Good to know
Good to Know
- Foreigners do not need a local partner or sponsor to open a company in Hungary — 100% foreign ownership of a Kft. is standard and a single founder can incorporate alone.
- Using an attorney is not a choice — Hungarian law requires an attorney (or notary for certain steps) to file the incorporation electronically; there is no self-service option, even for a simple single-member Kft.
- Almost the entire process can be done remotely via Power of Attorney, but opening the company's Hungarian bank account is the one step that currently still requires the managing director to show up in person in Budapest — plan a trip around that if you don't yet have Hungarian residency.
- Getting the company registered (often under a week) is not the same as being ready to trade — bank account setup, Cégkapu registration, and accountant onboarding typically add real time on top of the registration date.
- If you're a non-EU national who wants to physically live in Hungary while running your new company, that requires a separate business residence permit application (2–6 months), independent of the company formation process itself.
- KATA's flat monthly tax sounds attractive but only applies if every client is a private individual, not a company — most remote freelancers and consultants billing foreign businesses will not qualify and need to use the flat-rate or standard sole-trader regime instead.
- If you're a non-EU/EEA citizen without existing Hungarian residency, you generally cannot register as a sole trader (egyéni vállalkozó) as your first move — forming a Kft (limited company) is usually the practical route in, and the Kft itself can then form the basis of a business residence permit application.
- Budapest's municipality charges the full legal maximum 2% local business tax (HIPA); some smaller Hungarian towns charge 0-1%, but relocating your registered seat later to chase a lower rate adds cost and admin.
- A Hungarian Kft requires the managing director to visit Hungary in person to open the corporate bank account — this cannot be done remotely, even if you incorporate remotely via a lawyer.
- Hungary uses the Forint (HUF), not the euro, and has no confirmed near-term euro adoption timeline, so a business invoicing mainly in EUR/USD carries ongoing currency-conversion cost and exchange-rate risk.
- A standard sole-trader setup (outside KATA) ends up paying tax in two layers similar to a company — 9% on profit plus 15% personal income tax on withdrawn income — so the 'simpler' freelancer route doesn't automatically mean a lower total tax bill than a Kft.
Corporate Tax Overview
- Headline Corporate Income Tax Cit
- Hungary applies a flat 9% corporate income tax (CIT) on company profits, described as the lowest statutory CIT rate in the EU, unchanged since 2017. Resident companies (Kft, Zrt) are taxed at 9% on worldwide profit; non-resident companies with a Hungarian permanent establishment are taxed at 9% on Hungarian-source profit only.
- Cit Advance Threshold 2026
- HUF 20,000,000
Companies with prior-year CIT below this amount moved from monthly to quarterly advance payments starting 2026, easing admin burden.
Other Business Taxes
- VAT Standard Rate Percent
- 27
- Innovation Contribution Percent
- 0.3% of the net sales revenue base, applicable to companies above a size threshold.
- Withholding Tax On Dividends Interest Royalties To Foreign Corporates
- 0%
- Minimum Tax Base Rule
- If a company's calculated taxable profit is very low relative to revenue, the tax base is compared against 2% of total revenue; if actual profit is below that floor, the company must pay CIT on the higher minimum base or file a statement explaining the shortfall.
- Large Multinational Minimum Tax
- Groups with EUR 750 million+ in consolidated global revenue are subject to the OECD Pillar Two 15% global minimum effective tax rules; this does not affect ordinary small/medium foreign-owned businesses.
VAT Reduced Rates Percent
- 18
- 5
Local Business Tax Hipa
- Rate
- Up to 2% of adjusted net sales revenue; Budapest levies the full 2%.
- Simplified Tier System Threshold
- HUF 25,000,000
Companies/sole traders with annual revenue under this amount can use a simplified 'tier' calculation method for HIPA instead of the standard revenue-based formula.
- Small Revenue Exemption Budapest
- HUF 1,500,000
In Budapest, businesses do not owe HIPA if annual revenue is below this threshold.
- Description
- Every company (and sole trader above a small threshold) must pay a municipal Local Business Tax, Helyi Iparűzési Adó (HIPA), set by each municipality up to a legal ceiling. It is levied on adjusted net revenue, not profit, and is deductible when computing CIT. In Budapest the municipality charges the full legal maximum rate.
Cit Filing And Payment Obligations
- Tax year follows the calendar year (1 January – 31 December).
- Annual CIT return is due within 5 months of the tax year-end.
- CIT advance payments are made monthly if prior-year CIT liability exceeds HUF 20,000,000 (raised from HUF 5,000,000 as of 2026); otherwise quarterly.
- VAT returns are filed monthly or quarterly depending on turnover, due by the 20th of the month following the filing period; an annual VAT return is due by 25 February of the following year.
- All filings are submitted electronically through NAV's (the Hungarian tax authority's) online portal.
- Companies must file annual financial statements with the Court of Registration (Company Registry); a statutory audit is required once size thresholds under the Accounting Act are exceeded.
- Companies engaging in related-party (intra-group) transactions above set thresholds must maintain transfer pricing documentation applying the arm's-length principle; non-compliance can trigger significant penalties.
- Bookkeeping and statutory accounts must be kept in Hungarian.
Structure Comparison For Foreigners
Freelancer Sole Trader
- Liability
- Unlimited personal liability — there is no separate legal entity shielding personal assets.
- Registration
- Free, done online via the Ügyfélkapu client-gate portal (a notice of commencement of business activity); no minimum capital requirement; registration/tax number is issued essentially immediately.
- Hungarian Term
- egyéni vállalkozó
- Who Can Register
- EEA/EU citizens and existing Hungarian residents can register directly and immediately online. Third-country (non-EU/EEA) nationals can only register as a sole trader if they already hold a valid Hungarian residence permit that specifically permits self-employment — so this route is generally not available as a first step into Hungary for a non-EU foreigner without another residency basis.
- Compliance Burden
- Lighter than a Kft: no separate audited financial statements or Company Registry filings are required. Still must issue NAV-compliant e-invoices, keep income/expense records, file an annual personal income tax return, file VAT returns, and pay HIPA where applicable.
Tax Regime Choices
KATA (Itemized Flat Tax)
- Extra Tax Above Threshold Percent
- 40
- Regulatory Status
- Fully legal and regulated
- Flat Monthly Tax Full Time
- HUF 50,000
- Annual Income Threshold Before Extra Tax
- HUF 18,000,000
- Flat Monthly Tax Auxiliary Non Full Time
- HUF 25,000
- Eligibility Note
- Only usable if the sole trader's clients are exclusively private individuals (natural persons), not companies — since 2022 reforms this excludes most B2B remote/freelance work billing foreign or domestic companies.
Flat-rate Taxation (áTalányadózás)
- Regulatory Status
- Fully legal and regulated
- Annual Revenue Cap Retail
- HUF 193,680,000
- Annual Revenue Cap Most Activities
- HUF 38,736,000
- Description
- A deemed-expense system: for most activities 45% of revenue is treated as expense (55% is taxable income), taxed at the 15% personal income tax rate plus social contributions. Lower deemed-income ratios (e.g. 10-20% taxable) apply to certain activities including retail.
Standard / Itemized Regime (Vállalkozói Jövedelemadó)
- Regulatory Status
- Fully legal and regulated
- Description
- Actual revenue minus actual documented expenses is taxed at a 9% 'entrepreneurial' income tax on profit, with a further 15% personal income tax applied when profit is withdrawn as the owner's 'dividend-base' — a two-layer structure similar to a company, but without limited-liability protection.
Limited Liability Company Kft
- Who Can Own
- Any foreign individual or entity can own 100% of a Hungarian Kft, with no nationality or residency restriction on shareholders or the managing director; a foreigner can appoint themselves as managing director.
- Requirements
- Must maintain a Hungarian registered office and a managing director; the managing director must visit Hungary in person to open the corporate bank account — remote account opening is not available for a newly formed company.
- Hungarian Term
- Korlátolt Felelősségű Társaság (Kft.)
- Minimum Capital
- HUF 3,000,000
- Registration Time
- Typically a few business days once founding documents (countersigned by a lawyer) are filed with the Court of Registration.
- Capital Note
- Once the company is registered, the share capital does not need to remain locked in the bank account and can be used for operations immediately.
Taxation
- Cit Percent
- 9
- Hipa Percent Budapest
- 2
- Realistic Effective Rate Note
- Combining CIT, Budapest's full 2% HIPA, and the 0.3% innovation contribution, the realistic total tax burden on a Budapest-based Kft's profits is roughly 9-11%, depending on revenue structure.
- Innovation Contribution Percent
- 0.3
- Profit Extraction To Owner
- When profit is distributed as dividends to the owner, it is taxed separately at 15% personal income tax plus 13% social contribution tax (SZOCHO), with the social-contribution portion capped annually at a multiple of the minimum wage.
- Alternative Small Business Regime Kiva
- KIVA (small business tax) is an alternative flat regime at 10%, combining elements of corporate tax, payroll-related social contribution, and dividend-base tax into a single rate; availability depends on headcount and revenue size thresholds.
Compliance Burden
- Annual financial statements filed with the Court of Registration; audit required once size thresholds are exceeded.
- Annual CIT return within 5 months of year-end.
- VAT filed monthly or quarterly, plus an annual VAT return by 25 February.
- Monthly payroll reporting if the company has employees.
- Hungarian-language bookkeeping is mandatory.
- Transfer pricing documentation required for related-party transactions above set thresholds — relevant for a foreign-owned subsidiary invoicing its parent or affiliates.
Other Structures Less Common For Foreigners
- Branch office (fióktelep) — operates as an extension of a foreign parent company rather than a separate Hungarian legal entity.
- Zrt (private joint-stock company) — minimum capital HUF 5,000,000 (~9,600 was Kft; Zrt is roughly 16,000 USD equivalent), used for larger or more formally governed ventures.
- General/limited partnerships — less common for foreign founders due to unlimited liability exposure.
Typical Incorporation Cost Estimate
- Legal And Notary Fees
- HUF 500,000
Approximate attorney/notary cost for a straightforward single-member Kft.; complexity (foreign corporate shareholders, translations) increases this.
All In Formation Package Range
- Low
- HUF 680,000
- High
- HUF 1,500,000
- Note
- Commercial incorporation-service packages (legal fees, registered office, translations, basic admin setup) commonly advertise in this range; excludes the separate share capital contribution and ongoing accounting fees.
Local Partner Or Sponsor Requirement
- Summary
- No local partner, sponsor, or nationality/residency restriction applies to founders, shareholders, or managing directors.
Details
- Any foreign individual or foreign company can be the sole owner of a Hungarian Kft. — full 100% foreign ownership is legally permitted, and a single founder can incorporate alone.
- There is no requirement that the managing director or shareholders reside in Hungary.
- One mandatory local element applies: every member or managing director without a registered address in Hungary must appoint a local 'service of process agent' (kézbesítési megbízott) in the company register — this agent cannot be another member or director of the company itself.
- The company must maintain a registered office address inside Hungary (a serviced/virtual office address is commonly used for this).
Realistic Timeline
- Court Registration Itself
- Typically 1–10 business days once complete, correctly prepared documents are submitted — commercial and legal sources most consistently cite roughly 3–5 business days for a straightforward single-founder Kft. filed via the simplified/standard-charter procedure.
- To Become Fully Operational
- Add 1–4 additional weeks beyond registration for opening a business bank account (in-person requirement), setting up Cégkapu/accounting, and any sector licensing — founders should not equate 'incorporated' with 'ready to invoice and bank.'
- Non EU Founder Residence Permit If Relocating
- If a non-EU/EEA founder wants to actually live in Hungary while running the company (rather than just owning it remotely), a separate business residence permit is required, with processing taking roughly 2–6 months — this is a distinct process from company incorporation itself.
Most Common Vehicle
Korlátolt Felelősségű Társaság (Kft.) — the Hungarian limited liability company — is the standard entity for foreign-owned small businesses in Budapest; a Zrt./Rt. (joint-stock company) exists but is used mainly for larger operations due to higher capital requirements.
Step By Step Process
Step By Step Process
- 1. Choose and reserve a unique company name, checked against the Hungarian Company Register (Cégjegyzék) — must include the 'Kft.' suffix for a limited liability company.
- 2. Engage a Hungarian attorney (legally required) to prepare the Deed of Foundation / Articles of Association, covering founders, registered office, business activities (TEÁOR codes), share capital, and management structure.
- 3. Gather and (where needed) certify/translate founder documents: passport or ID, proof of address; if a founder is itself a foreign company, its corporate documents typically need certification and Hungarian translation.
- 4. Complete mandatory attorney-led identity verification (JÜB) and sign the founding documents, either in person in Hungary or remotely via Power of Attorney.
- 5. Contribute the minimum registered share capital.
- 6. Attorney electronically files the application with the Court of Registration using a qualified digital signature.
- 7. Upon court approval, the company is entered in the Cégjegyzék and automatically receives its company registration number, Hungarian tax number, and an EU VAT number.
- 8. Register for the Cégkapu (Company Gate) electronic mailbox, mandatory for official correspondence with Hungarian authorities.
- 9. Open a Hungarian-forint business bank account — this step requires the managing director to appear in person in Hungary; it cannot be completed remotely.
- 10. Register with the National Tax and Customs Administration (NAV) for ongoing corporate tax and, if applicable, VAT/payroll obligations; sector-specific licenses (financial services, energy, industrial activities, etc.) are only required for regulated activities.
Mandatory Legal Representation
Under Act V of 2006 (the Company Registration Act), the incorporation application can only be filed electronically by a Hungarian-licensed attorney using a qualified digital signature — self-filing by the founder is not legally possible. The attorney drafts and countersigns the Articles of Association/Deed of Foundation, completes the mandatory JÜB client-identification check, and submits the filing to the competent Court of Registration (Cégbíróság).
Official Registry And Government Links
Official Registry And Government Links
- Hungarian Company Register (Cégjegyzék) public search — e-cegjegyzek.hu: https://www.e-cegjegyzek.hu/?ceginformacio
- Company Gazette (Cégközlöny), Ministry of Justice — daily filings of articles of association: https://www.e-cegkozlony.gov.hu
- EU e-Justice Portal overview of Hungary's business register: https://e-justice.europa.eu/topics/registers-business-insolvency-land/business-registers-eu-countries/hu_en
AI-generated estimateData refreshed July 2026
Sources cited for this category
These are the sources cited in this business permits & incorporation for foreigners research for this city. Individual figures may not each trace to one of them.
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Data last updated July 2026 · Verify anything important.