Company Formation in Hungary

If you’re considering setting up a company in Hungary, stop right here! At TILEA Consulting Ltd., we offer a complete, one-stop solution for company formation in Hungary, including comprehensive and professional tax advisory, accounting, and payroll services. While forming a business is straightforward and something almost anyone can do, the real emphasis should always be on creating the correct tax structure. This is where we come in.

Our expertise goes beyond just helping you register your company. We assist you in navigating the complex landscape of tax regulations, ensuring you maximize your benefits and minimize liabilities. From the first step of choosing the right company structure to setting up a full-fledged business operation in Hungary, we provide guidance every step of the way.

1. The Process of Company Formation in Hungary

So, how does one go about forming a company in Hungary? The procedure is relatively straightforward but involves several crucial steps:

• Choosing the Right Company Type: The first step is deciding what type of company best suits your needs. Hungary offers several options, including sole proprietorships, branch offices, representative offices, limited partnerships, limited liability companies, and joint-stock companies. The choice will depend on your business goals, the level of liability protection you need, and the capital you have to invest.
• Company Name Reservation: Once you’ve chosen the type of company, the next step is to reserve a unique company name. This name must comply with Hungarian regulations and be unique to avoid confusion with existing businesses.
• Drafting the Articles of Association: This is a critical document that outlines the company’s structure, management, and operational rules. It must be prepared in accordance with Hungarian laws and signed by all founders.
• Opening a Bank Account: To establish a company in Hungary, you’ll need a corporate bank account where you will deposit the initial share capital.
• Registering with the Court of Registration: The company must be registered with the Hungarian Court of Registration, which involves submitting various documents, including the Articles of Association, proof of registered office or at least a virtual office, and details of the company’s shareholders and directors.
• Tax Registration: Once registered, the company will need to obtain a tax number from the Hungarian Tax Authority. We handle all aspects of this process, ensuring compliance with all local laws and regulations.
• Social Security Registration: Finally, the company must register for social security, which covers health and social insurance for its employees.

2. Understanding Company Types in Hungary

Sole Proprietorship

This is the simplest form of business entity and is ideal for those starting small. A sole proprietorship is established by a single individual who owns and controls the business. It’s relatively easy to set up, but the owner is personally liable for all debts and obligations.

Branch Office

A branch office is not a separate legal entity but an extension of a foreign company. It can engage in business activities, but the parent company is liable for its debts. This is an excellent option for foreign companies that want to test the waters in the Hungarian market without committing to full-scale incorporation.

Representative Office

Unlike a branch, a representative office cannot engage in commercial activities; it can only conduct market research, promote the parent company’s business, and act as a liaison. It’s ideal for companies looking to establish a presence in Hungary without engaging in direct sales or commercial operations.

Limited Partnership (Betéti Társaság, BT)

A limited partnership consists of at least one general partner with unlimited liability and one or more limited partners whose liability is limited to their capital contribution. This structure suits those who want to combine capital investment with personal management.

Limited Liability Company (Korlátolt Felelősségű Társaság, KFT)

A limited liability company is the most popular choice for small to medium-sized enterprises. The owners’ liability is limited to their capital contributions, making it a safer option. The minimum required share capital is relatively low, making it accessible to most entrepreneurs.

Joint-Stock Company (Részvénytársaság, RT)

A joint-stock company is suitable for larger businesses and can be either private (ZRT) or public (NYRT). This structure is ideal for companies looking to raise capital through the sale of shares. It requires a higher initial share capital but provides more flexibility in terms of ownership and financing.

Pro Tip: Start with VAT Registration if You Are a Product Distributor!

If you plan to distribute products in Hungary, starting with VAT registration might be enough to get your business off the ground. We can assist you with this process, providing professional support to ensure compliance and smooth operation from day one.

3. Employer of Record (EOR) Services: An Alternative to Traditional Company Formation

If you want to enter the Hungarian market without setting up a formal entity, consider our Employer of Record (EOR) services. With EOR, we handle all local employment regulations, payroll, taxes, and compliance, allowing you to focus on your core business activities. This is an ideal solution for companies looking to test the market, expand their team, or operate without the complexities of establishing a local entity.

4. Why Choose TILEA Consulting Ltd. for Your Company Formation Needs in Hungary?

• Comprehensive Services: We offer everything you need for company formation in Hungary, from initial registration to ongoing accounting and payroll services.
• Expert Tax Advisory: Our team of professional tax advisors will help you structure your business in the most tax-efficient manner, ensuring compliance while minimizing your tax burden.
• Customized Solutions: Every business is unique, and so are our solutions. We tailor our services to meet your specific needs, whether you’re a startup, SME, or multinational corporation.
• Local Expertise: With deep knowledge of the Hungarian market and regulatory environment, we provide the insights and guidance you need to succeed.
• Peace of Mind: Knowing that all legal, tax, and compliance matters are handled professionally gives you the peace of mind to focus on growing your business.