A Hungarian company with an account in a local bank is an excellent option for foreign economic business, as well as for holding activities. Opening an LLC (or Korlátolt felelősségű társaság - KFT) in this jurisdiction is a great solution for international business. Here’s why.
Advantages of a Hungarian company:
- “White” jurisdiction.
- Low tax on business.
- Loyal compliance procedure.
- The first persons of the company may be non-residents.
- Easy receipt of VAT number.
After joining the EU, the Hungarian Republic ceased to be considered an offshore jurisdiction, which added to the country's investment attractiveness. In addition, in 2017, the corporate income tax rate was reduced. Hungary also boasts a minimum of bureaucratic procedures when opening a company or bank account. For example, a VAT number is issued automatically to a Hungarian company. Immediately after this, you can issue a European VAT number without any additional formalities.
Corporate taxes in Hungary:
- company income tax - 9%;
- municipal tax - 0-2% (depending on the region of registration);
- tax on dividends received - 0% (payments from European companies);
- tax on outgoing dividends - 0% (payments in favor of a non-resident parent company);
- VAT - 27%;
- social contributions to employees (if any) - 23%.
When registering KFT in Hungary, its directors are not subject to serious restrictions. The law does not fix a mandatory requirement to pay a director a salary. In addition, the director of the company may be a non-resident. The same applies to the founders of the company. We recommend creating a company with individual founders, as this simplifies the opening of an account. Subsequently, the owner can be changed (including a legal entity), this will not affect the activities of the company.
It is especially worth noting that, according to Hungarian laws, the director of KFT is fully responsible for the activities of the company. There are no “nominee managers” in Hungary, the director must have the right to manage the company's bank account. For additional control, you can establish the requirement of a second signature (owner / founder of the company) on bank documents.
Account opening
A Hungarian company must have at least one account with a local bank. An account is opened within 15 days from the date of registration in the presence of the director. KFT may have any number of other accounts (in any currency) with banks in Hungary or in other jurisdictions. The staff of local banks is English-speaking, Internet banking is most often bilingual (Hungarian and English).
A Hungarian company with an account with a local bank is an excellent option for foreign economic business, as well as for holding activities!
