Investing in Hungary: The ‘Why’ will guide the ‘How’

Benefits and investment process

Starting a new business has always been a challenging and exciting idea. If you are thinking of setting up a business in Hungary there are a number of issues you need to consider (the situation of the industry of Hungary, the vulnerability of the countries of this specific geographical sector, the latest statistical data of the GDP, the unemployment rate, etc…).

This article is intended for anyone interested in investing in Hungary. We will expose the benefits of having business and the company formation in Hungary.


Why is Hungary the country to invest in?

  • Hungary: An emerging Market

In terms of development, Hungary is known as the most emerging country in Europe, with growth of 4% in 2017. The Hungarian cities are attractive in many areas, including tourism, thermal baths, dental care, education and in the vineyard. With nearly 5 million tourists in 2017, the Hungarian capital is one of the most visited cities in Europe.

In addition to that, infrastructure, telecommunication networks, legal and regulatory framework give Hungary a favorable environment for sustainable growth.

  • Investment Attractiveness: Foreign Investors trust in Hungary

In recent years, the popularity of Hungary among foreign investors continues to increase. According to the latest World Bank annual rating (2019), Hungary is ranked 53 among 190 countries in ease of doing business (48th in 2018).

The country has benefited from a shift in Foreign Direct Investment (FDI) in the textile and low-value-added food processing, wholesale and retail.

According to the Hungarian Investment Promotion Agency, Foreign Direct Investment inflows reached EUR 4.3 billion in 2018.

  • Highly Skilled workforce

The Hungarian workforce is very skilled with cost-effective, which increases the country’s competitiveness internationally. The country has several famous universities practice-oriented, each playing an important role in the training of the workforce. The large number of high research institutions quality reflects the traditional strengths of Hungary in the field of science and technology.

  • Efficient financial and banking system

The banking system includes 36 banks, 11 specialized credit institutions and 49 cooperative credit institutions. Apart from OTP Bank, the largest commercial banks are subsidiaries or branches of major foreign banks.

Since the beginning of the financial crisis, the Hungarian government has found a number of solutions to stimulate lending.

Funding for the Growth Plan was launched by the Central Bank of Hungary to improve financing conditions for small and medium-sized enterprises with preferential financing by the central bank. Up to January 2017, nearly 40,000 private companies have secured financing.

  • Attractive Tax System

In 2017, a uniform corporate income tax replaced the old progressive system in Hungary. The rate is 9%.

A step-by-step guide to starting a business in Hungary

As we have previously discussed, Hungary is one of the best locations for those who want to set up a business in Europe.

Company formation process includes 5 steps :

1- Prepare documents and have a registered address

Creating a business is a step that must be done by a lawyer: It is mandatory to use a legal representative and to have some documents countersigned by a lawyer to set up a business.

When you set up or incorporate a company In Hungary, the authorities review and register certain information about the company and make it available to the public.

Having a registered address is one of the most important steps of the company formation process. The domiciliation of the company corresponds to its administrative address (registered office).

2- Open a Hungarian bank account

The creation of a company bank account is a legal obligation.

It is very useful in many ways: cashing your down payments and payments, payment of wages, your accounts receivable, current expenses or taxes.

3- Collaborate with a qualified accountant

Whatever their size or activity, All companies in Hungary are expected to have an accountant. Having an accountant is required by law. The accountant is responsible for submitting the accounting documents to the public authorities and various partners of the company.

4- Registration With The Hungarian Trade Tribunal

The company receives a tax identification number from the tax authority. The Commercial Court registers the registration of the company within one working day after the issue of the tax identification number in the case of a simplified procedure, and within 15 working days from the receipt of the application in the case of a normal registration procedure.

However, it is necessary to ensure that the Commercial Court is informed by the tax authorities of the issue of the tax identification number within one working day, otherwise the procedure will be suspended and the registration of the company will require more time.

5- Registration With The Tax Administration And The Statistics Office