Hungary: Company Registration. KFT
Company registration in Hungary:
Hungary: Company Registration

Company registration in Hungary: limited liability company (KFT)

We offer company registration in Hungary, a country with one of the lowest corporate tax rates in Europe. The most attractive form of business in Hungary is a limited liability company (KFT). Company registration procedure, corporate structure, taxes and accounting, collection of necessary documents and annual administration.

Major advantages of doing business in Hungary:

  • Positive image of a European jurisdiction;
  • Not on any offshore blacklists;
  • Stable banking system;
  • Ability to work with US dollars;
  • Quick company registration;
  • Ability to open a local bank account quickly – from 1 day;
  • Quick and affordable creation of substance in the country of registration;
  • 9% corporate tax (maximum tax burden for a company, including municipal tax, is up to 11%);
  • 0% dividend tax and capital gains tax;
  • EU VAT number upon registration;
  • Large network of double tax treaties;
  • Ability to obtain a residence permit within the Schengen zone (detailed information is available upon request).

Time frame for setting up business in Hungary:

  • Company registration within 2 weeks;
  • Local bank account opening from 1 day.

 Company registration:

1.You need to decide on: 
  • Company name to be checked for its availability (at least two names), such name:
  • must not be identical or similar to the name of an existing company; 
  • must end with a suffix denoting the type of entity: for a private limited liability company it is KFT (Korlatolt Felelossegu Tarsasag); 
  • may contain Latin letters; 
  • must not contain such words as: ‘Hungarian’, ‘Budapest’ ‘national’, ‘state’, etc. 
  • Company structure (directors, members); 
  • Share capital and distribution of participations between the members (min. HUF 3 000 000 = appr. EUR 10 000); 
  • Activity and geography of business.
2.Payment of fees. At this stage, not only do you need to pay the fees of the registering person (lawyer handling the company registration), but also leave a deposit to cover other expenses, such as notary fees, registration fees, etc.


3.You need to provide documents for directors / members / attorneys (either originals or notarized copies):
- internal and international passports;
- proof of address (unless the internal passport contains an address stamp).

4.Preparing a package of documents for company incorporation, having the documents signed by directors and members:
  1. Power of attorney in the name of GSL’s Attorney for company registration and bank account opening in Hungary (certified by Hungarian Consulate or notarized, apostilled and accompanied by notarized translation into the Hungarian language); 
  2. Articles of Association of the company (signed by members / shareholders); 
  3. Documents signed by the director / attorney:
  • list of members;
  • specimen signature card;
  • confirmation of receipt of funds paid as share capital;
  • agreement to provide the registered office address;
  • letter of consent from a local representative to receive correspondence (for non-resident members and directors);
  • letter of consent from GSL’s Attorney.
      4. Due Diligence documents: administration contract, questionnaire, AML declaration.
Signatures on the documents must be certified by notary and documents must then be apostilled. Originals will be sent to Hungary for company registration. Any documents made not in the Hungarian language must have notarized translation into Hungarian (apostille stamp to be translated too). To reduce costs, the director can personally visit Hungary in order to sign necessary papers and open a bank account. In such case, no notarization or apostille is required. Another option to reduce costs may be making an agreement with a local director.
The fees for translation, notarization, legalization and apostille are charged additionally.

5. Filing the company registration application with the Registry (Company`s Court). After receiving and processing the application, the Registry issues a registration decision with the company name, address, temporary tax, statistics and registration number (an equivalent of Certificate of Incorporation).


6. Registering the company with the tax authority. The tax office checks whether an application for company registration has been filed with the Registry and whether there are any objections to allocating a tax number.
 
Alongside the company registration, the Registry registers the company online with the Tax Authority for VAT and corporate tax and with the Statistical Office.

7. Registering the company with the Social Security Administration (within 7 days of making the first employment agreement). This service is not mandatory, but can be performed by us additionally if agreed.

 
8. Opening a Hungarian bank account within 15 days of official registration of the company. A Hungarian company must have at least one Hungarian bank account.  One must specify where the money will be coming from (individual / legal entity, bank); give full information about the origin of funds; provide business description and geography of business and major contracts explaining the incoming funds.
The overall time to register a Hungarian company is 2 weeks, on average.
Upon registration, the Company`s Court provides an electronic company file which includes:
  • Company registration decision;
  • Articles of Association (Corporate Contract);
  • List of members;
  • Specimen signature card;
  • Confirmation of receipt of funds paid as share capital;
  • Agreement to provide the registered office address;
  • Letter of consent from a local representative to receive correspondence (for non-resident members and directors);
  • Letter of consent from GSL’s Attorney.
Where necessary, we can prepare an apostilled set of documents translated into English (from three business days). No apostille, notarization or any other certification is required to open a local bank account. 

STRUCTURE

Directors

Director can be either an individual or a legal entity; the minimum number of directors is 1. There are no statutory requirements as to the residency of a director, but it is recommended to appoint a local one. Details of directors are available on public file. 

Members

The minimum number of members / shareholders in a company is 1; they can be individuals or legal entities; there are no statutory requirements as to their residency.

Share capital

The minimum share capital of HUF 3 000 000 (appr. EUR 10 000) must be paid up before submitting the documents for company registration. The general practice is to make cash payment to the director of a company who signs the relevant written confirmation. In the company’s accounting records this transaction is recorded as depositing cash. The money can later be deposited in the company’s bank account.  
 
The founders may adopt a resolution that each member can make 50% of his money contribution before registering the company. Until the share capital is paid up, a company cannot distribute dividends, and a member whose share is not fully paid up cannot dispose of it. The paid-up share capital can be used for the needs of a company, the funds are not blocked in the account.

Registered office

Every Hungarian company must have a registered office with a company name plate, where it must keep its register of members, minutes of meetings, financial statements and other documents. 

Bank account

A company must have at least one Hungarian bank account. There are no restrictions as to the number or location of other bank accounts, however some transactions must be made through the main account at a Hungarian bank (for example, payment of taxes and government fees).
Information about the bank account is publicly available at the Registry, the bank itself sends this information to the tax office. 

Taxation, accounting and financial reporting

A Hungarian company must keep accounting records. Financial reports are signed by the director and accountant and are annually submitted to the tax authority. An audit of a Hungarian company is necessary if either of the following two conditions is met:
  • annual turnover exceeds HUF 300 000 000 (appr. EUR 970 000); or
  • number of employees exceeds 50 people per year.
 
Invoices
Invoices issued by the company are subject to additional regulation. They must be signed by the director or another company officer. Invoices can be issued electronically using programmes approved by Hungarian tax authorities.  
Invoices containing VAT in excess of HUF 100 000 (appr. EUR 320) are submitted to tax authorities.
We recommend to provide supporting documents for preparation of financial statements on a monthly basis.

Corporate tax
Hungary has the lowest corporate tax rate in the EU – 9 %. This is a universal rate, irrespective of the amount of profit.
Upon company registration, the director makes a projection of the expected profit, based on which the quarterly advance payments of corporate tax are made. If no relevant payments are made, a company will pay a fine, as a result of which the corporate tax will be 10% instead of 9%.
 
Municipal tax
Hungary has a municipal tax ranging from 0% to 2% of the profit, depending on the place of business of a company. In Budapest and major cities, the tax is 2%. It is payable annually.
 
VAT
Hungarian companies are registered for VAT by default during the incorporation process, which is a major advantage of the jurisdiction. In most European countries, obtaining a VAT number is quite a lengthy procedure that requires fulfilling a number of conditions, whereas Hungary has no special conditions for obtaining it.
To assess the company’s tax burden, we recommend seeking tax advice (which can be arranged upon request).

Fees1

Services Fees (EUR)
 
Total cost of company incorporation with one shareholder and standard Articles of Association (including registered office for the first year without postal service, preparation and provision of the company’s original constitutive documents and common seal)
 
4 250
Payment of share capital:
- if 50% of share capital is paid; OR
- if 100% of share capital is paid
 
5 000
10 000
Local bank account opening 1650
Provision of registered office address (without postal service2), starting from the second year 2200
Provision of registered office address (with postal service) 3300
Office rent: arranging the rent, selecting the premises, preparing a rent agreement 1500
+ monthly rent (depending on the size and location of office)
Local director services:
Option 1
•          Signing documents (when necessary)
•          Making payments in internet banking (up to 10 payments per year) 
Option 2
•          Signing documents (when necessary)
•          Making payments in internet banking (up to 10 payments per month)
Option 3
•          Signing documents (when necessary)
•          Availability on the phone 8 hours a day. Availability in the office upon request
•          Sending correspondence to related parties:
- forwarding emails (up to 10-20 emails per month)
- forwarding mail at the designated address (when necessary)
- forwarding fax messages (when necessary).
•          Issuing invoices to counteragents (up to 5 invoices per month)
•          Making payments in internet banking (up to 15 payments per month):
- administrative expenses
- household expenses
- other payments.
•          Keeping documents in the office (invoices, contracts, bank statements etc. both electronically and physically) and, possibly, cooperating with auditors during the preparation of annual accounts.
Readiness to attend negotiations with counteragents (not included in the fee).
 
If a unique (without other appointments) director is required, this can be arranged under Option 3.
 
 
5000
 



9000


 
  
12000 – 16000
(depending on the qualification of director and number of appointments)
Preparing and submitting financial statements 100 – 400 / hour
(depending on time spent)
Compliance fee
 
Payable in the cases of:
-           renewal of a company,
-           liquidation of a company,
-           transfer out of a company,
-           issue of a power of attorney to a new attorney,
-           change of director\shareholder\beneficial owner, except the change to a nominee director\shareholder)

 
250  (standard rate – includes the check of 1 individual)


+ 50 for each additional individual (director, shareholder, or beneficial owner) or legal entity (director or shareholder) if such legal entity is administered by GSL
+ 100 for each additional legal entity (director or shareholder) if such legal entity is not administered by GSL


350  (check for High Risk companies, including the check of 1 individual)
TOTAL: from 10900
1 Fees are valid as of January 2020
2 Postal service: receiving and sending correspondence. Cost of shipments is charged additionally.

Comments

Ask it in the comments or get a free consultation.

  • userpic round-small-mask

    08.07.2020 Valentina

    Dear Sir or Madam
    My name is Valentina, I am a lawyer at Legal Company “In Law We Trust”. With this letter we hereby wish to submit a request for rent the office with the purpose of receiving incoming correspondence.
    Our client is in process of incorporation in Hungary and is considering the possibility of receiving incoming correspondence. Our client needs a registration address. 
    For our successful cooperation, could you specify the following information as well:
    – What is the price of registration address and services of receiving incoming correspondence for your address?
    – Do you provide services for scanning incoming correspondence and sending it to our client?
    – What are the significant conditions for our client in this service?
    – Could you provide the Rental Agreement for this service?
    – Is it possible to register an address in other cities (not including Budapest)

    Kind regards
    Valentina Shokruta
    International lawyer at In Law We Trust
    https://inlaw-wetrust.com

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