Benefits of company establishment in Hungary

The corporate tax rate in the EU is currently the lowest in Hungary, at 9% (compared to 30% in Germany, for example). Thanks to the favorable tax and company formation conditions, the company establishment in Hungary is definitely recommended, because in addition to these circumstances, if the company requests a Community tax number, it can trade freely with the Member States of the European Union and the EEA states.

Establishing companies

Under the provisions of the relevant legislation, the establishment of companies is possible only with the assistance of an attorney or a notary.

In order to simplify the establishment of companies, the Ministry of Justice publishes on its website up-to-date contract samples for each company form in accordance with the legislation in force, as well as samples of other documents required for company proceedings. These patterns really speed up the process of setting up a company and if there is no need to include a significant individual provision in the memorandum of association, this may be the right solution for most businesses.

We consider it important to help our Clients choose the form of company that best suits their interests and needs, and to inform our Clients in detail about the particular form of company.

In our experience, if a memorandum of association is drawn up covering all circumstances at the time of the company’s establishment, it also avoids possible subsequent amendments, which would prevent the payment of a significant amount due to repeated company proceedings in addition to the problem.

General partnership

The Civil Code names the general partnership as the first company form. It has two important aspects: there is no specified minimum value of the property contribution to be made to the company and that members are jointly and severally liable for liabilities not covered by the company’s assets. Therefore, this form of company is mainly recommended for smaller businesses.

Limited partnership

A limited partnership is very similar to a general partnership in that the limited partnership has at least one member who qualifies as a majority partner and is obliged to settle with its entire assets for liabilities not covered by the company’s assets and has at least one other member who qualifies as an minority member who is not obliged to liablity for liablities not covered by the company’s assets. This form of company is also mainly chosen by smaller companies, which already have a significant cash flow.

Limited liability company

A limited liability company is a very popular form of company for small and medium-sized businesses, as the members are not liable for the debts of the company after the payment of the property contribution, ie the capital contribution. This circumstance, of course, necessarily requires that the company have an adequate amount of assets, also known as share capital, which based on the Civil Code’s current regulations, it is set at a minimum of HUF 3 million.

Joint stock company

The choice of larger companies is mainly the form of a joint stock company, in which, like the Limited liability company (Ltd.), the member, as a shareholder, does not owe any liability not covered by the company’s assets beyond the payment of the nominal value or issue value of the share stock. A joint stock company may operate as a private or public company, depending on whether its shares are listed on a stock market or not. The share capital of a private limited company is at least HUF 5 million, and  a public limited company’s share capital is at least HUF 20 million.

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