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Hungary is situated in the Central Europe.

  • Capital – Budapest.
  • Territory – 93 028 square kilometres. 
  • Population – 9 849 000.
  • Official language – Hungarian.
  • Political status – parliamentary democracy, legal system is based on civil law model.

Hungary is a member of the European Union (since May 1, 2004), NATO, the OECD, the Visegrád Group, and is a Schengen state. National currency – Hungarian Forint (HUF). In comparison to major currencies, HUF is subject to exchange rate variations. The approximate exchange rate in October 2016 is USD 1 = HUF 275, EUR 1 = HUF 307.


1. Advantages
  • political and economic stability,
  • high international reputation,
  • Hungary is not considered to be an “offshore” jurisdiction,
  • double taxation avoidance treaties have been concluded with 70 countries,
  • personal presence is not required to incorporate a company,
  • EU-VAT number is obtained immediately,
  • EORI number is obtained promptly,
  • Tax Residence Certificate is obtained promptly,
  • low tax rates, numerous tax incentives available.
2. Disadvantages
  • requirement of accounting,
  • requirement to submit annual statistical reports,
  • tax must be paid in HUF (HUF exchange rate is subject to variations),
  • only strict reporting forms or special software can be used for invoicing.
3. Corporate Law
  Act 1996/LXXXI on Corporate Tax and Dividend Tax.
4. The form of company
  Hungarian Limited Liability Company (Kft), hereinafter referred to as ‘company’, which has the following distinctive features:
  • has a status of a separate legal entity,
  • liability of its shareholders is limited up to their shares.
5. Permitted activities
  Any lawful activity for which a special license is not required (special license is required in order to undertake banking, finance or insurance activities) is possible.
6. Corporate income tax
tax rates   Corporate income tax rate as of 01.01.2017. has been reduced to 9% for all companies ( from 10%-19% which were the earlier years).
tax incentives Main items to be deducted from corporate income tax base:
  • capital gains from the sale of a notified share(except controlled foreign companies), if the following conditions are complied with:
    • company (or its predecessor in title) during at least 1 year has been accounting for this sum in its assets,
    • share is not less then 10%,
    • company has notified the tax authorities about the purchase of the shares within 75 days from the day of purchase.
  • Income received or due from dividends and shares during the tax year, with the exception of the income received or due as dividends and shares from a controlled foreign company.
  • 50% from received royalties, if this sum does not exceed 50% of the corporate income tax base.
7. Local tax on business

Hungarian companies must pay so-called local tax on business.


Tax base:


Company’s net revenue from sales (total of raised invoices excluding VAT) from which the following items are deducted:


- cost of sales (excluding VAT),

- payments to subcontractors (excluding VAT),

- material expenses (excluding VAT),

- direct expenses for research and development (R&D) during the financial year.


The following items do not make part of net revenue (and are therefore exempt from this tax):


- royalties,

- revenue from financial transactions including:


  • dividends received and shares,
  • profit on exchange rates from sale of shares,
  • interest and revenue on exchange rates from invested financial assets,
  • other dividends and profit from dividends.


Revenue derived from activities of company’s foreign branches is exempt from MTBA tax base.


MTBA is imposed at a rate of up to 2% of tax base (the exact rate is determined by the municipality, in which the company is registered). In Budapest it is imposed at a rate of 2%.
8. VAT
rates   The following VAT rates are currently applicable:
  • standard rate:  27%,
  • discount rate:  18% (dairy and bakery products, etc.) ,
  • discount rate:  5% (pharmaceuticals, books, newspapers) ,
  • zero rate (financial and investment services).
recovery If company has registered for VAT recovery, the VAT recovery is possible upon complying with the following conditions: 
  • an application must be submitted (VAT recovery is not effected automatically)and
  • the difference between the amount of VAT to be paid to tax authorities (on raised invoices, that have been paid) and amount of VAT on received invoices (that have been paid) and amount of VAT to be recovered from tax authorities shall not exceed:
    • companies that submit monthly accounts   - HUF 1,000,000
    • companies that submit quarterly accounts  - HUF    250,000
    • companies that submit annual accounts     - HUF      50,000
9. Withholding tax
  If the members of a Hungarian company are legal entities, distributed dividends are not subject to taxation. Dividends distributed to individuals are subject to additional tax at a rate of 15%. If Double Taxation Avoidance Treaties are applied, the tax rate may be reduced up to 5%-10%.


10. The period of registration


  Decision on the company’s incorporation is issued within 5 business days. However, the company’s registration number is assigned (and company may begin its business activities) as soon as the documents for incorporation are submitted.
11. The possibility to buy a shelf company
  Possible, but subject to availability (to be checked in each individual case).


12. The name of the company


  Name must not be identical or similar to a name of a pre-existing Hungarian company. Name of the company must reflect its legal form (it must end with the abbreviation ‘KFT’). Company name must be in Latin letters. Companies may elect to use the full company name or concise name. Sensitive words are as follows: ‘national’, ‘state’, etc. 


13. The main documents required for the incorporation
  • Deed of foundation or articles of association
14. Who signs the incorporation documents
  The incorporation documents are signed by the members or by their authorized representatives in Hungary. If foreign founders and/or managers are signing the documents outside of Hungary, their signatures are to be certified by Hungarian consul or by apostille.



15. Informations and documents required for registration
  In case of physical person (member, manager, executive officer) the following information should be provided:
  • name,
  • mother’s maiden name,
  • address,
  • place of  birth, date of birth.
In case of legal entity(only member) the following information should be provided:
  • company’s name,
  • company’ registered seat,
  • company’s registration number,
  • company’s tax number,
  • name and location of Court of Registration,
  • company’s representative data (name, mother’s maiden name, address).

The above data shall be evidenced by the following documents:

  • company extract in English not older than 1 month with apostille or consulated certification of authenticity,
  • passport or identity card copy with apostille or consulated certification of the person, who will act as a representative of the company in connection with the purchase of the  company as buyer in 1 copy *,
  • copy of any official document evidencing the address with apostille or consulated certification of the person, who will act as representative of the legal entity (buyer) in connection with the purchase of the company in 1  copy (ID, address card or if these documents are not obtainable public utility bill , etc.)*;

* If any of aforementioned documents includes non-Latin letters, the same in Latin letters should be provided.


16. The share capital of the company
  Minimal amount of the authorized share capital of company is HUF 500,000. Within the incorporation procedure each member must deposit his contribution – 50% of monetary assets. The other 50% of monetary assets must be paid within 1 year from the date of incorporation of the company. If there is only one founder in the company, min. HUF 100,000 must be paid within the incorporation procedure.
  Not issued. Share of each member is recorded in the deed of foundation or articles of association. Minimum amount of share is HUF 100,000 each share must be divisible by HUF 10,000. Each HUF 10,000 of share corresponds to 1 vote.


18. Members
minimum number One (either individual or legal entity).


nationality No requirements



19. Company’s manager
minimum number   1 individual


nationality No requirements


status All powers except those within the exclusive competence of the members (determined by the deed of foundation or articles of association)



20. Executive Officer (p.e. in case of registered branch office)
  Otherwise not specified by the deed of foundation or articles of associations, company’s members are able to appoint one or more executive officers.
The executive officer shall be employee in the company on the basis of a labour agreement and must have a salary. Minimum amount of salary – approximately USD 300 per month. Taxes (social, etc.) for such salary constitute approximately USD 140. His activity is controlled by the managers. 
The company’s members could provide to the executive officer a general representative right. Executive officer’s data is public. In the event that executive officer is not Hungarian, the employment of executive officer shall be subject to further information.
The executive officer shall be appointed usually in order to:
  • assist at the work of the manager,
  • provide general operation of the company,
  • control the activity of the company at the registered branch office or premises.

The liability of the executive officer is limited comparing with the liability of manager in the company.

21. Acting under a power of attorney
  Issuance of general powers of attorney in Hungaryis not common practice, however manager may issue them at his own  discretion and on his own responsibility. Also limited POAs granting specific powers are issued, if the company’s manager cannot perform these actions by himself.


22. The existence of registered office in the territory of Hungary


23. Company’s bank accounts
  Company must have at least 1 bank account in a Hungarian bank for payment of taxes and expenses (such as accounting, audit, etc.) arising in Hungary. In addition the company may maintain accounts in foreign banks without any limitation.


24. Annual meetings of


members Must be held at least once a year, there are no requirements as to place of holding of the meeting.


managers No requirements


25. The requirement of
the accounting Obligatory


VAT return Depending on the final amount of calculated tax (difference between VAT to be paid and VAT to be refunded) in the second year preceding the current accounting year, return is to be submitted monthly, quarterly or annually. 
Companies, whose annual turnover does not exceed HUF 5 million, are exempt from VAT return.



- EU VAT return Companies that have been assigned EU VAT numbers must submit returns at least quarterly (regardless of the final amount of calculated tax). VAT return and EU VAT return must be submitted on a monthly basis, if the annual total amount of tax is positive and is at least 1 million HUF.
Only the companies that have decided to submit VAT returns anyhow (even if the annual turnover does not exceed HUF 5 million) may receive EU VAT number within the incorporation procedure.


preparing the annual return Obligatory, should be prepared and submitted till 31st of May of subsequent year.



submission of the auditors’ opinion The company is exempt from audit if the next two conditions are satisfied:


  • company’s annual net sales do not exceed HUF 200,000,000 (calculated for the period of one year) on the average of two financial years preceding the due financial year and
  • the average number of the employees does not exceed 50 persons in the same time.
26. Company information available upon request of any third parties
  • corporate registration number,
  • registered seat,
  • address of  branch (if any),
  • date of registration,
  • principal business activities,
  • amount of subscribed capital,
  • details of auditor (if any),
  • statistical and tax numbers,
  • name and address of Bank in Hungary and account number,

Also members, managers and executive officers date:

In case of physical person:
Name, address and mother's maiden name of members, managers, executive officers.

In case of legal entity(only member):

  • company’s name,
  • company’ registered seat,
  • company’s registration number,
  • name and location of Court of Registration,
  • company’s representative data (name, mother’s maiden name, address).

All documents filed to the Registrar including deed of foundation or articles of association are available to public inspection.


27. Double taxation avoidance treaties
  Double Taxation Avoidance Treaties have been signed with the following countries: Albania, Armenia, Australia, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hong Kong, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Kazakhstan, Kuwait, Latvia, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mexico, Moldova, Mongolia, Morocco, Netherlands, Norway, Pakistan, People's Republic of China, Philippines, Poland, Portugal, Qatar, Republic of Korea, Romania, Russia, San Marino, Serbia and Montenegro, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Taipei, Thailand, Tunisia, Turkey, Ukraine, United Arab Emirates,United Kingdom, United States, Uruguay, Uzbekistan, Vietnam.


IMPORTANT NOTICE: In the preparation of this material, every effort has been made to provide the most correct and up-to-date information possible, however above materials may only be used for general information purposes and may not serve as a ground for any advice and/or action. We accept no responsibility for any financial or other loss or damage that may result from actions undertaken without appropriate legal advice.