Hungary is growing in popularity, as some traditional places like Cyprus or Malta are becoming less popular.
It is quite easy to open a company in Hungary, it’s easy to open bank accounts. Banks in Hungary are quite good.
You will have an easier time banking in Hungary than many other EU countries.
They’re very aware of new trends and technologies and are very open to improving. For example, right now they’re bringing a set of rules that requires banks to have a very fast settlement system – 3 seconds!
What are the consequences of forming a company in Hungary
The base national tax rate for a local company is 9%, which is the lowest in Europe.
There are municipal taxes, depending on where you form a company, but we can play around it and set up in the lowest tax area.
VAT is not nice! It’s 27%, which is quite high.
Payment processing is okay, but nothing extraordinary.
You’re part of the EEA so you get access to many providers, but Stripe, for example, is not in Hungary.
If you come and live here, be aware that personal taxes are not amazing.
If you’re a foreigner that owns a local company, if you own it directly, when you withdraw dividends you’ll be subject to 15% withholding tax.
Unless reduced by tax treaties, this is quite high for dividends.
Consider 9% basic corporate tax, plus 15% for dividends. Not so attractive!
But there is a catch!
There’s no withholding tax if the payment is made to a legal entity, rather then to an individual.
Hungary is a good place to have your operations
There are almost 10 million people. Reasonable access to talent.
Wages are not too high yet. You could easily set up an office and get a team here.
You could leave money in the company, or you could pay dividends to a withholding company somewhere else that would have participation exemption, so you wouldn’t need to worry about withholding tax on the Hungarian side. This would be worth considering.
They cracked down a lot when it comes to corporate expenses write-offs.
It’s not as bad as it is in Denmark or the Netherlands, but it’s not ideal either.
It’s becoming tighter when it comes to what can you run through your company as a business expense.
The economy in Hungary is pretty vibrant
The real estate market is on the rise. At this point cap rates are not going to be that great, you’ll not have the same opportunities that you’d have 10 years ago. However, there are still some opportunities for capital appreciation if you choose the right properties. It is still quite a bit cheaper than Vienna for example.
Being part of the former Austro-Hungarian empire many like to compare Budapest with Vienna. Many business people go back and forth between these two cities. Budapest is noticeably cheaper than Vienna.
The quality of life here is pretty good. Budapest is beautiful, among the most attractive cities in Eastern Europe. English is widely spoken.
The food scene is great as well, there are 5 Michelin star restaurants.
The cuisine is mixed here because this was an intersection of Germanic, Turkish, Italian and French foods in this area. It makes it such an interesting blend.
We can offer unofficial citizenship by investment in Hungary
However, this unofficial scheme is very expensive. This EU passport will cost you 750 000 EUR.
An important thing to mention is that Hungary is not a pro-immigration country, however, there are schemes to get residency by investment here.
If you’re looking for a place to set up an operating company, Hungary might be a good option for you.
Having in mind that substance is becoming more and more important in the world of business, you’ll need to look for a solid place to set up your operations.
If you’re thinking about Hungary, we recommend you to visit it.
We’ve been here multiple times, and always and a great experience.
Hungary is probably the most business-friendly country in this region
To sum it up, Hungary offers an easy setup, that’s not too expensive. It will be fast and simple to open a company. The banking setup is also straightforward and is not a nightmare as in many places. Corporate tax is not too high.
There are many opportunities in this country.
Be aware that the market has been on the rise in the past, and nobody knows whether this trend continues or not.
If you need help with companies, bank accounts, connections in the country or something else, feel free to reach out to us.