If you’re considering starting a business in Hungary, it’s important to choose the right company type. Here are the main business structures available:
1. Sole Proprietorship (Egyéni Vállalkozás)
Ideal for freelancers and small business owners. Easy to set up but comes with unlimited personal liability. Registration is free, and taxation is flexible, with options like flat-rate taxation (KATA) for small-scale entrepreneurs.
2. Limited Liability Company (Kft.)
The most popular business form in Hungary. Owners are only liable up to their invested capital, making it a secure choice. The minimum share capital required is HUF 3 million, and it can be established by a single person or multiple partners.
3. Joint Stock Company (Rt.)
Designed for larger businesses, this can be private (Zrt.) or public (Nyrt.), allowing for investment and stock trading. Public companies can be listed on the stock exchange, while private ones operate with restricted share transfers.
4. Limited Partnership (Bt.)
Requires at least one general partner with full liability and one limited partner with restricted liability. It is a cost-effective structure, but general partners assume personal responsibility for debts.
5. General Partnership (Kkt.)
All partners share equal responsibility and full liability for the company’s obligations. This form is rarely used due to its high financial risk for the owners.
Additional Considerations:
- Taxation: Hungary offers a competitive corporate tax rate of 9%, the lowest in the EU.
- Business Environment: Hungary is an EU and Schengen member, making it easier to trade across Europe.
- Banking Challenges: Opening a business bank account can be difficult for foreigners, so professional assistance is recommended.
Choosing the right company type depends on your business goals and liability preferences. Need help setting up your company? Get in touch today!