A Step-by-Step Guide to Establishing a Hungarian Kft and Its Strategic Advantages for International Entrepreneurs

Marketing Mirr Asia
4 days ago
3 min read

In today’s global economy, Hungary has become an attractive hub for international entrepreneurs. Establishing a Hungarian Kft (Korlátolt Felelősségű Társaság) — the local equivalent of a limited liability company — provides access to the EU market, low corporate tax, and a cost-competitive business environment.

Whether you’re setting up your first European base or expanding operations, here’s a complete, updated guide to Hungary company formation.

Why Choose Hungary for Business?

Strategic Location – Hungary sits at the center of Europe, with Budapest offering direct access to Western and Eastern markets.
Official Reference – Hungary Trade & Investment Agency
EU Membership – Hungary’s EU membership provides single-market access and harmonized business regulations.
Official Reference – European Union – Hungary
Favorable Taxation – Hungary has a 9% corporate tax rate (lowest in the EU) and a local business tax (HIPA) of up to 2%, depending on municipality.
Skilled Workforce – A well-educated, multilingual talent pool supports IT, engineering, and finance industries.
Cost Efficiency – Operating and labor costs are significantly lower than in Western Europe.

Hungarian Kft: Key Features

Minimum Share Capital: HUF 3,000,000 (≈ EUR 7,900), payable in cash or in-kind.
Official Reference – Civil Code (Act V of 2013), Section 3:161
Liability: Limited to the amount of capital contributed.
Ownership: 100% foreign ownership allowed; shareholders may be individuals or legal entities.
Management: At least one managing director required.
Taxation: 9% corporate tax + up to 2% local business tax.
VAT: A domestic tax number is issued automatically at registration. An EU VAT number must be requested from the tax authority (NAV), typically at the time of incorporation.
Official Reference – NAV – VAT Registration

Step-by-Step Incorporation Process

Company Name Check: Verify availability on the official registry.
Prepare Incorporation Documents: Includes Articles of Association (in Hungarian), registered office declaration, shareholder/manager IDs, capital statement, and specimen signatures.
Court of Registration Filing: Filed electronically by a Hungarian attorney. The court usually registers within 1 working day under simplified procedure.
Official Reference – Hungarian Courts – Company Registration
Tax Number & EU VAT: Tax ID assigned automatically; EU VAT number issued on request from NAV.
Bank Account Opening: Corporate accounts must be opened within 15 days of receiving the tax number.
Official Reference – Act LXXXV of 2009 on Payment Services
Local Tax & Social Security Registration: Register for local business tax (HIPA) and, if hiring staff, social security.
Official Reference – NAV – Local Taxes
Agent for Service of Process: If shareholders or directors have no Hungarian address, a kézbesítési megbízott (service agent) must be appointed.
Official Reference – Act V of 2006 on Company Registration, §5(8)

Compliance & Ongoing Obligations

Annual Financial Statements: Must be filed and published on the e-Beszámoló portal.
Registered Office: Must maintain a physical registered address in Hungary (seat-service providers permitted under regulation).
Accounting: Double-entry bookkeeping required; outsourcing to local accountants is common.

Advantages of Setting Up a Hungarian Kft

Speed: Court registration in as little as 1 day; practical total process 5–10 business days, including VAT number and bank account.
Cost-Efficiency: Lower office and salary costs than Western Europe.
Holding Benefits: No withholding tax on dividends to companies; participation exemption on qualifying shareholdings.
Official Reference – NAV – Corporate Tax (Dividends & Participation Exemption)
Startup Ecosystem: Budapest is a hub for innovation, co-working, and venture capital.