January 21, 2025
INCORPORATION OF A LIMITED LIABILITY COMPANY IN HUNGARY
Hungary is the heart of Europe, having a strategic and investor-friendly environment conducive to business. Through this location, access to the European Union (“EU”), and the freedom of establishing various forms of entities, a Limited Liability Company (“LLC”) would be the most convenient and preferred form among them, specifically in the forms of Korlátolt Felelősségű Társaság (“KFT”) in Hungarian.
WHY CHOOSE A HUNGARIAN LLC
A Limited Liability Company in Hungary offers several advantages:
- Limited Liability: Shareholders’ liability is capped at their contribution to the company’s capital.
- EU Market Access: It is directly accessing the single market of the EU by operating in Hungary.
- Flexible Ownership: LLCs can be fully owned by foreign nationals or entities.
- Low Minimum Share Capital: The minimum share capital requirement is €10,000 (HUF 3 million).
- Simple Tax Structure: Hungary offers one of the lowest corporate tax rates in the EU at 9%.
- Streamlined registration: Hungary’s registration system is one of the modern and streamlined.
PROCESS OF REGISTRATION
Under the Hungarian Civil Code and the Companies Act, the process of incorporating an LLC in Hungary includes the following steps:
- Choose a Unique Company Name:
- The company name must be unique and include the suffix “Kft” to indicate it is a Limited Liability Company.
- Verify the availability of the name through the Hungarian Company Registry.
- Prepare Required Documents:
- Articles of Association: This must include details such as the company name, registered office, scope of activities, share capital, and details of shareholders and directors.
- Proof of registered office address (e.g., rental agreement or ownership deed).
- Identification documents of shareholders and directors (passport or ID for individuals and incorporation documents for legal entities).
- Declaration of compliance with Hungarian laws.
- Open a Bank Account:
- Open a corporate bank account in Hungary and deposit the minimum share capital (€10,000 or HUF 3 million).
- Obtain proof of the capital deposit from the bank.
- Register the Company:
- Submit the application for incorporation along with the required documents to the Hungarian Court of Registration.
- Pay the applicable registration fee.
- The registration process typically takes 1-2 weeks.
- Tax and Social Security Registration:
- Register the company with the Hungarian Tax Authority (“NAV”) to obtain a tax identification number (“TIN”).
- Register for Value Added Tax (“VAT”) if the company’s activities require it.
- Enrol with the Social Security Authority if the company will hire employees.
BASIC INCORPORATION REQUIREMENTS
To establish an LLC in Hungary, the following requirements must be met:
- Minimum Share Capital: €10,000 (HUF 3 million) must be paid into the company’s bank account.
- Shareholders: A minimum of one shareholder is required (individual or legal entity).
- Directors: The company must have at least one director to run the company.
- Registered Office: The company must have a registered office in Hungary.
- Articles of Association: The company must prepare and submit Articles of Association containing all statutory details.
ANNUAL FILING AND COMPLIANCE REQUIREMENTS
Hungarian LLCs are required to meet the following annual compliance obligations:
- Annual Financial Statements:
- Prepare and file audited financial statements with the NAV and the Court of Registration.
- Corporate Tax Returns:
- File corporate tax returns annually and comply with VAT regulations if applicable.
- Social Security Contributions:
- Make regular contributions for employees, including social security and payroll taxes.
- Business Reports:
- Maintain and submit annual business reports as required by Hungarian law.
CONCLUSION
Incorporating an LLC in Hungary is a rather straightforward process for providing businesses with a secure structure to operate within the EU market. Hungary attracts entrepreneurs and investors because of its low corporate taxes, investor-friendly policies, and access to skilled workers. Proper adherence to incorporation processes and the subsequent maintenance of compliance with the regulations of that local jurisdiction may lead to business’s solid grounding in Hungary. Seek professional advice from a lawyer and accountant for the best smooth incorporation process.
HOW WE CAN HELP?
- Our team of professionals may guide you through the process of setting up a business in Bhutan. We can also ensure compliance with all requirements, including registration, licensing, tax obligations, employment, and labour laws.
- Our team offers advice to help set up successful businesses in emerging sectors.
- Our team of experts can conduct extensive market research to assist businesses in understanding and comprehending their target audience, industry trends, and potential competitors.
For more information or queries, please email us at
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Key Contact
Surendra Singh Chandrawat
Managing Partner
