Hungary Subsidiary Entity Set Up

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Hungary Entity Set Up

In Hungary, foreign subsidiary entities hold the same company standing as any other conventional company in the country and are treated as equals with domestic businesses. They enjoy independence from their parent company and are subject to all national laws of Hungary.

The registration process comes with some variation (depending on the company type), but it is generally straightforward and can be done with little difficulty. Once that is done, however, setting up a subsidiary in Hungary involves a heavy workload.

How to set up a Hungarian Subsidiary

  • Decide on the best company type that suits the nature of your business and expansion plans. Common company types in Hungary include: The Limited Liability Company (KFT), The Joint Stock Company (JSC), a branch office, a representative office, a trust, or a foundation.
  • Obtain a business address in Hungary and prepare the property documents for registration.
  • Acquiring legal representation from a legal professional in Hungary and/or acquire the services of a domestic law firm.
  • Register for a commercial license with the Hungarian Ministry of Economy.
  • Prepare the appropriate registration documents and have them translated to Hungarian or English (depending on the document types).
  • Open a local bank account in Hungary and deposit the appropriate share capital.
  • Notarize and legalize the registration documents at a notary’s office.
  • Register your company at the Company Registry.
  • Register for a VAT Number and a Tax Identification Number with the regional and national tax authorities.
  • Register in the municipality with the Court of Registration.
  • Register the company’s address with the Chamber of Commerce and Industry.
  • Register for a social security number with the National Office for Health Insurance.
  • Receive a Tax Identification Number, a certificate of registration and a unique registration number.

Benefits of setting up a Subsidiary in Hungary

Hungary is a compelling destination in the Baltics for subsidiary establishment and growing a business’ influence. There are also other significant benefits to establishing an entity in Hungary:

  • Subsidiaries in Hungary are taxed the same as any other resident company.
  • Subsidiary entities in Hungary also benefit from double tax treaties, in which there are significant reductions in tax payments on dividends, interests or royalties paid to the foreign country.
  • Hungary has the highest adult literacy rate of the region with, according to the UNESCO Education and Literacy Report (2020).
  • Hungary boasts strong industrial sectors, with specialties in automation, electronics, and pharmaceutical and medical technology.
  • Hungary benefits from the lowest tax rate in Europe, and no withholding taxes.
  • Hungary also benefits from low administration and labor costs.
  • Hungary also boasts a highly educated workforce, with a particular emphasis on engineering, medicine, and economics.
  • Hungary’s well-established infrastructure gives entities high-quality logistics options to access markets easily and affordably to the rest of Europe.