By Kooshila Takoordyal, 17.10.18
Hungary continues to be a leading nation in Central and Eastern Europe when it comes to attracting foreign direct investment. Major industries include food processing, pharmaceuticals, motor vehicles, machinery, electrical goods, information technology, and tourism. Internationals are attracted to Hungary because it has one of the corporation tax rates in Europe, only 9%. Forming a Hungary Limited Liability Company (LLC) is the most popular formation type for foreign investors. Another benefit of forming a Hungary Limited Liability Company (LLC) is that foreigners can own 100% of the shares.
Hungary Limited Liability Company (Kft.)
Under Hungarian Company Law, Act 4 of 2006, a Limited Liability Companies name must end with the abbreviation Kft. (Korlátolt Felelõsségû Társaság) which translates to limited liability corporation. This is the most popular company type for the sale of goods or services for both private and commercial ventures.
A Kft. is a company limited by quotas (business shares) which is similar to a German GmbH or an English LTD (Private Limited Company). Kft companies are required to have one member and one manager but this can be the same person or legal entity from any country. Single member companies have increased regulations and liability. A single owner would have limited liability, but this could be forfeit if that owner was found to be responsible for adverse effects to the company.
The main benefits of forming a Hungary Limited Liability Company, Kft:
- Low Corporate Tax Rate: Hungary’s 9% corporation tax is one of the lowest in Europe. However, taxpayers residing in countries which tax global income may be required to report their income to the local tax authority.
- Foreign Ownership: Non-residents can own 100% of the shares in a Hungary Kft.
- EU Member State: Hungary has been a European Union member since 2004.
- Single Member Company: One member and one manager are required but this can be the same person or legal entity from any foreign country.
- Low Share Capital: Share capital is not required to be deposited upon incorporation
- Quick Company Registration: Euro Company formations can file your company documents with the Court of Registration (the Hungary company register) in just 5 working days.
Company shareholders are known as members or quota holders because they own a “quota” of the company’s total shares. Hungarian limited liability companies can have one or more members including both foreign nationals and foreign legal entities. These companies will have a Deed of Association which should layout all the rights and privileges of the members including their voting rights. Under Hungarian Company Law, Act 4 of 2006, all capital contributions must be paid in full before profits can be distributed to members. Members are liable only to the amount of their capital contributions (quotas), they are not personally liable for the company’s liabilities and debts in the event of business closure.
Minimum Share Capital
The minimum share capital of Hungary Kft. is 3 million Hungarian Forints (approximately €10,000). The share capital is not required to be paid in full at the time of incorporation, but all contributions must be paid in full within two years of the company registration. Member’s contributions cannot be less than one hundred thousand forints (approximately €300). The Deed of Association will specify the due date and acceptable method of payment for any unpaid shares.
Hungary is a former region of the Soviet Republic which gained independence in 1989 and joined the European Union (EU) in 2004. The political system is a constitutional republic of elected officials including a President, Prime Minister, and a National Assembly.
Budapest is the capital and also the largest city in Hungary. It is a significant economic hub, which has been classified as a leading global city
According to the Economic Complexity Index, Hungary it is the 15th most complex economy in the world. It is comprised of widespread trade with a large range of resources, materials, and skills. Hungary’s high human development index and skilled labour force have afforded it with the 16th lowest income inequality in the world. With a heavy emphasis on foreign trade and an export-oriented economy, it outputs more than $100 billion each year, making Hungary is 36th largest exporter in the world.
Readymade/ Shelf Companies Available
Euro Company Formations have several Readymade Hungary limited companies that have never traded, these are ideal for faster registration.
Premium Readymade Company package includes:
- Hungarian Readymade Company (fully registered and ready to use)
- A Corporate Bank Account with K&H Bank (the largest and most reputable bank in Hungary)
- VAT Number
- Registered Office Address
Company Formation Services in Hungary
Euro Company Formations can assist you to register your Hungary Limited Liability Company in the shortest possible time frame. Take advantage of simple and fast company registration process for foreign owners, and one of the lowest corporate tax rates in Europe. Contact us today to learn more!