Your Guide to Investing in Hungary

Company Formation

Most investors are able to form a company in Hungary in a matter of three to five business days. You can choose from a limited liability company (Kft.), or a company limited by shares (Zrt.).

The requirements are minimal. Kft companies must have a minimum registered capital of 3 million Forints, which is approximately 7,000 Euros, a relatively small investment by international standards. None of these funds need to be available when starting the company. For Zrt companies, this minimum amount is 5 million Forints, which is approximately 12,750 Euros. You only need to pay 25% of that when establishing the company.

You must hold one general meeting every year, but this doesn’t have to include a personal presence. Your company will also need to hold a Hungarian bank account.

Additionally, some Hungarian companies should be audited. This audit only takes place if your company has at least 50 employees and earns at least 300 million Forints in the two previous financial years. You also don’t need to have any local directors.

You can create nearly any type of company, including a real estate company. Many foreign investors choose Hungarian real estate as an easy investment subject to low tax rates and a likelihood to increase in value. Read more details about company formation in Hungary.

Key Takeaways

The following key points summarize why foreign investors choose to form companies in Hungary:

The process can take just 3 to 5 days, within two weeks at the most
For Zrt companies, only 25% of the startup funding is required at when the company is established
Startup capital of just HUF 3,000,000 or 5,000,000 (about 7,000 or 12,750 Euros)
9% corporate tax rate
Only one shareholder required
Only one director required
Director’s meetings can be held anywhere
Relevant documentation is translated into English as necessary
You receive a Hungarian residence permit (as does your family)

Read more about how to get Hungarian citizenship.

Real Estate Investment: An Alternative Path to Residence Permit

While forming a Hungarian company is straightforward and requires a minimal financial investment, some foreigners prefer to invest in real estate. If you invest at least 180,000 Euros in Hungarian real estate, you will also be eligible for a residence permit which can be valid for five years. This permit can be renewed.

Residence Permit and Visas

Given the low cost and quick process of establishing a company in Hungary, it is common for investors to use it as a way to get a Schengen visa. That is because simply becoming the foreign director of a Hungarian company can make you eligible for this visa. Your initial Schengen visa and residence permit will be valid for three years, with the ability to renew it. Once you have your residence visa, your family members can receive their own residence permit with the same validity period.

The only caveat to renewing the visa is that you have to spend 90 or more of the 183 days before renewal in Hungary and in the Schengen Area. Given the size of the Schengen Area and the appeal of its member countries, you are likely to do this anyway.

Low Tax Rate

The low tax rate in Hungary is just one of the many reasons that the country attracts foreign investors. The corporate tax rate is set at only 9%. This tax rate is the lowest within the European Union. On top of that, Hungarian companies are suited to exercising holding functions, since income from dividends and income from selling corporate shares are not taxable. There may also not be a withholding tax on the payments that leave Hungary. Additionally, personal income tax is just 15% plus a social security contribution.

No Double Taxation

To further protect your investments, Hungary has treaties with over 60 countries to avoid double taxation. If you happen to be from one of the countries without a double taxation treaty, Hungary will still give you a credit on your Hungarian taxes of up to 90% of your foreign taxes.

Conclusion

Foreigners and Hungarians alike can form a company in Hungary in a matter of days with a low initial investment. There are minimal requirements, including no requirement for a local presence or local directors. Moreover, forming a Hungarian business or making a significant real estate investment in the country entitles you and your family to a residence permit and a Schengen visa that is valid for two years and is simple to renew.

For further information, please contact: Crystal Worldwide Law Firm

https://crwwgroup.net