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According to the World Bank ratings, Hungary is ranked 1st in international trade, 32nd in lending services, 30th in property registration & 22nd in enforcing contractual conditions. 

The advantages of doing business in Hungary include:

  • developed market economy;
  • stable political situation;
  • high living standards;
  • developed infrastructure & banking sector;
  • skilled labor force;
  • investor-friendly laws;
  • simplified procedure for obtaining a residence permit, permanent residence (3 years) & citizenship (8 years);
  • visa-free regime in the Schengen zone;
  • investor-friendly taxation;
  • more than 70 agreements on avoidance of double taxation;
  • fast and easy business incorporation process.

Those looking to register a company in Hungary are highly recommended to focus on the following sectors of the Hungarian economy: eco-farming, power generation, hospitality, transport, IT, mining & mechanical engineering

It also makes sense to open a company in Hungary because of:

  • the country’s membership in the EU;
  • affordable office space;
  • perks for SMBs;
  • little red tape.

Business Organization Forms

Those seeking to register a Hungarian company or open an account with a European bank can take advantage of the following business organization forms:

  • LLC (Kft);
  • PLLC (zRt);
  • PLC (nyRt);
  • LLP (Bt);
  • Representative office (Ki);
  • Subsidiary (Fa).

Please note that the 2 most optimal options for remotely opening a company in Hungary are LLC (Kft) & PLLC (zRt).

Taxation

One of the reasons why foreign entrepreneurs want to establish a company in Hungary in 2021 is the country's investor-friendly taxation. Income tax in Hungary is only nine percent (the lowest in the EU). Hence, opening a company in the EU or Hungary would make much more sense than doing it in an offshore zone.

Foreign companies investing in environmental protection projects, film industry, Internet service provision, food industry & warehousing can also take advantage of a tax relief of up to 80% (for up to 10 years).

Other corporate taxes include:

  • VAT rate - 27%;
  • LBT - from 2%.

There’s no tax on dividends, interest & royalties.

Considering opening a company in Hungary? Need advice on the incorporation of a company in the EU? Why not contact IQ Decision UK?