Hungary, a central hub in Europe, offers an unbeatable combination of strategic location, favorable tax policies, and a supportive business environment. As a member of the European Union, it provides seamless access to the EU’s single market, making it an excellent choice for international entrepreneurs and businesses looking to establish a presence in Europe. Here’s why Hungary is the gateway to success and how you can navigate the process of setting up a company in this vibrant economy.
Why Choose Hungary for Your Business?
1. Strategic Location
Hungary’s location at the heart of Europe provides unparalleled access to both Western and Eastern European markets, making it a strategic hub for businesses seeking regional expansion.
- Proximity to Major Markets: Businesses in Hungary enjoy access to over 500 million consumers in the EU.
- Well-Developed Infrastructure: Advanced road, rail, and air networks connect Hungary to key trade routes, enabling efficient logistics.
- Global Trade Opportunities: Positioned as a bridge between Europe and Asia, Hungary serves as a critical point for global trade and supply chain management.
2. Lowest Corporate Tax in the EU
Hungary boasts the lowest corporate tax rate in the European Union at just 9%, a major draw for businesses of all sizes.
- Savings for SMEs and Corporations: Whether you’re a small startup or a multinational corporation, Hungary’s flat tax rate ensures significant savings.
- Tax-Free Dividends: Dividend payments to owners—both domestic and foreign—are exempt from taxes, further enhancing Hungary’s attractiveness as a business hub.
- Municipal Tax Benefits: Local business tax rates vary by municipality, with some areas offering rates as low as 0% to attract businesses.
3. A Business-Friendly Regulatory Environment
Hungary has streamlined the process of company registration to make it quick and efficient:
- Digital Processes: Most administrative steps can be completed online, ensuring a hassle-free experience.
- Fast Registration: Company formation typically takes between 1–2 days, depending on the type of entity.
- Remote Incorporation: Foreign entrepreneurs can establish a company remotely, provided notarized documents are submitted.
4. Skilled Workforce and Competitive Costs
Hungary offers a well-educated, multilingual workforce that supports businesses across diverse sectors, including IT, manufacturing, logistics, and fintech.
- Competitive Labor Costs: Salaries are significantly lower than in Western Europe, providing cost advantages for businesses.
- Government Incentives: Programs are in place to support hiring, training, and retaining skilled employees.
Corporate Structures in Hungary
Hungary provides various legal entities to suit different business needs, offering flexibility and tailored solutions for both startups and established corporations:
- Private Limited Liability Company (Kft)
- Public Limited Liability Company (Nyrt)
- General Partnership (Kkt)
- Limited Partnership (Bt)
- Branch Office
Step-by-Step Guide to Registering a Company in Hungary
Setting up a company in Hungary involves a series of well-defined steps to ensure compliance with local laws and regulations:
Step 1: Choose a Legal Entity
Decide on the type of entity that best suits your business model and operational needs.
Step 2: Reserve a Company Name
Ensure your company name complies with Hungarian regulations and is not already registered.
Step 3: Prepare Incorporation Documents
Compile the required documents, including identification for all shareholders and directors, proof of registered address, and charter documents.
Step 4: Submit Application
File the incorporation documents with the Hungarian Court of Registry. The entire process is digital, making it efficient and straightforward.
Step 5: Open a Bank Account
A Hungarian business bank account must be established within eight days of registration. Multiple currency accounts are also allowed.
Step 6: Obtain a Tax Number
All companies in Hungary are automatically registered for VAT, providing instant access to intra-EU trade benefits.
Step 7: Hire an Accountant
Hungarian accounting rules align with EU standards but include specific local requirements, making it essential to work with a qualified accountant.
Taxation in Hungary
Hungary’s tax system is one of the most competitive in Europe, offering businesses significant advantages:
- Corporate Income Tax: Flat rate of 9%, the lowest in the EU.
- Personal Income Tax: Flat rate of 15%.
- Value-Added Tax (VAT): Standard rate of 27%, with reduced rates for specific goods and services.
- No Withholding Tax: Dividends, interest, and royalties paid to non-residents are not subject to withholding tax under domestic law.
- Incentives: Tax allowances for R&D, renewable energy projects, and SMEs.
Payroll and Employment in Hungary
The Hungarian Labor Code outlines clear and comprehensive employment regulations, ensuring businesses and employees operate within a structured framework:
- Minimum Wage: HUF 200,400/month (€540) for unskilled jobs; HUF 260,000/month (€700) for skilled positions (2022 figures).
- Social Contributions: Employers pay 13% social contributions on gross salaries, while employees contribute 18%.
- Work Permits: Required for non-EU citizens, with a straightforward process supported by government agencies.
Why Hungary?
Hungary’s business ecosystem combines strategic advantages, such as low taxes, skilled labor, and digital administration, with cultural and geographical strengths. From its rich history and high quality of life to its role as a logistics and technology hub, Hungary offers an environment where businesses can thrive.
Ready to Start Your Business Journey?
When you choose VoltLegal, you gain a trusted ally committed to your success. Let us help you unlock the potential of Hungarian’s business-friendly ecosystem.
📧 Contact us today at info@voltlegal.com
