Limited Liability Company registration in Hungary

It must not contain sensitive words that imply criminal activity or contradict to the standards of public morality. The words such as Assurance”, “Bank” and  “Insurance” are the subject of licensing.

The name of the company may not create any associations with the governmental bodies, agencies and departments.

The company’s name must not be very similar to existing names on the registrar and it must not contain improper or objectionable words. It must be written in Latin letters and contain the abbreviation “Kft “which means limited liability.

Hungary LLC is required to have a registered office address in Hungary.

One director is the minimum required. There is no requirement for them to be locals and there are no requirements regarding the place and frequency of the directors’ meetings.

Corporate persons cannot become directors. The director and member can be the same person. The directors’ details are registered on the public record and can be accessed by the public.

The appointment of a secretary is not mandatory, but optional.

One member is the minimum required. There is no requirement for them to be locals and corporate persons can become members. The members’ meeting may be held anywhere, but at least once a year.

The director and member of the company can be the same person. The members’ details are registered on the public record and can be accessed by the public.

The beneficial owners’ details are registered on the public record.

The minimum amount of the authorized capital should be not less than € 8534 EUR (3.000000 HUF) The authorized capital is the maximum amount of capital that the company is authorised by its constitutional documents. In case of Hungary, it should be denominated in Hungarian forints – HUF.

A Hungary LLC does not have shares. Instead, members are making the contributions and their part of the ownership in the company is proportional to such contribution. That contribution should not be less than € 285 EUR (100.000 HUF)

There is no requirement to have the authorized capital of the company fully paid up. This means that the owners of an LLC may not pay fully pay their contributions during the incorporation.

The incorporation period in Hungary may take 1 day, however, the preparing of the relevant document may take some time.

Ready-made but unused LLCs are available in Hungary, in case you are in need of a quicker incorporation process.

Hungarian legislation does not contain any requirements regarding the economic substance of the Limited Liability Companies. This means that the company is not required to have premises and an adequate number of employees, the number of expenditures to support its activity in Hungary. Hungarian LLC must have an address within the territory of Hungary that will be registered as a company’s address.

A Limited Liability Company incorporated in a Hungary must keep accounting records, about its assets and liabilities to reflect accurately its financial situation for eight years. Those documents should be stored in a safe place which will be known by authorities.  Also, the annual tax reports and annual rewards should be filed to the authorities.  The requirement of auditing, and the appointment of a professional auditor is applicable to the companies with a turnover more than €285.000 EUR (100.000000 HUF) and with more than 50 employees.

The corporate tax rate in Hungary is 9% which is basically the lowest in the Europe. Taxation is conducted on the worldwide basis. In order to be a tax resident, the company must be either registered in Hungary or be managed from there. The country has a huge number of double tax avoidance treaties and due to being a member state of the EU, a Hungarian LLC is entitled to the tax benefits that are established on the EU level. The standard tax rate of 9% is applied to the interest gained by the company as well as for royalties. However, half of the royalties should be tax exempted. Dividends that are gained for other companies are not a subject of taxation but, the control foreign company rule should be taken into account. The rate of Value added tax is 27% but can be reduced to 18% and 5%. Hungarian legislation does not imply any thresholds for the VAT subscription.