A practical guide to doing business in Hungary for foreign investors

A practical guide for companies looking at Hungary as their route into the European Union: what the entity options are, what employing people here actually involves, how the tax system treats a foreign-owned subsidiary, and which decisions are difficult to reverse once made. Every legal reference below was checked against the current, consolidated text of the law when the guide was written.

Kft. or branch, and what each commits you to

Most foreign investors choose a Hungarian limited liability company, a Kft. It is a separate legal entity from its foreign owner, so liability is limited to what the company owns. Under Ptk. section 3:161 (2013. évi V. törvény), a Kft. needs a minimum registered share capital of HUF 3,000,000, with each member's contribution at least HUF 100,000; the full amount does not have to be paid in cash at the moment of registration, but the founders commit to paying it in on the schedule set out in the articles. The founding document also fixes who can sign for the company, sole or joint representation for the managing director, which is worth deciding deliberately rather than defaulting to whatever the template suggests.

A branch office (fióktelep), governed by the 1997. évi CXXXII. törvény, is not a separate legal entity. It is the foreign company operating directly in Hungary under its own name through a registered local establishment, which means the parent is directly and fully liable for what the branch does, with no capital shield, and the branch's Hungarian-sourced profit is still taxed here at the same corporate rate as a Kft. A branch can be the right structure for a short, defined presence, such as a construction project or a representative operation that will not sign large local contracts, but for anything that will hold assets, employ a growing team, or sign contracts with local counterparties, the capital shield of a Kft. is usually worth the extra step of incorporating a separate entity.

The registration sequence, and where it stalls

A Kft.'s founding document must be either notarised or countersigned by a Hungarian attorney or in-house counsel registered with a bar association; a document signed abroad without one of these does not get filed. Under the Companies Act (Ctv., 2006. évi V. törvény), the registration application must reach the Company Court within 30 days of the founding document being finalised, together with proof of the registered seat, specimen signatures for anyone with signing rights, and evidence of the paid-in capital where the articles require it up front.

Two procedures exist. A simplified, template-based electronic filing is decided within one business day of the tax authority issuing the company's tax number, once the application itself is in order; a filing outside the standard template goes through the general procedure, which takes longer and runs to the deadlines set in the Company Registration Act. In practice, the point where a fast filing turns slow is rarely the Company Court itself: it is a foreign document that needs an apostille or certified translation, a beneficial owner who has not yet been correctly identified, or a bank that has not opened the company's account in time for the paid-in capital to be shown.

Identifying the beneficial owner

Since the central beneficial owner register (2021. évi XLIII. törvény) came into operation, a natural person holding, directly or indirectly, at least 25% of the voting rights or ownership share in the company must be identified as a beneficial owner, and the company's bank reports that data to the tax authority on an ongoing basis. Where ownership sits behind several holding layers, working out that chain before registration, rather than reconstructing it later when a bank asks, avoids a delay that has nothing to do with the substance of the business.

Employment basics from the first hire

A Hungarian employment relationship is created by a written contract, and the Labour Code (Mt., 2012. évi I. törvény) sets out, in ordinary language, what it must contain at minimum: the job, the place of work and the base salary. A probation period may run for up to three months, or six months where a collective agreement allows it; anything written beyond that has no effect. Statutory notice for employer-initiated termination starts at 30 days and increases with length of service, and under section 64(2) the written reason for dismissal must be real, clear and logically sound, since it cannot be improved on once the notice has been delivered. Employers must also keep working-time records from which ordinary hours, overtime and standby duty can be established on a current, not reconstructed, basis; a missing record tends to be resolved against the employer in a dispute, because the obligation to keep it sits entirely on the employer's side. None of this needs a different management style, only a contract drafted from the Hungarian text itself rather than translated from a template written for a different jurisdiction.

Tax and accounting through the first year

Hungary's corporate income tax, under the Tao. törvény (1996. évi LXXXI. törvény), is 9% of the positive tax base, among the lowest headline rates in the EU. Rates change by legislation, so confirm the rate in force for the year you are planning before you fix a budget.

A company trading in goods or services normally needs to register for VAT with the tax authority (NAV) close to the start of its activity; the standard rate under the Áfa törvény (2007. évi CXXVII. törvény) is 27%, with reduced rates for specific categories of goods and services, and every invoice a Hungarian company issues is reported to NAV's Online Számla system in close to real time, which is a practical constraint on which invoicing software will actually work from day one. Local business tax (helyi iparűzési adó), under the 1990. évi C. törvény, is charged on a net-revenue-based tax base at a rate the municipality sets itself, capped by law at 2%. Under the Accounting Act (Számviteli tv., 2000. évi C. törvény), every Kft. keeps double-entry books and files an annual financial statement; a company formed partway through the calendar year has a shortened first financial year running to the following 31 December, which is worth building into the first-year budget and any group reporting timetable.

Residence and work permits for managers and specialists

A non-EU manager or specialist relocating to run or staff the new company needs a residence title that also authorises work, under the third-country nationals act (2023. évi XC. törvény), administered by the National Directorate-General for Aliens Policing (oif.gov.hu). Most employees go through the combined residence and work permit procedure (összevont kérelmezési eljárás), which authorises both residence beyond 90 days and employment with a specific employer in a single application. A group transferring an existing employee from an office abroad rather than hiring locally may instead fit the intra-corporate transfer route, built for exactly that situation. Highly qualified staff, typically those with a relevant degree or equivalent professional qualification working in a role that requires that level of expertise, can instead apply for the EU Blue Card, which runs for up to four years and is renewable. All of these routes need the employment relationship to exist, or be about to exist, before the application is filed, which is why the permit application and the employment contract need to be sequenced together rather than treated as two unrelated projects.

Sequencing the decisions that are hard to reverse

None of the steps above is individually difficult. What causes cost later is doing them out of order: signing an employment contract before the company is registered and has a tax number, choosing a scope of activity that turns out to need a licence you do not have, or bringing in a manager on a tourist visa because the permit application was not started early enough to run alongside the company formation. Sequencing the entity choice, the registration filing, the beneficial owner identification, the first employment contracts, the tax registrations and the immigration filings against one shared timeline, rather than handling each in the department that happens to own it, is what turns a fast registration into a company that actually works from day one.

What an incoming investor can reasonably ask for is exactly that shared timeline, run by people who talk to each other. You work with one contact person who coordinates the lawyer, the accountant and the immigration adviser from the start, rather than leaving them to compare notes only when something has already gone wrong.

Hungary in a Box runs this sequence as a single engagement rather than five separate ones. If company formation on its own is the only open question, Kft. registration covers that step, residence permits covers the immigration side for relocating staff, and monthly accounting picks up the bookkeeping and tax filings once the company exists.