How To Set Up A Company In Hungary As An Expat

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How To Set Up A Company In Hungary As An Expat

Are you an expat who wants to do business in Hungary or in the EU? Your best bet is to set up a Hungarian company. By starting an LLC, you also become eligible for residency. Hungarian company setup is fast, simple, and straightforward, and you can start your activity in no time.

Company Types Available in Hungary

In Hungary, company formation is available to natural persons from all nationalities, without restriction. Registration normally takes just a few days, although preparation may take some more time, depending on the company form you choose and your goals in Hungary. The most popular company form among both expats and locals is the KFT, which is a limited liability company. Other options are also available; let’s see a quick overview.

KFT: limited liability company. The starting capital should be at least HUF 3 million (ca. EUR 8,000), but then liability for damages is limited to the capital. You can start a KFT on your own or with a partner.
BT: limited partnership. There is no minimum starting capital, but you need at least one other person, and at least one member must be fully liable for damages.
KKT: general partnership. There is no minimum starting capital, but all members are fully liable for damages.
RT: joint stock company. This company type has a complex organizational structure that is more convenient for big corporations where ownership and management is typically separate.

If you are an expat, company setup in Hungary is easiest and safest through a KFT (or LLC). Liability is limited, and you do not need a partner (not to mention a local partner, which is in some countries a must). With just your passport, you can set up a company and start doing business within a few days.

How to Register an LLC in Hungary

In Hungary, you need a lawyer to register your company. However, instead of finding a lawyer, it makes sense to find an agency that can help you with the entire setup procedure and starting your operation; these often provide ongoing services too.

Company formation includes at least the following:

Company registration at the registration court and paying the registration tax
Chamber of Commerce registration and paying the registration fee (must be renewed yearly)
Registering a local and EU VAT number
Registration for electronic administration
Registering your activities with the Hungarian Central Statistical Office

As you can see, some of these tasks do not necessarily fall within the competence of a lawyer, so unless you are prepared to do all of these on your own, it makes sense to work with an agency specialized in these tasks to save time and effort you could dedicate to developing your business.

What else to consider before you set up your company?

Even though the company setup procedure is quite simple, operating a company involves taking care of complex administrative tasks, which you need to consider besides your actual activity. Most importantly:

Finding a registered address: While you may use your own permanent address in Hungary, it is better to work with an official provider who can receive your mail even when you are not in Hungary.
Finding an accountant: Even if you do not start your activity right away, certain reports must be submitted to the tax authority regularly.
Opening a corporate bank account: You need at least one HUF bank account at a Hungarian bank to pay taxes.

Other things to consider before starting a business in Hungary include taxation, finding a great location for your operation, and hiring employees. The more effort you put in preparation, the less effort you will need to actually start your operation.

Company Setup and Residency

If you are planning to run a Hungarian company as an expat, your business operation might affect your residency status. If you are an EU citizen, there is no change, as you can live and work in Hungary without any limitations anyway. If you are a third-country citizen, however, you might be required to switch to a different kind of residence permit if you already have one – this depends on various factors, including the type of your existing residency and your planned role in your company. Operating a Hungarian company grants your residency based on gainful activity, but if you want to perform work for the company other than managing it, you will need a work permit too.

Residency is available not only to company owners and managers but also to employees, in case you were wondering whether you can recruit from abroad as well as from Hungary. Make sure you learn how to get a work permit in Hungary before you start looking for candidates in either place. The work permit procedure is complex but straightforward, however, it takes time, and you should consider whether your applicant will be worth the wait.

Start a Business as an Expat in Hungary

Setting up a company in Hungary is quick and simple, especially if you choose KFT (LLC), which is the most popular business form. There are a lot of aspects to consider, but if you prepare carefully and find the right partners, you can delegate most of the administrative tasks and focus on developing your business. If you are not yet a Hungarian resident, your business operation will make you eligible for residency too, which give you visa-free access to every member state of the Schengen zone and to 185 countries around the world.

Moving Abroad Checklist

Initial Considerations

Will your partner be travelling with you?

If so, what will they be giving up in your present home and will they be able to continue with their career in your new home? You will need to check whether a separate visa is required for your partner to work or if your visa gives that right. If they are unable to work you will need to decide on the effect on your finances and what alternatives are available to give a fulfilling life (home business, training, voluntary work).

Are you taking family with you?

Moving with family raises many exciting opportunities, but also can create challenges. The HSBC Expat Explorer survey indicates that expat kids can take six months to settle in to their new country (see article). Getting young or even older children to prepare to move and leave their friends and family behind can be a challenge and should be thought through.

The options for education is another area that needs to be thought through.

Moving your child to a new country with a different education system can be a great opportunity to broaden their experience, but if they are close to key exams the timing can make this inadvisable. If you do take your family with you, it is important to decide between joining the local school system or choosing an international school.

Where will you be living?

Whether you will be living in a house or apartment, furnished or unfurnished, these decisions will affect what you need to take with you. The time you are planning to live overseas will also affect whether you should leave your property at home empty, rent it out or sell it. See the article Sell, Store or Ship.