Hungary

Company Formation in Hungary

Hungary is a good destination to set-up your company to cater to the large EU Market. YourGlobalPro can assist in Hungary for Company Formation, Secretarial Compliance, Tax Registration, VAT Reclaim, Document Retrieval, Trademark Registration and Citizenship Services.

About the Country

Hungary is a unitary parliamentary republic in Central Europe – situated in the Carpathian Basin, and is bordered by Slovakia to the north, Romania to the east, Serbia to the south, Croatia to the southwest, Slovenia to the west, Austria to the northwest, and Ukraine to the northeast. The Country is home to the largest thermal water cave system and second largest thermal lake in the world. It has 10 national parks, 145 minor nature reserves, and 35 landscape protection areas. The below content will explain you in detail about the requirements for the company formation in Hungary , know more about the process of trademark registration in Hungary  and understand the Hungary Legal and Compliance requirements.

Hungary

Doing Business Introduction

The industrial sector of Hungary accounts for around one quarter of the country’s GDP while the Service sector accounts for slightly less than two-thirds of the GDP. Hungary government’s strong commitment to streamlining business processes, gives it a competitive advantage.

As per Doing business report of The World Bank –Hungary ranks 41 for 2017 survey. YourGlobalPro professionals are able to assist its client with any type of company formation in Hungary, trademark registration in Hungary and other recurring services for your business.

Incorporation - Types of Business Entities

There are different types of entities that can be incorporated in Hungary are as mentioned below:

  • A General Partnership (after the name of the Partnership letters KKT added)
  • A Limited Partnership (after the name of the Partnership letters BT added).
  • A Joint Stock Company (after the name of the Company with the letters RT added).
  • A Limited Company (after the name of the Company with the letters KFT added)

Time Frame for Incorporation of Company in Hungary varies from depending on the type of entity selected. Each business type has its own advantages and disadvantages. YourGlobalPro estimates the time required for process of Company formation in Hungary to be completed is 7-10 working days.

Benefits of Registration of a Company

Below are the advantages of company formation in Hungary:

  • Investment friendly economic policy – Increasing the competitiveness of both SMEs and large enterprises
  • Tax system is competitive
  • Refundable and non-refundable incentives
  • Strategic location as situated in the heart of Europe
  • Highly skilled and highly educated labour force
  • Infrastructure, ready-made industrial sites, offices and science parks

Tax Registration and Filing

Below are some crucial points in relation to taxation in Hungary.

Corporate Income Tax Rate 10/19%
Capital Gains Tax Rate 10/19%
Branch Tax Rate 10/19%
Value-added tax (VAT) 27%
Dividends Paid to Companies: 0 Paid to Individuals: 15%
Interest Paid to Companies: 0 Paid to Individuals: 15%
Royalties 0%
Branch Remittance Tax 0%
Filing Corporate Income Tax Returns By the last day of the fifth month following the end of the tax year.

Double Tax Treaty

Double Tax Agreements regulates the tax treatment of income or capital gains in situations where the same taxpayer is taxed twice in two countries for the same subject. Hungary has double taxation treaties with over 70 countries.

Trademark registration

For trademark registration in Hungary application needs to be made to The Hungarian Intellectual Property Office (HIPO) in Hungary. It takes approximately 10-12 months’ time frame to complete the trademark registration process. In Hungary, a Trademark Registration is valid for 10 years from the application and can be renewed for further 10 years before expiration date and during the grace period of six (6) months after expiration.

YourGlobalPro professionals are fully equipped to assist you with the process of trademark registration in Hungary for your business. For assistance or advice in the matter of the trademark registration in Hungary or intellectual property – please feel free to write or contact us.

Secretarial Compliance

  • All business has to support their financial statements with double-entry bookkeeping
  • The entities are required to keep its financial statements, the business report, all supporting inventories, assessments and general ledger statements, chief books of account and any other records fulfilling the requirements of the law in a legible format for a minimum of 10 years
  • Records directly or indirectly supporting bookkeeping must be stored for a minimum of eight years in a retrievable format.
  • Only registered shares may be issued in a printed or dematerialized form
  • The exempt parent company is required to have the consolidated annual financial statements and the consolidated business report published within 60 days of the approval of the consolidated annual financial statements of the superior foreign parent company.

Accounting Services

The Ministry for National Economy and Accounting Act regulates the Accounting and bookkeeping in Hungary. The said Accounting regulations are harmonized with international accounting principles. The Accounting Act applies to all entities except Hungarian commercial representations of businesses registered abroad, individual entrepreneurs, civil law partnerships, building communities. The business year is the same as the calendar year. The accounting policy is required to be incorporated in writing within 90 days of the establishment of the company.

YourGlobalPro professionals can assist you with the entire bookkeeping and accounting services for your Hungary Business Set up as per your business needs including implementation of financial accounting software, accounting records preparation and time to time preparation of budgets, forecasts.

Auditing service

All the entities are required to prepare a report on every business year in Hungarian. The companies are required to appoint an auditor in accordance with the Accounting Act in case annual net sales exceed HUF 300 million and number of employees exceeds 50 people. The auditing must be done in line with Hungarian legal regulations and in accordance with the Hungarian National Auditing Standards.

Based on the size of the business – the companies are required to prepare and file financial statements with the Authority. YourGlobalPro professionals can provides you auditing services for your business as required by your business.

Banking

It is very simple process to open Bank Account in Hungary. It is recommended to compare commission rates for money transfer to and from Hungary while selecting a Bank. The documentation requirement differs from Bank to Bank and need to be complied for the Bank account opening. All banks are stable, reliable and offer the same level of services.

YourGlobalPro professionals can facilitate all the paper work in relation to banking need and can assist you in opening bank account for your business plan in Hungary.

Legal and Compliance

Below are the various Hungary legal and compliance requirements to be followed by incorporated entities:

  • Companies selecting a tax year other than the calendar year must notify the tax authorities within 15 days of such decision.
  • Announcement of any changes in the data registered in the company register
  • Submission of the annual financial statements to the Court of Registration
  • Businesses required to prepare consolidated annual financial statements have to disclose their report by the last day of the sixth month following the balance-sheet date
      The Companies are required to register with the following authorities:
    • The Central Office of Statistics (KSH)
    • The (Regional) Court of Registration
    • The Institute of National Insurance
    • National Income Tax (APEH)
    • Regional Income Tax

HR and Employment Law and Immigration / VISA

Below are some of the important points in relation to HR & employment law in Hungary:

  • Unless there is an agreement between Hungary or the foreign country, the foreign national is mandatory required to apply to Hungarian Embassy in his County of Residence for Visa.
  • The employer is required to submit work permit for the employee through the employment center and the work permits are usually valid for a maximum of two years
  • The resident permit is issued by the police department that deals with foreigners.
  • All employment contract including modification, termination thereof must be in writing
  • Tenure is usually an indefinite period of time with probationary period for a maximum of three months
  • Termination of employment contract is usually based on mutual agreement of the parties or a unilateral notice from one party
  • Regular working hours are 40 hours per week and extra payment for overtime are strictly regulated by the law
  • Minimum annual paid holiday is 20 workdays with the maximum being 30 days and pregnant women are entitled to 24 weeks of maternity leave.
  • Childcare benefit is available for up to three years

Country Statistics

Capital Budapest
Largest City Budapest
Total Area 93,030 Sq. Km.
Population 9,830,485
Density 105.9 / Sq. Km.
Currency Forint (HUF)
Government Unitary Parliamentary Constitutional Republic
Official Language Hungarian
Religion Christianity: 52.9%
not declared: 27.2%
No religion: 18.1%
Other religions: 1.8%
Business Offices Hours Monday to Friday - 08:30 to 17:30
Banks and Exchange Houses Hours Monday to Thursday - 8:00 - 14:00
Friday - 08:00 - 13:00

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