Setting up a kft. company in Hungary

The minimum share capital is HUF 3,000,000, roughly €9,677. The founders may choose how to pay it up — for example into a dedicated bank account or as a cash contribution to the company. In the latter case, payment is proven to the registry court by a statutory declaration.

Registering for VAT and obtaining a VAT number is considerably simpler and faster than in Slovakia. In Hungary a company can be registered for VAT right from incorporation, without lengthy procedures. It is enough to state this requirement to the registry court when filing the application for registration.

Shareholders of a Hungarian kft. company may be both natural and legal persons. They are liable for the obligations of the company only up to the amount of their contributions to the share capital. The company may be founded by a single legal or natural person.

The standard VAT rate in Hungary is 27%. Two reduced rates also apply — 5% and 18%. The 5% rate covers, for example, certain kinds of milk, poultry, fish fillet, fresh eggs, medicines, books, magazines, district heating services, new residential property, restaurant services and internet access. The 18% rate may apply to dairy products, products made of maize and starch, and commercial accommodation services. VAT returns are filed monthly, quarterly or annually, always by the 20th day of the month following the period. The annual return must be filed by 25 February of the following year.

Hungarian regulations require kft. companies to hold at least one bank account denominated in HUF, Hungarian forints.

Hungarian regulations require all managing directors and shareholders of Hungarian companies who are not Hungarian citizens to appoint a so-called delivery agent for correspondence from public institutions and authorities. We can provide this service. The agent receives mail from public institutions concerning the company on behalf of the directors and shareholders and delivers it to the addressee.

The business activities of a Hungarian company must be defined more precisely than in Slovakia. It is not enough to state retail and wholesale — the commercial register must specify exactly which products the company will trade in.

The company name must be unique and must not be confusable with an already registered name. The name of a Hungarian company includes the suffix kft.

A foreign natural person may act as the managing director. The director does not have to provide a criminal record extract from their home country.

The corporate income tax rate is 9%.

Hungary also applies a local corporate income tax, the rate of which is set by individual counties for companies with a registered office in that county. Most counties apply a rate of 2%, but there are also counties where the rate is 0%.

The dividend tax rate on a distribution to a shareholder of a Hungarian kft. company that is a Slovak legal entity is 0%. If the shareholder is a Slovak natural person, the rate is 15%.