The Hungarian economy is growing year by year. The country’s GDP grows by 5% annually. Hungary is interested in foreign investment, therefore it actively implements market reforms and creates the most favorable conditions for business. Hungary has concluded double taxation treaties with 65 countries.
Popular business areas in Hungary
The mechanical engineering, agriculture, the electronics, and automotive industries, as well as tourism are actively developing In Hungary. Transport companies are especially popular. Mostly the markets of Hungary are aimed at export deliveries to Europe. Prospects for foreigners when opening a business in Hungary by purchasing or registering a company in Hungary, you get the opportunity to legally transfer your capital to European banks and work in the EU market.
Owning a business in Hungary is the basis (not a guarantee!) of obtaining a residence permit in Hungary, as well as a permanent residence and, in the future, citizenship. Since Hungary is a country of the European Union, then you get the opportunities that are provided for all residents of the European Union. Benefits for residents of the European Union Types of companies that are registered in Hungary The Hungarian Companies Law provides several options for company forms:
- Private Limited Liability Company – Kft;
- Open Joint Stock Limited Liability Company – Rt;
- Unlimited Partnership – Kkt;
- Limited Liability Partnership – Bt.
Residence permit in Hungary: open a company
Registration of a company in Hungary entitles its owner to obtain a residence permit, which after 3 years is exchanged for a permanent residence permit in Hungary. According to this parameter, Hungary can be called one of the “fastest” countries in obtaining European residency.
Typically, European countries insist that a resident spend 183 days a year in the country. However, Hungary requires foreigners with a Hungarian residence permit to be absent from the country for no more than 45 days a year (with a good reason, the absence is allowed up to 90 days).
The minimum number of founders is one person, but in this case, the appointment of an auditor is mandatory. When there are two founders an auditor is required. Minimum share capital: 500,000 HUF (~ 2000 EUR);
50% of the authorized capital can be deposited immediately, the rest within one year from the date of registration of the company. Minimum share of one founder: 100,000 HUF (~ 400 EUR). For founders of individuals, the documents required for registration are a passport and the desired name of the company. To establish a company, you must arrive in Hungary for 3-4 days. The cost of legal services for registering a company in Hungary is 3000 EUR, which includes full legal support, filing an application for registration with a registered court, opening a bank account, interpretation at all instances.
For a foreigner to have the right to obtain a residence permit for business reasons, just registering a company is not enough. The law requires the creation of at least three new jobs for residents. Orders for obtaining a residence permit in Hungary for business reasons are discussed individually.
Investing in Hungarian bonds
Another way to get a residence permit in Hungary is to buy government bonds for 250 thousand euros or more. This innovation took effect in November 2012. The conditions for obtaining a residence permit in Hungary are extremely simple, an investor simply needs to invest the required amount in the Hungarian economy, rent, or purchase housing in Hungary. And also to pass the check of the “security services” and prove that he does not pose a threat to the country. Before obtaining the right to permanent residence in the country, the investor must have lived in Hungary for 5 years, after which he can apply for permanent residence.
The main advantage of investing in Hungarian government bonds is the freedom of movement of the applicant.
That is, there is no mandatory condition for immigrant investors to stay in Hungary for 10.5 months a year. Permanent residency in Europe on an investment basis is granted after five years, and not after three, as is possible when registering a company in Hungary and immigration business.
On the other hand, if you do business outside of Hungary, then it is unlikely that you will have the opportunity to permanently reside in Hungary. And, again, given that most European countries grant their permanent residence in at least five years, residence in the country for 183 + 1 days a year is also a prerequisite. Therefore, permanent residence in Hungary in five years with the possibility of free movement around the world sounds very advantageous.
Double citizenship
Dual citizenship is another privilege that this country provides, which ensures you in all directions, both in terms of business development and in terms of “escape routes”.
Taxes in Hungary
Perhaps the most significant drawback of Hungarian companies is their rather high tax rates, even by European standards.
- VAT 27%
- Income tax 15%
- Corporate tax 9%
- Municipal taxes up to 2%
