Let’s clarify right away: Hungary is not an offshore zone as such. It is a low-tax jurisdiction because its legislation provides for a favorable tax regime. Therefore, many non-residents are attracted to registering a company in this country’s offshore zone.

Below, we will discuss why Hungary is an excellent choice for opening a company, how the registration process works, and whether there are any pitfalls to avoid.

Contents:

1. Hungary’s tax regime for non-residents
2. Forms, share capital, and the nuances of company registration in Hungary
3. Reporting, auditing, and registration timelines
4. Why Hungary?

Hungary’s Tax Regime for Non-Residents

Hungary has a two-tiered progressive taxation system. It was introduced back in 2010, and at that time, Hungary effectively matched the status of offshore zones.

The activities of companies are regulated by the “Corporate Taxation and Dividend Taxation” law.

See also: Company in Singapore, Hong Kong, the UK, or Switzerland: ready-made companies in offshore and onshore, registration, and account

We are specifically interested in corporate tax, as the system for individual entrepreneurs is entirely different. According to the legislation, you have to pay:

• 10% if the profit is up to 500 million forints inclusive (approximately 2.3 million dollars);
• 19% for profits exceeding 500 million forints;
• 27% VAT. There is a list of goods and services for which this tax ranges from 5% to 18%.

Dividend tax for non-residents is 0%. However, to receive such benefits, certain business conditions must be met.

One of the main advantages of opening an offshore in Hungary is the existence of more than 70 treaties with other countries to avoid double taxation. You are also provided with a high level of confidentiality at the legislative level.

Information about beneficiaries can only be disclosed after a local court order is presented and exclusively in criminal cases (mainly related to money laundering). Hungary actively cooperates with the European Union to prevent tax evasion and corruption.

Forms, Share Capital, and the Nuances of Company Registration in Hungary

In Hungary, companies of various legal forms can be registered. The most common is the “limited liability company,” which allows clear specification of all payments to the treasury and lower taxes on profits. If the number of founders is no more than two, this legal form is ideal for company registration in Hungary.

You may be interested in: Buying a ready-made or starting a business: Germany and Austria

You can create:

• Korlatolt Felelossegu Tarsasag (Kft). This is a limited liability company;
• Betiti tarsasag (Bt). Translated as a limited partnership;
• Zártközűen Működő Részvény Társaság (Zrt). Equivalent to a closed joint-stock company;
• Kozkereseti tarsasag (Kkt). This is a general partnership;
• Nyilvánosan Működő Részvény Társaság (Nyrt). This is a public joint-stock company.

The share capital of a company established in Hungary must be no less than 10,000 euros (converted into local currency — 3,000,000 forints). At the time of registration, you must have at least half or more of the total amount in your account. You have a calendar year to deposit the remaining balance.

However, if a limited liability company has only one founder, 100% of the share capital is registered immediately.

There are hardly any nuances in the registration process in Hungary. Note that when choosing a company name, you cannot use existing names or similar ones. It is also prohibited to use adjectives like “state,” “Hungarian,” city names (e.g., Budapest).

Offensive or similar names are strictly prohibited. The legal form abbreviation (like Kft) is used at the end of the company name.

Reporting, Auditing, and Registration Timelines

Even if a company is registered by a non-resident, it is necessary to report annually to the Hungarian tax authorities. Therefore, state institutions strongly recommend maintaining thorough accounting records and periodically conducting a full audit to avoid any issues.

An audit is required when the expected annual profit exceeds 1,000,000 dollars or if the company has more than 59 official employees. A bank account is opened exclusively in a local financial institution.

Read more: Company registration in Hong Kong: a comprehensive guide

Registration takes place within a calendar month after all documents are submitted. The registration court grants permission to establish the company. However, you can start operating immediately after submitting the documents, without waiting for the court’s decision.

Why Hungary?

There are quite a few offshore zones in the world. And most of them have a zero tax rate. But only Hungary simultaneously offers non-residents several advantages:

• Excellent business reputation;
• Stable economic situation;
• Favorable investment climate;
• Absence from blacklists;
• Double taxation agreements to suit all needs;
• Developed infrastructure;
• Convenient banking system;
• Respectable jurisdiction;
• The ability to obtain a European VAT number.

COMPANY INVESTMAKLER will help you open a company in an offshore zone in Hungary in just a few days.

To obtain a ready-made business, you need to provide:

1. Passport.
2. Proof of residence (required if the passport does not indicate the place of registration).
3. International passport with the surname and first name written in Latin characters.
4. Information about the company’s activities, with an approved charter and capital.

We check the company’s name in the Hungarian register and prepare the entire package of documents for registration. All you have to do is sign and choose a bank to open accounts.

Company registration in offshore is quite a common practice. And if you choose Hungary, you probably won’t go wrong. Contact our managers for further consultation today.