Hungary Corporation – Company Registration and Formation
Hungary is a Central European parliament republic. Its land area is 35,900 square miles (93,000 square kilometers), located on the Carpathian Basin and bordered Romania to the east, by Slovakia to the north, Croatia to the southwest, Serbia to the south, Slovenia to the west, Ukraine to the northeast, and Austria to the northwest. Hungry has around 10 million inhabitants. Hungary is a member of the European Union (EU). Hungary’s capital and largest city is Budapest.
Hungary regulates its corporations under the Companies Act which allows corporations a certain amount of freedom, like the option to acquire rights in their name (including making contracts, obtaining property, and pursuing lawsuits). However, to actively act as a corporation in Hungary, a license from the proper department is required. There exists one exception to this rule; corporations that participate in offshore activities can form without a license.
Corporations in Hungary obtain some benefits including:
• Prime European Location: Hungry being located in the center of Europe makes it easier to connect with other EU countries.
• Growing Economy: Hungary is experiencing an economic growth with its many financial opportunities.
• EU and NATO Member: Hungary is a member of both the European Union and NATO. As a member of the European Union, Hungary conforms to the EU high-quality investment standards, adding to the quality of opportunities that are already abundant in its region.
• Government Stability: Hungary has demonstrated consistent and long-term government stability, making it a safe and ideal place to invest.
• Superior Workforce: Hungary has a highly trained workforce at salaries far lower than most EU countries.
Hungary corporations must come up with a unique corporate name that is not similar to other corporations that already exist in Hungary.
The corporate name must include the full or abbreviated version of the corporation’s structure at the end of the company’s name: unlimited partnership (Kkt), limited partnership (Bt), limited liability company (Kft), or a company limited by shares (Rt, Zrt, or Nyrt).
Office Address and Local Agent
Hungary corporations must have a registered local agent and a local address to obtain necessary paperwork and potential process service requests. Corporations can choose to have a primary business address located anywhere in the world.
The requirements for shares in Hungary depends on the type of corporate entity structure selected. As mentioned above, there are unlimited partnership (Kkt), limited partnership (Bt), limited liability company (Kft), or a company limited by shares (Rt, Zrt, or Nyrt). Each corporate structure has its own shareholder (or member) requirements.
Directors and Officers
The number of directors and officers required depend on the type of corporation.
For directors, the requirements are as follows:
- In a Kft, the company must have one or more managing directors.
- In an RT, a board of directors consisting of between 3 to11 members must be formed. Or the corporation may pick a general director to manage it.
For both types of corporations, at least one director of any nationality must be appointed.
For officers, corporations must appoint a minimum of one officer of any nationality.
The initial capital required depends on the type of corporation:
- Kft: HUF 500,000 (EUR 2,000).
- Private Rt: HUF 5 million (EUR 20,000); both Kfts and private Rts may be established without cash contributions.
- Public Rt: HUF 20 million (EUR 80,000); the company may not be established without cash contributions.
Taxes The current tax rate in Hungary is 10 percent on profits earned up to $1.74 million USD, and 19 percent of any income higher than that number. However, Hungary plans to introduce a standard corporate tax rate of nine percent in the near future.
Annual Fees Registration
fees depend on the type of corporation:
• public Rt is HUF 600,000 (EUR 2,400);
• private Rt is HUF 100,000 (EUR 400);
• Kft is HUF 100,000 (EUR 400);
• Kkt or a Bt is HUF 50,000 (EUR 200).
Hungary does maintain taxes and corporate information on its public records.
Accounting and Audit Requirements
Accounting and auditing are not required in Hungary unless the Accounting Act states the corporation is required to do so; or the corporate Articles of Association requires that the corporation do so.
Annual General Meeting
An annual general meeting is required in Hungary.
Time Required for Incorporation
Registration for a Hungarian corporation takes about two business days. However, To obtain the return of the corporate documents from the Registrar may take up to two weeks.
Hungarian shelf corporations are available for faster incorporation.
Hungarian corporations receive several benefits including: being in a central European location experiencing a growing economy while being a member of the EU and NATO. In addition, Hungary offers a stable government and a superior workforce costing less than most EU countries.