Setting Up a Business in Hungary | Comprehensive Guide For Entrepreneurs

Setting up a business in Hungary can be life changing for fresh start to wealth.

Hungary offers a strategic location for entrepreneurs looking to establish their business in the European Union.

With its stable economy, skilled workforce, and favorable business environment, Hungary has become an increasingly attractive destination for international investors.

This article will highlight the process of setting up a business there and obtaining Hungary residence permit based on that investment.

Setting Up a Business in Hungary Step-By-Step

Establishing a business in Hungary is a simple process that takes a few straightforward steps. The process takes a few weeks and is very affordable. The procedure is as follows:

1. Choose a Business Structure

Before diving into the dynamic Hungarian market, you must first decide on the appropriate legal structure for your business.

Standard options include a limited liability company (Kft.) or a joint-stock company (Zrt.). Each structure has advantages and disadvantages, so it’s crucial to understand the implications of your choice.

For example, Kfts offer their owners more operational flexibility and limited legal and financial liability. Kfts are an excellent option for smaller businesses and startups.

Zrts, on the other hand, offer better capital-raising potential and have transferable shares. Hence, they are suited to larger corporations with higher monetary needs.

2. Register The Business

Once you’ve determined the business structure, you need to register your company with the Hungarian authorities. This involves submitting the necessary documents, including the company’s articles of association, and obtaining a tax identification number. The registration process typically takes a few weeks.

Registration fees are minimal, and registering a Kft would incur a registration fee of about $180.

3. Open a Business Bank Account

To operate legally in Hungary, you’ll need to open a business bank account. Most banks require proof of company registration and the presence of company representatives during the account opening process.

This is an essential step of the process, not only for registering the company, but it is critical in order to be able to issue a residence permit based on your business activity later on in the process.

It is even advised to inject a sensible amount of capital into the business’ bank account before applying for the residence permit, as it makes the chances of approval much higher.

4. Comply with Tax Regulations

Another important step is issuing a Hungarian business tax number.

Some businesses and practices may have VAT exemptions or reductions, so it is important to understand the type of taxes your company will be liable for and any potential exemptions when registering a tax number.

Business owners can employ the services of tax advisors to handle the registration and compliance practices. Typical tax advisory services for new, small companies in Hungary can range between $150 and $600 monthly.

5. Obtain Necessary Licenses and Permits (if needed)

Depending on the company’s gainful activity, it may need specific licenses or permits to operate legally in Hungary.

This rule applies to licensed professions such as medical, law, or financial practices, but it can also extend to other areas such as agrifoods and manufacturing.

Obtaining the licenses or permits is essential for the business as well as the residency application.

6. Obtaining a Residence Permit in Hungary

Once the business is fully registered, an applicant can apply for a residence permit based on their gainful activity through the company.

Hungary allows business owners to apply for a temporary one or two-year work permit that allows them to live and work in Hungary for the duration of their residence permit, and it can be renewed as long as the business is still active.

Applicants can also add their family members, such as their spouse and children below the age of 18, to their application. 

The process of issuing a residence permit takes between two weeks to three months on average, and although a person can apply before their company registration is complete, the chances of obtaining approval are much higher when the company’s documents are all in order.

The process of obtaining a residence permit in Hungary through establishing a company is straightforward and quick, and it is one of the simplest routes to obtaining a residence permit in the EU, especially with the help of experienced professionals such as Savory & Partners.

Set Up Business in Hungary: Final Thoughts for Investors

Hungary's positioning in the heart of Europe, makes it an ideal base for investors and optimal for manufacturing, services and logistics. Applicants need to make choices that ultimately make sense from an immigration and business standpoint. Don’t forget to read about the most common mistakes investors make in a business migration application.

To learn more about establishing a business in Hungary, contact Savory & Partners today to book a comprehensive consultation with one of our experts.