Company formation in Hungary

Hungary attracts foreign investors with its favourable tax regime and simplified business registration procedure. In this article, lawyers from  Regulated United Europe would like to review the key stages of setting up a company in Hungary, taxation peculiarities and important legal aspects to be paid attention to when doing business.

Step 1: Choosing the legal form

The most popular business forms among foreign investors are the private limited liability company (Kft.) and the joint stock company (Zrt.). Kft. is suitable for small and medium-sized enterprises with a limited minimum authorised capital of 3 million Hungarian forints (about 10 thousand euros), while Zrt. requires an authorised capital of at least 20 million forints (about 65 thousand euros).

Step 2: Company registration

The company registration process begins with the filing of an application with the Court of Registration through a certified Hungarian lawyer. The documents required for registration include the memorandum of association, articles of association, details of directors and shareholders, and proof of payment of the share capital.

Step 3: Tax registration and opening a bank account

After registering your company, you need to register with the tax office and obtain a tax number. This will allow you to open a bank account in a Hungarian bank, which is a prerequisite for doing business.

Taxation

Hungary offers one of the lowest corporate tax rates in Europe at 9%. In addition, it is possible to take advantage of VAT exemptions for certain activities, especially in the area of exports. The standard VAT rate is 27%, but reduced rates may be applied for certain goods and services.

 Open business in Hungary

Hungary has become one of the attractive destinations for foreign investors due to its central European location, flexible economic policy and support for innovation.

Choice of legal form of business

First of all, it is necessary to decide on the form of ownership of the enterprise. For small and medium-sized businesses, the form of a private limited liability company (Kft.) is most often chosen, as it involves minimal risks for the owner and does not require a large authorised capital. For larger projects, a joint-stock company (Zrt. or Nyrt.) is suitable, as it has greater opportunities for attracting investment.

Registration process

Starting a business starts with preparing and submitting the necessary documents for company registration. You will need:

• Articles of Association and Memorandum of Association (can be prepared with the help of a lawyer in Hungary).
• Information on directors and founders.
• Proof of the address of the legal entity in Hungary.
• Payment of the authorised capital (the amount depends on the chosen form of ownership).

Documents are submitted to the Court of Registration through a lawyer. The average time for company registration is 1 to 2 weeks.

Taxation and accounting

The key to doing business in Hungary is to understand the taxation system. Corporate tax is 9%, which is one of the lowest rates in Europe. It is also important to take into account VAT, the standard rate of which is 27%. It is essential to ensure that all transactions are accurately recorded and reported to the tax authorities in a timely manner.

Opening a bank account and financing

Doing business in Hungary requires opening a local bank account. This can be done after registering a company and obtaining a tax number. Foreign investors also have access to various forms of financing, including bank loans and government grants to support innovative and export-oriented projects.

Advantages of opening company in Hungary

Hungary has proven in recent years to be one of the most attractive destinations for international business in Europe. Its stable economy, flexible tax system and strategic geographical location make it an ideal place to start a company.

Geographical location

Hungary is located in the heart of Europe, providing excellent transport links to other European Union countries. This provides companies with easy access to major European markets, simplifying logistics and expanding trade and export opportunities.

Tax benefits

One of the most significant advantages of doing business in Hungary is the low corporate tax rate of only 9%, one of the lowest in Europe. This makes Hungary attractive for business entities seeking to minimise their tax liabilities. In addition, there are various tax incentives for investors, including incentives for research and development projects.

Simplicity of business procedures

Hungary ranks high in world rankings on the ease of doing business. The government is committed to simplifying administrative and legal procedures for starting and running a business. This includes a simplified company registration process and minimal bureaucratic barriers to starting a business.

Strong support for innovation

Hungary actively supports the development of innovation and technology by offering a variety of grants and funding for start-ups and R&D projects. The government has invested heavily in the creation of innovation parks and technology incubators, which creates a favourable environment for technology and scientific enterprises.

Access to qualified personnel

Hungary offers a high level of education, especially in technical and engineering specialities. Many world-renowned universities produce qualified professionals, which is an important resource for any company. The availability of educated and multilingual employees makes the recruitment and training process much easier. 

Forms of business in Hungary

Choosing the right form of business is a critical step when entering the Hungarian market. This choice can have a significant impact on taxation, obligations to public authorities and the degree of legal liability. There are several basic business forms available in Hungary, each with its own characteristics and suitable for different business goals and strategies.

1. Individual entrepreneur (Egyéni vállalkozó)

A sole proprietorship is the simplest and least regulated form of business, ideal for a single owner. This form involves full personal responsibility for the debts and liabilities of the business. Advantages include minimal registration requirements and simplified taxation.

2. Partnership (Betéti társaság, BT)

A partnership is a form of business that involves two or more partners working together. In Hungary, such partnerships can be “simple” (BT), where all participants have unlimited liability for the obligations of the enterprise.

3. Limited Partnership (Közkereseti társaság, KKT)

A limited partnership in Hungary provides for limited partners, who invest capital and have limited liability limited to the amount of their investment, and limited partners, who manage the business and have full liability.

4. Limited Liability Company (Korlátolt felelősségű társaság, Kft.)

This is the most popular form of business among small and medium-sized enterprises. The minimum authorised capital is 3 million Hungarian forints (about 10 thousand euros). The participants are not personally liable for the company’s obligations, which makes this form attractive to many entrepreneurs.

5. Joint Stock Company (Részvénytársaság, Rt.)

A joint stock company can be of the closed (Zrt.) or open (Nyrt.) type. This form is suitable for large operations and companies planning to attract investments through a public offering. The minimum authorised capital for a closed joint stock company is 5 million forints (about 16 thousand euros).

What types of companies exist in Hungary?

Hungary offers many forms of legal entities that can be chosen for doing business. Each type of company has its own characteristics that affect the duties, rights and tax obligations of the founders and managers.

1. individual entrepreneur (Egyéni vállalkozó)

This is the simplest and most inexpensive form of business, ideal for a single owner. Sole proprietors are fully personally responsible for the operation of their business, including all debts and liabilities.

2. partnership (Betéti társaság, BT)

A partnership is a business based on the partnership of two or more persons who together manage the company and share the profits. All partners are jointly and severally liable for the company’s obligations, which implies unlimited personal liability of each partner.

3. Limited Partnership (Közkereseti társaság, KKT)

A limited partnership in Hungary comprises two types of partners: active (limited partners), who manage the business and are fully liable, and passive (limited partners), who contribute capital and whose liability is limited to the amount of their contribution.

4. Limited Liability Company (Korlátolt felelősségű társaság, Kft.)

This is the most popular type of company for small and medium-sized businesses in Hungary. Kft. allows its owners (founders) to limit their liability to the amount of the contributed share capital. This type of company is ideal for entrepreneurs who wish to minimise their personal financial risks.

5. Joint Stock Company (Részvénytársaság, Rt.)

Rt. can be closed (Zrt.) or open (Nyrt.). Closed joint-stock companies are often used for large companies with a limited number of shareholders, while open joint-stock companies can sell shares to the general public. The shareholders of these companies have limited liability equal to the value of their shares. 

What is the amount of the authorised capital of a company in Hungary?

The authorised capital is a fundamental aspect of company formation, which determines the minimum amount of funds that the founders must contribute in order to start a business. In Hungary, the requirements for the authorised capital vary depending on the type of legal entity.

Limited Liability Company (Kft.)

The limited liability company (Kft.) is the most popular form of business in Hungary, especially among small and medium-sized enterprises. The minimum authorised capital for a Kft. is 3 million Hungarian forints (approximately 10 thousand euros). This amount must be paid in at the time of incorporation, which demonstrates the financial strength and seriousness of the founders’ intentions.

Joint Stock Company (Zrt. and Nyrt.)

A joint stock company may be closed (Zrt.) or open (Nyrt.). For a closed joint stock company (Zrt.), the minimum authorised capital is 5 million Hungarian forints (about 16 thousand euros). An open joint stock company (Nyrt.), involving public trading of shares, requires an authorised capital of at least HUF 20 million (approximately EUR 65 thousand). These requirements reflect the increased risks and scale of operations of such companies.

Limited partnership (Kkt.)

In a limited partnership (Kkt.), the requirements for the authorised capital can be flexible and are determined by the terms of the agreement between the partners. However, as a general rule, the minimum capital must be sufficient to cover the initial operating expenses and liabilities of the business.

Partnership (Bt.).

For a partnership (Bt.), the law does not set strict requirements for the minimum authorised capital. However, the partners must contribute sufficient funds to maintain the business and cover any operating expenses in the course of its activities. 

Does a company in Hungary have to have a local director?

One of the important aspects of corporate governance when registering a company in Hungary is the appointment of a director. The question of the need for a local director often arises for foreign investors wishing to set up a business in Hungary.

Legal requirements

There is no strict requirement in Hungarian law that a local director must be appointed for companies incorporated in Hungary. A director can be a person of any nationality and residence. However, it is important to take into account some nuances related to the management and administrative processes of the company.

Practical aspects of having a local director

Although the law does not require the appointment of a local director, in practice having a director resident in Hungary can present a number of advantages:

1. Communication with local authorities and banks. The local director can communicate more effectively with government agencies, tax authorities and financial institutions, which simplifies administrative issues and improves operational efficiency.
2. Understanding of the local market and legislation. A director who is familiar with the Hungarian business climate and legal framework can prevent many legal and strategic mistakes.
3. Representation and legitimacy. Having a local director can increase the trust of partners and customers and improve the company’s image on the Hungarian market.

Alternatives to the appointment of a local director

For companies that prefer not to appoint a local director, the following alternatives are possible:

• Utilising the services of professional directors. Some firms offer the services of temporary or permanent directors who can legally act in this role.
• Management from abroad. Modern technology allows a company to be managed remotely, although this can complicate some processes such as banking or legal affairs.

What are the state fees for establishing a company in Hungary?

Incorporating a company in Hungary involves the payment of government fees, which vary depending on the form of the legal entity and the complexity of the incorporation process. Understanding these fees helps entrepreneurs to plan costs and manage their budget effectively when setting up a business.

Main types of fees

1. Registration of a limited liability company (Kft.)
   • State registration fee: When registering a Kft. a fee of 50,000 Hungarian forints (approximately 150 euros) must be paid. This fee includes the costs of making an entry in the commercial register and publishing company data.
   • Fee for filing documents electronically: If the registration documents are submitted online, there is an additional fee of HUF 5,000 (approx. EUR 15).
2. Registration of a joint stock company (Zrt. or Nyrt.)
   • State registration fee: For a closed joint-stock company (Zrt.) the fee is 100,000 HUF (approximately 300 EUR) and for a public joint-stock company (Nyrt.) the fee is 600,000 HUF (approximately 1,800 EUR). These fees reflect the higher documentation requirements and the complexity of the registration process.
3. Registration of the partnership (Kkt. or Bt.)
   • State registration fee: For a limited partnership (Kkt.) and a partnership with unlimited liability (Bt.), the registration fee is 25,000 HUF (approx. 75 EUR).

Additional fees

• Notarisation costs: Some documents, such as memorandums of association or amendments to the articles of association, must be notarised. The cost of notarisation may vary depending on the complexity of the documents and the amount of work involved.
• Legal Support Fees: While these are not government fees, many companies use law firms to prepare and file documents, which also incurs additional costs.
  

What is the annual cost of maintaining a company in Hungary?

Doing business in Hungary entails not only the initial costs of incorporating a company, but also regular annual costs that need to be considered to keep the company in compliance with local legal and tax requirements.

1. Tax liabilities

• Corporate tax: The corporate tax rate in Hungary is one of the lowest in Europe at 9%. The amount of tax depends on the company’s profits.
• Value Added Tax (VAT): The standard VAT rate in Hungary is 27%, but there are preferential rates for certain goods and services. Companies are required to file regular VAT returns.

2. accounting and audit

• Accounting services: All companies in Hungary must keep records of their financial activities. The cost of accounting services can vary considerably depending on the size of the business and the specifics of the activity, starting at around 200 euros per month for small businesses.
• Audit: For large companies or those that fulfil certain criteria in terms of assets and revenues, an annual audit is required. The cost of an audit starts at several thousand euros.

3. legal services

• Consultation and representation: Regular legal advice helps to ensure that the company complies with Hungarian law. The annual cost of legal services can start from a few hundred to thousands of euros depending on the complexity of the legal issues.

4. office rent and operating expenses

• Rent: The cost of renting commercial property in Hungary varies depending on the location and size of the premises. In Budapest, office rental costs can start from €10 per square metre per month.
• Utility charges: Utility costs also depend on the size of the office and may include electricity, water, internet and other services.

5. State fees and licences

• Annual registration fees: Depending on the type of business the company is engaged in, certain licences and permits may be required, which require an annual fee.
• Social security contributions: The Company is obliged to pay contributions for each employee, which also increases annual operating expenses.

What are the main advantages of setting up a company in Hungary?

Hungary is becoming an increasingly popular destination for international business due to its strategic position in Europe, flexible economic policy and a number of incentives for foreign investors.

1. Strategic geographical location

Hungary is located in the centre of Europe, which provides convenient access to the major markets of the European Union. Thanks to its well-developed transport infrastructure, companies can easily trade with Eastern, Western and Southern European countries.

2. Low taxes

One of the most attractive aspects of doing business in Hungary is one of the lowest corporate tax rates in Europe – only 9%. In addition, there are various tax breaks and incentives for start-ups and investment projects, which makes doing business here even more favourable.

3. Ease of business registration

The process of registering a company in Hungary is relatively simple and does not require a lot of time or bureaucratic effort. This makes the country attractive for foreign entrepreneurs who want to start their business quickly.

4. Skilled labour force

Hungary offers a highly skilled labour force, especially in fields such as engineering, technology and medicine. The level of education in the country is high and labour costs remain relatively low compared to other EU countries.

5. Attractive investment policy

The Hungarian government actively supports foreign investment through a number of programmes and initiatives aimed at improving the business climate. Companies can take advantage of grants, state support and specialised economic zones with special tax conditions.

6. Developed infrastructure

The country has a well-developed infrastructure, including modern roads, strong communications and reliable energy sources. This provides convenient conditions for logistics and the day-to-day operations of companies.

What are the ways to set up a company in Hungary?

Establishing a company in Hungary is a process that can vary depending on the type of business, the legal form chosen and the specific goals of the entrepreneur. Effective planning and understanding of all available options are key factors for the successful incorporation and subsequent operation of the company.

1. Choice of the form of a legal entity

The first step in the company formation process is to choose the appropriate form of legal entity. In Hungary, the most common forms are:

• Limited Liability Company (Kft.) – suitable for small and medium-sized enterprises with limited liability of the founders.
• Joint Stock Company (Zrt. or Nyrt.) – used for large operations and allows you to attract investment through the sale of shares.
• A sole proprietor (Egyéni vállalkozó) is an ideal option for a single owner who wishes to run a business without creating a legal entity.

2. Preparation of necessary documents

Registering a company in Hungary requires the preparation and filing of a number of documents including:

• The Articles of Association and Memorandum of Association are the official documents describing the structure and rules of the company.
• Directors’ and Founders’ Data – personal details of the managing directors and owners.
• Certificate of authorised capital – confirmation that the necessary funds have been deposited in the company’s account.

3. Registration with state authorities

Once all documents have been prepared, it is necessary to register the company with the relevant state authorities:

• Trade Register – to officially register the company and obtain legal personality.
• Tax Service – to obtain a tax number and register as a taxpayer.

4. opening a bank account

In order to conduct financial transactions, it is necessary to open a bank account with a Hungarian bank. This requirement applies to all companies registered in Hungary.

5. Obtaining necessary licences and permits

Depending on the company’s line of business, special licences or permits may be required. This process may include verification of compliance with safety, health and environmental standards.

Is it necessary to have a legal address in Hungary?

The registered office of a company plays a key role in its legitimisation and functioning under Hungarian law. This address is used as the official seat of the company, where all legally relevant documents and public notices are sent.

Legal aspects

Under Hungarian corporate law, every company incorporated in the country is required to have a registered office in Hungary. This address is included in the official Commercial Register and is used for all official purposes, including:

• Registration of the company in the commercial register;
• Correspondence with tax authorities and other government agencies;
• Receive legally important notices and official documents.

Practical significance

A legal address not only fulfils legal requirements, but also serves as an important element of corporate image. It can be used for:

• Establishing trust with customers and partners;
• Registration at the local level to access municipal grants and subsidies;
• Organising legally significant meetings and shareholder meetings.

How to get a legal address

There are several ways to ensure that you have a legal address for your company in Hungary:

1. Renting an office or commercial space. This is the most traditional way, which also helps to increase the visibility of the company.
2. Utilising virtual office services. For companies that do not need a permanent physical presence, a virtual office can be a cost-effective solution, allowing them to have a legal address without incurring significant rental costs.
3. Legal address through a law or consulting firm. Some law and consulting firms offer legal address services as part of a comprehensive business service.
   

Is it possible to open a branch of a foreign company in Hungary?

Hungary offers attractive opportunities for foreign companies interested in expanding their business into the European market. One way to enter the Hungarian market is to open a branch office of a foreign company.

Legal framework

A branch of a foreign company in Hungary is regarded as an integral part of the parent company without legal personality. This means that the parent company is fully responsible for all operations and obligations arising from the activities of its branch.

Registration process

1. Preparation of documentation: In order to register a branch office, a set of documents must be prepared and submitted, including:
   • Articles of Association of a foreign company;
   • Decision on the establishment of a branch;
   • Extract from the commercial register of the parent company, confirming its legal registration in the country of origin;
   • Power of attorney for the branch manager.
2. Translation of documents: All documents must be translated into Hungarian by a certified translator.
3. Registration with the Hungarian Commercial Register: The branch office must be registered with the Hungarian Commercial Register. This includes submitting all necessary documents and paying the registration fee.

Taxation

A branch of a foreign company is taxed on profits earned in Hungary at the rate set for all corporate entities – 9%. It is also necessary to file regular tax returns in accordance with Hungarian tax legislation.

Banking and finance operations

In order to conduct financial transactions, a branch office is required to open an account with a Hungarian bank. This simplifies transactions with taxes, payroll and other day-to-day financial matters.

Advantages and disadvantages

Benefits:

• Increase brand awareness and expand business into new markets;
• Direct control of the subsidiary’s operations by the parent company;
• Ability to utilise local benefits and subsidies provided by the Hungarian government.

Disadvantages:

• Full financial and legal responsibility of the parent company for the actions of the affiliate;
• Difficulties associated with managing a branch at a significant geographical distance.
  

Can a foreigner open a company in Hungary?

Hungary offers great opportunities for foreign investors interested in setting up business in its territory. The country attracts with its favourable investment climate, strategic location in Europe and relatively low taxes. This article discusses the main aspects that foreigners need to consider when starting a company in Hungary.

Legal aspects

Foreign nationals can establish and own companies in Hungary on an equal footing with locals without any additional restrictions. There are several forms of business that foreign investors can choose from:

• Limited Liability Company (Kft.) is the most popular form for small and medium-sized enterprises.
• Joint Stock Company (Zrt. or Nyrt.) – suitable for large businesses with the possibility of issuing shares.
• A sole proprietorship is a simple form for a single owner, requiring minimal administrative effort.

Company registration procedure

1. Selection of the company name and checking its uniqueness in the Hungarian commercial register.
2. Preparation of constituent documents such as articles of association and memorandum of association, which must be notarised.
3. Registration in the commercial register through a solicitor or registration agent.
4. Opening a bank account and depositing authorised capital.
5. Registration with the tax office to obtain a tax and VAT number if necessary.

Tax aspects

Foreign companies incorporated in Hungary are subject to general taxation. The main taxes include:

• Corporation tax – the rate is 9%, which is one of the lowest in Europe.
• VAT – the standard rate is 27%, but exemptions are available for certain goods and services.

Requirements for foreign investors

Although foreign nationals are free to start and own companies in Hungary, there are certain requirements:

• Having a registered office in Hungary.
• Compliance with local legislation in terms of accounting and reporting.
• The company can be managed either personally or through appointed directors.
  

Is it possible to obtain a residence permit when establishing a company in Hungary?

Hungary offers many opportunities for foreign investors, including the possibility of obtaining a residence permit when starting a business. This process can be an attractive option for entrepreneurs seeking not only to expand their business but also to improve their quality of life.

Legal framework for entrepreneurs

Hungarian law provides the possibility for foreign entrepreneurs to obtain a residence permit in the country if they establish or buy a business. This allows not only to run the business locally, but also to enjoy the benefits of permanent residence in the EU.

Basic requirements

1. Establishing or acquiring a company in Hungary: The foreigner must prove that the company contributes to the country’s economy by creating jobs, investing in the local economy or participating in significant projects.
2. Financial security: When applying for a residence permit, the investor must provide proof of financial stability and the ability to support himself and his family in Hungary.
3. Having a business plan: An important element is to have a clear and realistic business plan that demonstrates the potential profitability and long-term prospects for the business.
4. Company registration and tax obligations: The company must be officially registered in Hungary and comply with all tax and other regulatory requirements.

The process of obtaining a residence permit

1. Filing of documents: Applying at a Hungarian consulate or directly to the Hungarian immigration authorities.
2. Assessment of the business plan and financial situation: The authorities carefully analyse the submitted documents and business plan to ensure that they are in line with the economic interests of the country.
3. Interview: Generally, the process may include an interview to clarify the details of the business plan and the applicant’s intentions.
4. Decision on the application: After checking all documents and conducting an interview, a decision on the granting of a residence permit is taken.

Advantages of obtaining a residence permit through a business

• Mobility within the Schengen area: A residence permit allows you to move and reside freely in any of the Schengen countries.
• Possibility of family inclusion: Family members can be included in the process, which entitles them to live, study and work in Hungary.
• Long-term perspective: The residence permit can be a step towards obtaining a permanent residence permit and subsequently Hungarian citizenship.

What is stipulated in the articles of association of a company registered in Hungary?

The company’s constitutional documents play a key role in the organisation and management of the business, being the basis for the internal structure and operations of the company. In Hungary, as in many other countries, the articles of association contain all the basic provisions on the functioning of the company and its structure.

Main elements of statutory documents

1. Name and legal address of the company
   • The articles of association must contain the full official name of the company and the address of its legal registration in Hungary.
2. Purpose of the company’s activity
   • The objectives that the company intends to achieve should be clearly described in the articles of association. This includes the types of activities the company will engage in.
3. Types of shares to be issued and capital
   • For joint-stock companies, the types of shares (ordinary, preferred), their nominal value and number are specified. The amount of the company’s authorised capital is also specified.
4. Management structure
   • A description of the organisational structure of the company, including the names and powers of the executive bodies (e.g. the board of directors) and the procedure for their election and appointment.
5. Rights and obligations of shareholders
   • A detailed description of the rights and obligations of shareholders, including their right to participate in the management of the company, the right to dividends and the right to information.
6. Procedure for convening shareholders’ meetings
   • Guidelines on how and when shareholder meetings should be held, including annual and extraordinary meetings.
7. Rules for amending and supplementing the statutes
   • The procedure to be followed for amending the statutory documents.
8. Liquidation and reorganisation of the company
   • Conditions and procedure for liquidation or reorganisation of the company.

Importance of statutory documents

Statutory documents not only define the legal aspects of a company’s functioning, but also serve as an important tool for protecting the rights and interests of shareholders and managers. They are a legally binding document that must be strictly adhered to by all parties involved in the company’s activities.

How long does it take to set up a company in Hungary?

Establishing a company in Hungary is a process that can vary in time depending on a number of factors, including the type of company, the completeness and accuracy of the documents provided, and the efficiency of government services.

Stages of company registration

1. Selection of the company name and its verification
   • The first step is to choose a unique name for your company and check its availability through the Hungarian Trade Register. This process usually takes 1 to 3 days.
2. Preparation and certification of constituent documents
   • Constituent documents such as the company’s articles of association and memorandum of association must be prepared. The documents must be notarised. This procedure may take from a few days to a week.
3. Opening a bank account and depositing authorised capital
   • To incorporate a company, a corporate bank account must be opened and the authorised capital deposited into it. The time required to open an account can vary from a few days to a few weeks, depending on the bank and the completeness of the documents provided.
4. Registration in the commercial register
   • Once all documents are prepared, they are submitted to the Hungarian Trade Register for the official registration of the company. The processing of the application usually takes 1 to 2 weeks.
5. Registration with the tax authorities
   • The last step is to register the company with the Hungarian tax office to obtain a tax number. This process usually takes up to 1 week.

General timelines

On average, the process of incorporating a company in Hungary can take between 4 and 6 weeks from the time you start preparing your documents to the time you receive all the necessary registrations and authorisations. It is important to note that any delays in the submission of documents or their improper preparation may increase the overall registration time. 

What kind of activities can a company engage in in Hungary?

Hungary offers a favourable environment for a variety of businesses due to its strategic location in the centre of Europe, liberal economic policies and well-developed infrastructure. The country’s various industries and services are open to both local and foreign companies.

Key sectors of the economy

1. Production
   • Automotive industry: Hungary is one of the largest producers of automotive components and vehicles in Central Europe. Foreign investors such as Audi, Mercedes-Benz and Suzuki have significant production facilities in the country.
   • Pharmaceuticals and Biotechnology: Hungary is also known for its achievements in the field of pharmaceuticals and biotechnology, with many companies operating locally and internationally.
2. IT and telecommunications
   • Hungary has a well-developed IT infrastructure and is actively developing its technology sector, including software, mobile applications and e-commerce. Hungarian startups actively attract foreign investment and receive support from the government.
3. Agriculture and food industry
   • Agriculture has traditionally been an important industry, with strong positions in the production of cereals, meat, fruit and vegetables. Hungary is also known for its wine producing regions.
4. Tourism and hospitality
   • Hungary’s tourism sector is booming thanks to its rich cultural heritage, historical sites and thermal waters that attract tourists from all over the world.

Legal aspects of doing business

In order to start operating in any of the above sectors, a company must comply with Hungarian legal requirements, including registering its activities, obtaining the necessary licences and complying with quality and safety standards. It is important to note that some activities may require special permits or licences, especially in the areas of health care, education and financial services.

Does a company in Hungary have to have employees?

One of the key aspects of running a business is having qualified employees who can efficiently carry out day-to-day operations and contribute to the growth of the company. In Hungary, as in other countries, certain business activities may require full-time employees, while others may not.

Legal requirements

Hungarian law does not impose a mandatory requirement to have employees for all forms of business. However, depending on the form of the company and its field of activity, there may be certain regulatory or licence requirements for hiring staff:

• Companies in areas requiring special licensing (e.g. financial, health or education sectors) must prove they have qualified employees to meet licensing standards.
• Manufacturing companies often require a labour force to perform operational tasks.

Management aspects

For small companies or start-ups founded by a single entrepreneur, hiring employees may not be necessary at the initial stage. In such cases, the company may be managed entirely by the owner. However, as the business grows and develops, there may be a need for a specialised workforce to improve operational efficiency and expand market presence.

Economic considerations

The decision to hire employees should take into account the economic benefits and possible costs. Hiring employees entails additional salary, tax and social security costs. It is therefore important to assess whether hiring staff will increase the company’s revenues enough to justify these costs.

Advantages of having employees

Having employees can offer a number of benefits, including:

• Increased productivity and the ability to focus on strategic business development.
• Expanding the company’s competences by attracting specialists in certain areas.
• Flexibility in project management and the ability to serve more clients or expand the range of services.

How to choose a name for a company in Hungary?

Choosing a name for a new company is a key stage in establishing a business that requires careful consideration and strategic planning. A company name not only helps to stand out in the market, but also plays an important role in creating a first impression with potential customers and partners. In Hungary, the name selection process is governed by certain legal requirements that need to be taken into account for a successful company registration.

Legal requirements for company name in Hungary

1. Uniqueness and distinctiveness: The name must be unique and must not be the same or similar to already registered company names in the Hungarian Commercial Register. This prevents confusion and protects brands from possible legal disputes.
2. No restrictions: The name should not contain words that could be misleading as to the company’s business or legal form. For example, the use of the word “bank” is restricted to licensed financial institutions.
3. Language aspects: The name can be registered in Hungarian or any other language using the Latin alphabet. It is important that the name is written correctly and complies with the grammatical and orthographic rules of the chosen language.

How to choose the right name for your company

1. Market Research: Understanding your target audience and market niche will help you choose a name that speaks to potential customers about your business, its values and the products or services you offer.
2. Creativity and memorability: Choose a name that is easy to remember, easy to pronounce and stands out from the competition. A creative name can be a powerful marketing tool.
3. Checking the availability of the name: Before the final selection, it is necessary to check the availability of the name in the Hungarian Trade Register to make sure that it is not used by another company.
4. International aspects: If you plan to do business not only in Hungary, make sure that the name is acceptable and does not have negative connotations in other languages.
5. Future Scalability: Choose a name that fits your business’s long-term growth strategy and won’t limit future growth.

Conclusion

Choosing a company name in Hungary requires a strategic approach and consideration of both marketing and legal aspects. A properly chosen name contributes to the formation of a strong brand and can significantly increase the company’s recognisability in the market. Therefore, it is important to give this stage due attention and, if necessary, to consult with lawyers and marketing experts to achieve the best possible result.