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14 Steps of Company Formation in Hungary by Foreigners

Company formation in Hungary, strategically positioned in the heart of Europe, offers an enticing opportunity for international businesses looking to expand their presence within the European Union. Given Hungary’s advantageous geographical location, skilled workforce, and business-friendly environment, the process of company formation in Hungary presents a gateway to a wealth of opportunities for foreign enterprises seeking to establish themselves in the European market. This article will provide a comprehensive, step-by-step guide on how foreign companies can navigate the intricate process of company formation in Hungary, emphasizing the critical elements of this important procedure.

1. Market Research and Business Plan in Company Formation in Hungary

Prior to initiating the company formation process in Hungary, it is crucial to conduct comprehensive market research to understand the Hungarian market, potential competition, and the demand for your products or services. A well-thought-out business plan is essential, outlining your objectives, financial projections, and growth strategies for your upcoming company formation.

 

2. Legal Structure Selection in Company Formation in Hungary

Hungary provides a range of legal structures for company formation, with the most common choices including a Limited Liability Company (Kft) and a Joint Stock Company (Rt). Foreign firms often favour Kft due to its flexibility, limited liability, and streamlined company formation requirements. Our team will assist you in determining the optimal structure, whether it’s a KFT, RT, or branch, taking into consideration both legal and tax considerations.

 

3. Reserve and Register a Company Name in Hungary

Select a unique and appropriate name for your Hungarian company and check its availability with the Hungarian Company Information Service (Cégközlöny). Once approved, the name can be reserved for 30 days. We will check the name options for you. However, we highly recommend registering the trademark either just in Hungary or across the whole EU. Our team can assist you with trademark registration in Hungary or trademark registration in the European Union.

As Gurcan Partners, we can guide you through the intricacies of legal procedures and the latest developments while company formation in Hungary as a foreigner, empowering you to make well-informed decisions regarding your investment. If you have any inquiries or need further guidance, please feel free to contact us via email info [@] gurcanpartners.com

 

4. Appoint a Hungarian Resident Director in Hungary

All Hungarian companies can have a local resident director, who can be a Hungarian citizen or an EU resident living in Hungary. However, it is not obligatory to have a local manager. Non-resident or non-Eu managers may have some challenges during bank account opening in Hungary. Foreign firms often collaborate with legal or consulting firms to fulfil this requirement. Our team will assist you regarding all requirements.
Our professional team specializes in the establishment and upkeep of foreign businesses and investments in Hungary. Contact us, and we’ll assist you in registering your firm.

 

5. Share Capital and Shareholders in Hungary

Determine the share capital for your company, which is a minimum of HUF 3 million (approx. 7850 EUR) for a Kft. The capital can be deposited in a Hungarian bank account, and a bank certificate confirming the deposit is required. At least one shareholder is required, and they can be foreign entities or individuals. However, since our side company Gurcan Consultancy provides accounting services, without paying capital in advance, with the cash capital payment method we can register your company.

Our dedicated team is here to guide you through every step of the Company Formation in Hungary.

 

6. Draft the Articles of Association in Hungary

Prepare the Articles of Association for your Hungarian company, outlining the internal governance structure, shareholder rights, and other important provisions essential for the company formation. These documents must be notarized, and in Hungary, lawyers can approve the signatures. Remote incorporation is also a possibility, and our team will assist you in organizing all company formation processes remotely through video call notarization.

 

7. Choose a Registered Office in Hungary

Select a registered office address in Hungary for official communications and legal notifications during the company formation process. This address must be a physical location and can be either a commercial or residential property. We offer two distinct virtual office options and one co-working choice for our clients in the centre of Budapest, catering to your company formation needs. Do not hesitate to get in touch with us.

 

8. Taxation and VAT Registration in Hungary

Register your Hungarian company for taxation and acquire a Value Added Tax (VAT) number if your company formation plan involves engaging in taxable activities. Hungary’s corporate tax rate stands at an appealing 9%, rendering it a desirable destination for business operations. Throughout the company formation process, we will facilitate the registration of VAT and ensure the receipt of the EU VAT number as well.

At Gurcan Partners, we’re dedicated to making your business goals a reality. Let us guide you through the complexities of Taxation and VAT Registration in Hungary, ensuring a smooth and efficient process every step of the way. Feel welcome to get in touch with us: info [@] gurcanpartners.com

 

You can find our articles on taxation in Hungary here:
Company Taxation In Hungary, “KATA” Start-Up Friendly Taxation
Taxation In Hungary, Taxes, Social Security

 

9. Business License and Permits in Hungary

Obtain any necessary business licenses and permits based on the nature of your business activities as part of the company formation process. Different industries may have specific regulatory requirements. During the company formation process, we will thoroughly assess whether your activity requires a special license, highlighting the importance of this stage in preventing any potential post-incorporation complications.

 

10. Registration with the Hungarian Court of Registration in Hungary

Submit your company formation documents to the Hungarian Court of Registration as a crucial step in the company formation process. The registration process may span a few weeks, during which the court meticulously reviews your application to ensure full compliance with local regulations. In most cases, we achieve registration within less than 10 business days and simultaneously secure tax numbers, expediting your company formation.

 

11. Social Security and Employment Matters in Hungary

If you plan to hire employees in Hungary, you’ll need to register your company with the Hungarian tax authority (NAV) for social security contributions and employee taxes (Taj number).

Gurcan Consultancy provides comprehensive consultation services to be your growth partner from corporate accounting to tax returns. Feel free to reach out to us anytime at: info [@] gurcanpartners.com

 

12. Open a Business Bank Account in Hungary

Open a Hungarian business bank account to manage your company’s finances, process payments, and handle other financial transactions while company formation in Hungary. It is obligatory to open a bank account for Hungarian Companies however it might be challenging to open a bank account for non-resident manager companies. Our team will assist you during all process.

 

13. Accounting and Reporting in Hungary

Comply with Hungarian accounting and reporting standards. It’s advisable to engage a local accounting firm to ensure accurate and timely financial reporting.

Gurcan Consultancy offers a wide range of consulting services to serve as your strategic ally, assisting with everything from corporate accounting to managing your tax filings, all aimed at fostering your business growth.

 

14. Compliance and Regulations in Hungary

Stay up to date with Hungarian and EU regulations and comply with all statutory requirements, including annual reporting, tax returns, and employee documentation throughout the company formation process in Hungary.

Should you be contemplating the prospect of company formation in Hungary, it is imperative to recognize the paramount significance of securing the right guidance and support to guarantee a smooth and prosperous commencement. In this article, we emphasize the critical importance of enlisting professional assistance when embarking on the journey of company formation in Hungary, as it plays an integral role in ensuring that your entrepreneurial endeavour enjoys a confident and assured commencement.

Explore our additional articles about Hungary:
Company Registration Steps In Hungary
Buying Property In Hungary
Company Setup In Hungary, 5 Good Reasons To Start
Company Formation In Hungary
Real Estate Investment In Hungary
Debt Collection In Hungary
Digital Nomad Visa (White Card) In Hungary

 

Conclusion

Company formation in Hungary as a foreigner offers excellent opportunities to tap into the European market. With careful planning, adherence to legal requirements, and professional assistance, the process can be smooth and rewarding. By following these steps, Foreign companies can establish a strong and successful presence in Hungary, leveraging the country’s favourable business environment and strategic location within the European Union. Please contact us.

 

Feel free to reach out to us through the following contact information:

E-MAIL: info [@] gurcanpartners.com

Gurcan Partners Hungary Office
TELEPHONE: +36 1 808 94 49