How to Set Up a Company in Hungary?

Hungary is one of the fastest and cheapest gateways into the EU market: in favourable cases a limited liability company (Kft.) can be registered in a single business day, and corporate income tax is 9% – the lowest rate in the Union. In this article we go through what the Hungarian Civil Code (Ptk.) and the Companies Act (Ctv.) require, and what foreign founders in particular need to watch out for.

1. Why a Kft.?

Hungarian law recognises several company forms (Bt., Kkt., Zrt., Nyrt.), but more than 90% of foreign owners set up a limited liability company (Kft.). The reason is simple: under Section 3:159 of the Civil Code, a member's liability is limited to providing their capital contribution – as a general rule, they are not liable for the company's debts with their personal assets. By contrast, the general partner of a limited partnership (Bt.) has unlimited liability, while a company limited by shares (Zrt.) is significantly more expensive and administratively heavier.

The Kft. is also flexible: it can have a single member (one owner who is also the managing director), and there is no restriction on the member or the managing director being a foreign national.

2. Share capital: how much money do you actually need?

Under Section 3:161 of the Civil Code, the minimum share capital of a Kft. is HUF 3,000,000 (approx. EUR 7,500), and a single member's capital contribution may not be less than HUF 100,000.

Two common misunderstandings are worth clearing up:

• Share capital is not a cost. It is the company's own money: after registration it can be freely used for operations, salaries or purchasing assets. It is not a "blocked deposit".
• It does not have to be paid in at once. The articles of association may provide that part of the cash contribution is paid in later, after registration. In that case, however, the member is liable for the company's debts up to the amount not yet paid in, and no dividend may be paid until the share capital has been contributed in full.

The contribution may also take the form of an in-kind contribution (apport) – machinery, software, receivables, intellectual property. The rules are set out in Sections 3:161–3:163 of the Civil Code, and the member is liable for any overvaluation of the in-kind contribution.

(TODO-link: Share capital, in-kind contributions and capital increases in a Kft. – detailed guide)

3. The company formation process step by step

Step 1 – Engaging a lawyer (mandatory)

Under Section 32 of the Companies Act, legal representation is mandatory in company registration proceedings. In Hungary, a company can only be incorporated with documents countersigned by an attorney (or a notary) and filed electronically – there is no such thing as "DIY" company registration.

Step 2 – Gathering the data and documents

You will typically need the following:

• the company name,
• copies of the identity documents of the members and the managing director (passport / ID card),
• a foreign or Hungarian tax identification number,
• a registered seat – either owned or rented,
• the main business activity (TEÁOR code, the Hungarian equivalent of the NACE code),
• a delivery agent, if a foreign member or officer appears in the application (Section 31 of the Companies Act).

Step 3 – Signing

The articles of association can be signed in person before the attorney, or from abroad through an authorised representative. In the latter case, the power of attorney generally has to be notarised and bear an Apostille (in states party to the Hague Convention). This means that you do not necessarily have to travel to Hungary to set up the company – although the bank will often still require you to appear in person.

Step 4 – Filing and registration

If the parties use the model articles of association annexed to the Companies Act, the case proceeds under the rules of the simplified company procedure (Sections 48–49 of the Companies Act): the court of registration must decide on registration within one business day of the tax number being issued. Where a bespoke, tailor-made deed of foundation is used, the general procedure applies, which can take anywhere from a few business days up to 15 business days.

The tax number is issued automatically by the Hungarian Tax Authority (NAV) as part of the registration procedure; the EU VAT number must be requested separately if the company will carry out intra-EU transactions.

Step 5 – Bank account and post-registration tasks

Registration is not the finish line. The most common deadlines:

• opening a bank account within 8 days of registration (i.e. of obtaining the tax number) – a domestic payment account is mandatory,
• chamber of commerce registration and payment of the annual contribution of HUF 5,000,
• Cégkapu (Company Gate) registration – the channel through which the company communicates with the authorities,
• registering for local business tax with the municipality of the registered seat,
• engaging an accountant – double-entry bookkeeping is mandatory for every Kft.

(TODO-link: Opening a corporate bank account in Hungary as a foreign owner)

4. How much does it cost?

The good news: registering a Kft. founded with the model articles of association is free of duty, and no publication fee is payable either. The actual cost is therefore largely made up of service providers' fees:

5. Registered seat: a PO box is not enough

Under Section 7 of the Companies Act, the registered seat is the company's registered office: this is where mail must be received, where the company's documents must be kept and made available, and the seat must be marked with a company sign. Foreign founders typically use a registered office service provider – this is perfectly legal, but the provider must meet the statutory requirements, and NAV scrutinises this area closely. In practice, choosing the wrong registered office provider can lead to the suspension of your tax number.

(TODO-link: Registered office services in Hungary: what to look out for)

6. What foreigners need to pay special attention to

Company formation ≠ right of residence

This is the most common misconception. Setting up a Kft. does not in itself give you the right to reside in Hungary. As an EU/EEA citizen you can settle here by registration, on the basis of the right of free movement. As a third-country national, by contrast, you need to apply for a separate residence permit (under Act XC of 2023), and the conditions for the "guest self-employment" permit linked to an executive officer position have tightened noticeably in recent years. This is worth planning before you incorporate.

Delivery agent

If you have no Hungarian address, a Hungarian delivery agent must be named in the registration application (Section 31 of the Companies Act) to receive mail from the court of registration and the authorities. This is typically the attorney or the accountant.

Bank account and KYC

The anti-money-laundering (KYC) procedure of Hungarian banks takes longer where there is a foreign owner: the managing director should expect in-person identification, proof of the ultimate beneficial owner and a presentation of the business activity. This often takes more time than the company registration itself.

7. Taxation in a nutshell

• Corporate income tax (TAO): 9% – the lowest rate in the EU.
• Small business tax (KIVA): 10% – available below a certain size; profit retained in the company is not taxed.
• Local business tax (HIPA): up to 2%, depending on the municipality.
• VAT: 27% standard rate (with reduced rates of 5% and 18%).
• Dividends: 15% personal income tax + 13% social contribution tax (the latter up to an annual cap).

The combination of owner-manager remuneration, dividends and the choice between TAO and KIVA has a significant effect on your effective tax burden – it is worth thinking this through already at incorporation.

In summary

Setting up a Hungarian Kft. is legally straightforward: an attorney is mandatory, HUF 3 million of share capital is required, and with the model articles of association registration is duty-free and fast. The pitfalls are not at the court of registration but afterwards: the bank account, the registered seat, your residence status and the tax structure – these are what determine whether the company will actually be able to operate.

This article is for general information purposes only and does not constitute legal or tax advice. Legislation referred to: Book Three of Act V of 2013 on the Civil Code (Ptk.), and Act V of 2006 on Public Company Information, Company Registration and Winding-up Proceedings (Ctv.). The legal environment and tax rates are subject to change – please seek professional advice in any specific matter. Last updated: July 2026.