How to set up a business in Hungary

Legal background:
The primary act of law in Hungarian company law is Act 4 of 2006 on Business Associations
(Companies Act). The main types of business associations under the Companies Act are
identical to those in EU countries.
The Company Act determines six different corporate forms:
1. unlimited partnership (Kkt.)
2. limited partnership (Bt.)
3. limited liability company (Kft.)
4. company limited by shares (Rt.) which may be privately founded (Zrt.) or publicly
founded (Nyrt.)
5. association (egyesls)
Types of businesses:
Sole trader business
A sole trader may set up a sole trader business, which is a taxpayer without legal personality
but they have legal capacity, and may acquire rights and undertake obligations such as
agreements, properties, etc. A sole trader company may only have one member, and a natural
person may only be a member of one sole trader company.
One person sets up and runs the company. The person provides all the capital and has hs own
responsibility for business matters including debts as well.
Companies
Forms:
without legal personality:
-

General partnership (Kkt). The members undertake the obligation to participate in

joint business activities with unlimited,joint responsiblity.
Limited partnership (Bt).Not every member has to assume unlimited responsibility,
buti t must have at least one member (full partner) and at least one other member
(associate member) who only has to provide the financial deposit.

with legal personality:

-

Limited liability company (kft).A company that is made up of share capital

comprising primary stakes of a pre-defined amount, and for which a member's liability
extends to providing his primary stake and any other material contributions defined in
the articles of association.

Joint stock company (rt).A capital investment company, and may be private (zrt.) or
public (nyrt.) in form. A joint stock company is public if all or part of its shares are
traded publicly, and it is private if its shares are not traded publicly.

The process of setting up a business:

Step 1.
Preparation of corporate documents by a Hungarian attrney-at-law
Founders of the company must sign teh companys constituitive documnet, together with
some other documents must be countersigned by a Hungarian attorney.
The following details should be provided during registration:

A commercial license

Documents of incorporation

Business name of the company and the address of its registered offices or of its owners

Documents of incorporation

Business name of the company and the address of its registered offices or of its owners

Location of the company's activities

Type of activities

Form of incorporation

Approval for foreign workers

Time to complete: minimum one day

Costs: Attorney fees range widely

Step 2
Open a bank account
Time to complete: one day
Costs: depending on the bank

Step 3
Registering the company at the Hungarian Court of Registry and obtaining a tax
identification number.

It must be submitted electronically via a legal reperpestive.The court records documents

relating to the company and provides an electronic certificate of registration as well as
confirmation of an changes made.
Time to complete: Usually 15 working days. Can be more time-consuming.
Costs: Depending on the type of the company ( HUF 50,000- HUF 600,000)

Step 4
Registration with the Hungarian tax authority and other bodies:
- The Central Office of Statistics (KSH)
- National Income Tax Authority (APEH)
-Regional Income Tax Authority
- The (Regional) Court of Registration
-The Institute of National Insurance
Time to complete: one day
Costs: free of charge

Step 5
Data provision on employees to the tax authority
Once they have registered at the Client Gateway,employers are obliged to submit
electronically on the Goverment Portal the data stipulated by law relating to their employees,
on the form drawn up for this purpose, for the competent State tax authority of first instance,
by no later than the first day of the legal insurance relaionship prior to commencement pf
emloyment.
Entrepreneurship in Hungary
Hungary has a very low entrepreneurial activity in comparison to other EU countries. Most
Hungarians prefer being an employee to being self-employed. Self-employed Hungarians tend
to choose this option for economic reasons rather than for the freedom and independence it
entails.
Hungary Income Taxes and Tax Laws
Hungary operates a sliding scale taxation system (the higher the income, the higher the rate of
tax payable). In 2009 the tax rates in Hungary for an individual ranged from 18% to 36%.
There are reduced tax rates for certain income earners.

Corporate tax in Hungary in 2009 was fixed at 16%. There is an additional 4% solidarity tax.
Corporate tax for incomes up to HUF 50 million is 10%. The tax year in Hungary is the
calendar year.
Organizations helping young entreprenuers
FIVOSZ - Young Entrepreneurs Association Hungary

FIVOSZ is the largest nation-wide organization which brings together the Hungarian young
entrepreneurs and business-minded young people into a community of success. FIVOSZ
works for supporting the creation of the next Hungarian business generation, representing
them in Hungarian and International forums and building bridge between the entrepreneurs of
today and tomorrow. FIVOSZ reaches directly more than 20,000 people from starting SMEs
to big profit oriented companies with millions of dollars in yearly revenue. The biggest yearly
event of FIVOSZ is the Global Entrepreneurship Week Hungary which is organized under the
scheme of the international GEW initiative, together with 152 other countries of the world.
Junior Achievement Hungary:

A Junior Achievement Magyarorszg is the member of Junior Achievement Worldwide which

operates in 124 countries training 9,7 millon youngsters a year.