Starting a business in Hungary is very easy. Registration is done in 4-5 business days, and you immediately get an EU VAT number as well, so you can start trading in no time. You only need a bank account to manage your finances, and you are ready to go. But what else to consider before setting up? Here is a list of the most important things – with which our team will be happy to help.
1. What do you want to do?
When you set up your business, you will have to indicate its planned main activity. Some activities need additional licenses, while different regulations might apply to selling goods and services domestically and internationally. You can find more information about activities and the relevant NACE codes here.
2. Who are your customers?
Consider whether your customers will be businesses or natural persons, and whether you will be selling your products locally or internationally. If you are selling items in a shop, you will probably need a cash register. These factors will affect the premises your operation may require and the taxes you must pay.
3. Where will you perform your activity?
Think about what kind of environment you need for performing your business activity. Will it need an office or a shop? Will it need a warehouse for storing goods? Your premises will need to be registered, and you will be paying a local business tax to the local municipality.
4. Will you need a seat provider?
Wherever you actually plan to operate your business, you will need a physical address from day one after starting a business in Hungary, where authorities will expect to find you. For this purpose, most businesses use the services of a virtual office provider that has competent personnel on location every day who can receive official mail on your behalf and forward it to you within a day or so, so you can promptly act on the messages. Our own service goes one step further, adding short English-language summaries with instructions whenever necessary.
5. Will you become a VAT subject?
In Hungary, the standard rate of VAT is 27%. Most businesses are subject to VAT, even though it is not mandatory under a yearly revenue of HUF 12 million (ca. EUR 30,000). However, VAT may be reclaimed from most purchases, but that is only possible if you are a VAT subject. Make sure to discuss this with your Hungarian accountant.
6. What is the size of your planned operation?
This question is partly about your expected yearly revenue, which affects not only whether you should become a VAT subject, but also the tax regimes available to you (more on that below). However, it also ties in to the premises and the number of employees you need for performing your activity.
7. How many employees do you need?
Maybe not from day one, but eventually you will probably need employees to carry out your business activity. How many people will you need? And where will they work? This ties back to question 3 about premises. Moreover, salaries must be paid in HUF, preferably a Hungarian bank account.
8. How to open a corporate bank account in Hungary?
In Hungary, every company must have at least one corporate bank account in HUF. You are supposed to pay taxes and salaries from this account. Of course, you may have other bank accounts in other currencies as well, which makes sense if you are doing business in those currencies. We can help you with bank introduction too – read more about bank account opening here.
9. Is there an initial deposit to make?
When you set up a Hungarian LLC (or “KFT”), which is the most popular company form for small businesses, it must have a share capital of at least HUF 3 million (currently ca. EUR 8,000). This can either be deposited at your bank or used for company related expenses. Make sure to consult your accountant about this.
10. Will you need an accountant?
The short answer is: yes, you will need a Hungarian accountant. Some reports can only be submitted to the Tax Authority by chartered accountants, and you will need an ally anyway who can help you keep tabs on your finances and help your business remain compliant with tax regulations. Your accountant can be either an employee or a separate provider, such as Helpers. Read more about the tasks of an accountant here.
11. Who will issue your invoices?
Issuing invoices is normally not part of the accountant’s job, unless they are in-house. You can easily issue invoices on your own, though: you just need a licensed invoicing tool. Currently, there are various online invoicing platforms you can use for this purpose; your accountant may be able to get you started. Read a summary of Hungarian invoice types here.
+1 Which tax regime to choose?
In Hungary, corporate tax is the lowest in Europe at just 9%. At the same time, there is another tax regime available to small businesses called KIVA. In some specific cases, it might be even more favorable for your business than regular corporate tax (TAO). Learn more about KIVA here.
Ask for a consultation before starting a business in Hungary
While starting a business in Hungary takes just a few days, planning the whole procedure may be longer. You should have a vision of what you want to do and how you want to do that, and then come up with answers to practical questions about implementation. The above list of questions is a good place to start. However, there might be more questions along the way.
To make the most of your business idea, your best bet is finding an experienced team of professionals such as the Helpers Team, who can guide you every step of the way, answer your questions, and help you create a feasible plan for starting and growing your business in Hungary. Working with Helpers you can rest assured that your Hungarian business is in good hands.
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