Hungary, a country located in Central Europe, has been gaining popularity as a destination for entrepreneurs and startups. With its strategic location, highly skilled workforce, and favorable business environment, Hungary offers a unique opportunity for businesses to thrive. If you’re considering starting a business in Hungary, you’re on the right track. In this article, we’ll guide you through the process of setting up a business in Hungary, highlighting the key steps, requirements, and benefits.
Benefits of Starting a Business in Hungary
Hungary offers a range of benefits for entrepreneurs, including a highly developed infrastructure, a favorable tax environment, and access to the European Union market. Some of the key benefits of starting a business in Hungary include:
- Strategic location: Hungary is situated at the heart of Europe, providing easy access to major markets and trade routes.
- Highly skilled workforce: Hungary has a well-educated and skilled workforce, with a strong emphasis on IT, engineering, and science.
- Favorable tax environment: Hungary offers a competitive tax environment, with a corporate tax rate of 9% and a range of tax incentives for startups and small businesses.
- Government support: The Hungarian government offers a range of support programs for startups and small businesses, including funding, mentorship, and training.
Business Structures in Hungary
In Hungary, there are several business structures to choose from, each with its own advantages and disadvantages. The most common business structures in Hungary include:
SOLE PROPRIETORSHIP (Einzelunternehmer)
A sole proprietorship is the simplest and most common business structure in Hungary. It’s a single-person business, where the owner is personally responsible for the business’s debts and liabilities.
LIMITED LIABILITY COMPANY (Kft.)
A limited liability company (Kft.) is a popular business structure in Hungary, offering limited liability protection for its owners. It requires a minimum share capital of HUF 3 million (approximately EUR 10,000) and must have at least one shareholder and one director.
JOINT STOCK COMPANY (Nyrt.)
A joint stock company (Nyrt.) is a more complex business structure, suitable for larger businesses. It requires a minimum share capital of HUF 5 million (approximately EUR 16,000) and must have at least one shareholder and one director.
Registration and Licensing Requirements
To start a business in Hungary, you’ll need to register your business with the relevant authorities and obtain any necessary licenses and permits. The registration process typically involves:
- Registering your business with the Hungarian Court of Registration
- Obtaining a tax identification number and registering for taxes
- Registering with the Hungarian Social Security Authority
- Obtaining any necessary licenses and permits, such as a trading license or environmental permit
Taxation in Hungary
Hungary has a relatively low corporate tax rate of 9%, making it an attractive destination for businesses. However, businesses must also comply with other tax requirements, including:
VAT REGISTRATION
businesses with an annual turnover of HUF 6 million (approximately EUR 20,000) or more must register for VAT.
INCOME TAX
Individuals and businesses must file an annual income tax return and pay income tax on their profits.
Support for Startups and Small Businesses
The Hungarian government offers a range of support programs for startups and small businesses, including:
- Funding: The Hungarian government provides funding for startups and small businesses through programs such as the Hungarian Startup Fund and the Small Business Development Program.
- Mentorship: The Hungarian government offers mentorship programs, pairing experienced entrepreneurs with startups and small businesses.
- Training: The Hungarian government provides training programs for startups and small businesses, covering topics such as business planning, marketing, and financial management.
In conclusion, starting a business in Hungary can be a great opportunity for entrepreneurs and startups. With its favorable business environment, highly skilled workforce, and range of support programs, Hungary offers a unique chance for businesses to thrive. By understanding the key steps, requirements, and benefits of starting a business in Hungary, you can set yourself up for success and take advantage of the opportunities that Hungary has to offer.
