International Tax, Accounting and Law Firm in Hungary

Company incorporation in Hungary

Company foundation in Hungary


Helping you to expand your business to Hungary is one of our core activities that we are passionate about.  We will start by mapping up your business needs, focusing on the fulfilment of your goals. Then, we will register your new company and continue by providing professional support for the business.

In the following compact overview we provide up-to-date information on the most important aspects of setting up a business in Hungary. We describe the incorporation process and answer the most frequently asked questions when registering a company.

The Limited Company (Kft) and other legal forms

The most popular company form in Hungary for EU and UK investors is the Limited Company (Hungarian: Kft). A limited liability company can also be established as a one-man company. Another company type with limited liability is the Company Limited by Shares (Rt.), which is more suitable for predominantly large businesses listed on the stock exchange. It is also possible to set up a GmbH & Co. KG, which can offer tax advantages in specific cases.

The minimum initial capital of a limited liability company is 3,000,000 HUF (approx. 8,000 euros). The partners have limited liability for the company's obligations.

Incorporation of a Ltd (Kft)

The articles of association or the incorporation certificate of the Ltd (Kft) is to be drawn up by a lawyer licensed in Hungary and submitted to the registry court. The court has to decide on the registration of the company within 15 days. If the registration court requires an amendment to the articles of association or the submission of additional documents prior to the registration of the company, this period can be slightly extended.

A company can also be founded in the absence of the members or shareholders. Thanks to the new possibility of remote identification of the founding parties, e.g. via Skype, the founding parties no longer have to travel to Hungary to set up the company. This also eliminates the need for notarial or consular certification and apostille, which was common in the past. The founding of the company, including the necessary consultations, as well as the preparation of the paperwork (two column articles in English and Hungarian ) take place exclusively via digital communication channels.

Nevertheless, a director has to visit a Hungarian bank in person to open a bank account no later than 15 days after the company registration. Both Hungarian nationals and foreigners can be elected as managing directors; a special relationship with the company, such as a shareholder status or  an employment relationship, is not required.

A newly incorporated company must also be registered with the State Tax Agency and the Central Bureau of Statistics. Branch offices and commercial agencies must also be registered by the registry court and may only start their activities after registration. If the company intends to maintain relationships with business partners in EU member states, an EU tax number is to be applied for.

The supreme body of a Kft is the members' meeting, which must be convened at least once a year. The members' meeting decides on the most important strategic issues, elects the managing director(s), the auditor and the members of the supervisory board. The shareholders' meeting passes its resolutions generally with a simple majority of the votes cast.

Corporate income tax, depreciation, salary costs

Corporate income tax (profit tax) is 9% of net profit. For corporate tax purposes, the following depreciation rates are applied:

  • Buildings in general: 2%.
  • Machinery and equipment: 14.5% or 33%. Computers and similar equipment can be written off by 50% within two years.
  • Motor vehicles: 20%
  • Land is not subject to depreciation.
  • Rented or leased tangible assets: buildings 5% other assets 30%.

If you would like to have an overview of the expected wage costs for your new company in Hungary, you can easily make an estimate by using our salary calculator.

Accounting and bookkeeping

Accounting and bookkeeping are regulated by the  Hungarian Accounting Act (Hungarian GAAP). Hungarian accounting regulations are harmonized with Directives 4 and 7 of the European Union and International Financial Reporting Standards (IFRS).

The bookkeeping and the annual financial statements are to be drawn up in HUF according to the principle of double-entry bookkeeping. Bookkeeping and accounting on a euro basis is also possible, and there is a great deal of flexibility in choosing a financial year that differs from the calendar year.

Structure of the chart of accounts: Account classes 1-4 contain balance sheet accounts, classes 1-3 are asset accounts and class 4 contains liability accounts. Account classes 5 and 8-9 contain the data for profit and loss statement. An accounting policy framework must be set out in writing within 90 days of the incorporation of the company.

The annual financial statements, which are prepared at the end of the financial year, contain a true and fair view of the company's financial situation and the profit or loss situation. It must be published by May 31 of the following year if the balance sheet date is December 31.

Accounting and annual audit

According to the Hungarian Accounting Act, all companies are obliged to have their financial statements audited if their average net sales exceed HUF 300 million (approx. EUR 800,000) for two consecutive years and the average number of employees exceeds 50 . An annual audit is also required for consolidated companies.

Acquisition of a property

A commercial property in Hungary can be purchased both by private individuals and by companies, such as a Kft. No real estate acquisition permit is required for companies or private individuals from the European Union. There is also no permit requirement for Swiss private individuals (natural persons). On the other hand, companies from Switzerland and most other countries may only acquire commercial real estate on the basis of a permit. It is to be noted that in practice the maintenance and management of a property (e.g. rental) directly by a foreigner is often associated with administrative difficulties.

In most cases, commercial real estate is acquired through companies registered in Hungary. In this context, various constructions are possible, for example acquisition by a Hungarian Kft or a branch of a foreign company registered in Hungary. Commercial real estate can be held directly via the main business entity, but the construction of a real estate vehicle and an operating company is also possible. Tax considerations can speak in favour of the latter solution, because the  tax depreciation rate of 5% for rentals is more advantageous than the rate of 2% for using a building directly by the main business.

When purchasing a commercial property, a 4% real estate transfer tax is levied in Hungary. Value added tax is 27%, which, unlike real estate purchase tax, is usually refundable.

Transfer Pricing

As in most international tax systems, Hungarian tax law provides that businesses which are related parties must adjust the corporate tax base if they do not use arm's length pricing in their business transactions. Therefore, transfer prices between related parties should correspond to arm's length prices. These processes are to be recorded and analysed in detail in a transfer pricing documentation file that is to be drawn up annually. In the absence of transfer pricing documentation, the tax authority NAV can impose a fine of up to HUF 8 million.

The taxpayer can choose between the comparable uncontrolled price, the resale price and the cost-plus method, as defined by the OECD. If none of the three methods is appropriate, the taxpayer may use another reasonable method. If the actual price does not correspond to the fair market price, the corporate tax base must be adjusted.

A company is considered to be related when a  controlling majority interest in one company is held by another company, or a third party controls both companies. A controlling majority - which may be indirect – is attributed to the party which has over 50% voting rights or the right to appoint or remove the majority of officers and directors.

Data protection, privacy legislation

European data protection law, the GDPR, applies in Hungary. In principle, the express consent of the data subject or a legal basis is required for the processing of personal data.

Consent by the private person is generally necessary for the processing of personal data in a company registered in Hungary, such as in everyday dealings with employees, the use of stamp cards, payroll accounting, accounting, the processing of customer data, the operation of surveillance cameras, entry badges, marketing, website, etc. Violation of the data protection rules can lead to high fines by the data protection authority NAIH.

If you have any further questions, we would be happy to advise you on setting up a company in Hungary. Please do not hesitate to contact us if you intend to incorporate a business with English-language communication and documentation.


We are dedicated to adding value to our clients’ businesses through understanding their objectives and supporting them in achieving their goals. With over 20 years of international experience  and a strong focus on digitalization we provide full scale professional services at a single point of contact.

In our Case Studies we have described some examples of how we work for our clients and what benefits we have achieved for them.

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