported intellectual properties, if, out of the proceeds of the sale of such IP, the taxpayer, within 3 years, purchases a new intellectual property.

Due to a specific regime on royalty income, this type of income may be effectively taxed at the rate of 5% / 9.5% instead of 10% / 19%.

Hungary does not levy withholding taxes on payments made to non-resident enterprises; i.e. no Hungarian withholding tax applies to interest, royalty, service fee and dividend (etc.) payments. It must be noted furthermore that the double tax treaty network of Hungary is very favourable in respect of interest and royalty taxation, by many of the treaties completely eliminating source taxation of interest and royalties.

Capital gains realized on the sale of Hungarian property holding companies may be subject to Hungarian withholding tax at a rate of 19%; however, in most of the cases, the applicable double tax treaty excludes the Hungarian taxation of the capital gain.

If the larger of a taxpayer’s pre-tax profit or taxable basis does not reach the so called “profit-minimum”, then (i) the taxpayer has to make a detailed declaration to the tax authority as to its taxable basis, or (ii) it has to pay its tax based upon the profit-minimum regarded as its taxable basis, instead of calculating the tax in accordance with the general rules. The profit-minimum is 2% of the total revenue adjusted by certain decreasing and increasing items described by the act.

Taxpayers may choose between these alternatives on their own decision.

However, in the case the taxpayer opts to make the declaration, the burden of proof shifts to the taxpayer in the course of the tax investigation, such that the taxpayer must prove the fulfilment of the transactions challenged by the tax authority and that the costs incurred in the interests of the business activity. If the taxpayer fails to demonstrate that its declaration is true and correct, the tax authority may establish the taxable basis by estimate.

Taxpayers must submit their corporate income tax returns by 31 May of the year following the tax year in question provided that they did not opt for a financial year deviating from the calendar year.
VAT, the most significant indirect tax for the majority of companies, is based upon the framework of the EU directives. The standard VAT rate is 27% for goods and services. Reduced 18% rate applies to certain dairy and baked products, and certain items, such as goods and services related to medical treatment as well as books and newspapers are rated at 5%.

Imports are subject to VAT at the same rate that is applied to similar products of Hungarian origin. The basis of assessment is the sale value of the products and services.

In the case of imported products the basis of assessment is the value for customs duty, increased by the amounts of customs duty and customs clearance charges.

The trade to and from EU Member States is considered as intra-community acquisition and supply. The relevant taxation rules are in line with the VAT Directive of the EU.

As a main rule, taxpayers should report VAT quarterly. If the net VAT liability reported for the second year preceding the tax year exceeds HUF 1 million, the taxpayer must file monthly reports. Those taxpayers whose total net VAT liability of the second year preceding the tax year did not exceed HUF 250,000 must report annually. Tax returns must be submitted by the 20th day of the month following the end of the tax period (except for annual reports which must be submitted by 15 February).

Hungary has a dense network of double taxation treaties with 72 countries. Under many of these treaties, the withholding tax on royalties is reduced to 0%, while under some, the rate is reduced to 5 or 10%. This is only of relevance for royalties received by a Hungarian sub-licensor, as royalties paid abroad by a Hungarian licensee are not subject to a withholding tax by virtue of Hungarian domestic law.




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