Contemplating LLC company registration in Hungary? Whether you are a startup founder, a seasoned business owner looking to expand into Central Europe, or a corporate group setting up a local branch, Hungary is a very attractive jurisdiction with a low corporate tax rate, access to the EU market, and a company law that is relatively easy to navigate. In this guide, we cover everything you need to know about registering an LLC (Kft) in Hungary, its advantages, a practical step-by-step registration roadmap, required documents, tax and payroll obligations, timelines, common pitfalls, and tips on staying compliant while operating. For the benefit of foreign founders, we outline the registration routes and services available and provide practical tips. 

What is an “LLC” in Hungary?

In Hungary, the equivalent of an LLC is the Korlátolt Felelősségű Társaság or Kft for short. A Kft is a private limited liability company where the liability of the shareholders is limited to their capital contribution. This is the default structure for small and medium-sized enterprises (SMEs) and also for foreign investors seeking a limited liability structure under Hungarian law. Key practical features:  

  • A single-member Kft is permitted (with one founder).  
  • A Kft can only be registered if the owner has a registered seat in Hungary.  
  • The company is managed by one or more managing directors who are appointed in the incorporation documents.
  • Share capital is recorded in the company register at the time of formation. 

Why start a Kft (LLC) in Hungary? 

  • Profitable businesses will find Hungary’s corporate income tax (9%) to be advantageous. It is one of the lowest in Europe.  
  • As a member of the EU, Hungary offers unrestricted access to EU trade, VAT, and movement regulations.  
  • The Kft law offers a clear and reliable company law along with strong creditor protections, which is helpful to companies as well as investors.  
  • The company can be started by one person who will be the sole founder, sole director, and sole shareholder.  
  • Hungary balances a steep VAT tax with a transparent tax system; Hungary’s VAT is set at 27% which is the highest in the EU.  
  • Hungary’s central position in the region is complemented by an educated workforce, which is helpful in logistics and for the country’s labor market.  

Due to these benefits, the Kft is the preferred company vehicle for foreign investors who do not want to set up a branch office but wish to have a locally registered entity. 

Can foreigners or foreign legal entities form a Kft in Hungary?

Yes. An Kft can be formed in Hungary by a foreign individual or a non-EU legal person. There are no restrictions on shareholding ownership. However, the company:

  • Must have a registered office (seat) in Hungary (your fiscal/commercial address).
  • May need to obtain certified translations and apostilled incorporation documents for foreign founders.
  • Should have a local contact for administrative purposes (this is offered by many registered office service providers). 

So while foreign ownership is allowed, practical requirements (local address, translated documents) need to be managed properly.

Core legal and financial facts (load-bearing points)  

Minimum share capital: The legal minimum capital for a Kft is 3 million HUF (Hungarian forints). This share capital is eligible for being a contribution in cash or in kind after proper appraisal and registration procedures.  

Corporate income tax: Hungary has a flat rate corporation tax of 9% on taxable income. This is a major reason why a lot of foreign groups set up holding or trading companies in Hungary. 

VAT:  The Standard VAT rate is 27%; some goods or services may qualify for reduced or special VAT. You are obligated to register for VAT if your trade turnover surpasses a certain threshold limit or if you plan to do business in Hungary.  

Local business tax (municipal): Local authorities are permitted to impose a Local Business Tax (often up to 2% of the Adjusted Local Tax Base). Be sure to check your commune’s regulations.  

Be sure to confirm with your adviser, but these represent the major tax principles of operating a business in Hungary.  

Step-by-step: how to register an LLC (Kft) in Hungary  

We provide a streamlined guide so that you can avoid the common delays.  

Step 1 — Outline the business’s basic details  

Settle the core aspects before document creation:  

  • Among the options are the company’s name (must be unique within the company register).
  • Business activities (NACE codes).  
  • Location of the registered office in Hungary.  
  • Amount of the share capital (at least HUF 3,000,000) and the type of contributions (cash or in-kind).  
  • Shareholders and their details (individuals or legal entities).  
  • Managing director(s) and their authority.  
  • Fiscal year (standard is calendar year, but can be chosen differently).  

Select a name early on to streamline the registration process, as the registry ensures there are no conflicts.  

Step 2 – Draft the founding documents  

You will require:  

  • Articles of Association / Deed of Foundation (details shareholders, their share contributions, officer appointments, and the company’s business activities).  
  • In the case of a sole founder, a unilateral deed (single-member deed) is used.  
  • Company documents in Hungarian and English, and apostilled documents for foreign founders (commercial register excerpt, power of attorney, etc). All foreign documents require an apostille (Hague Convention) or consular legalization and a Hungarian official translation. 

Foreign founders often hire a Hungarian attorney or formation agent to assist them with the translation and preparation of the documents.

Step 3 — Deposit Share Capital/contributions

In the case that the share capital is to be provided in cash, share capital represents cash, then the bank will open a temporary bank account to enable the founder to deposit the capital subscribed. In turn, the bank will issue a bank certificate confirming the deposit. In case the contribution is in-kind, then the contribution will be assessed and thoroughly examined by the register. The bank certificate (in the case of cash contributions) or documents in case of in-kind contributions will be part of the registration evidence. 

Step 4 — Court of Registration for Company Registration

In Hungary, there is a Company Register (Cégbíróság) which is operated in a central manner electronically. Filing is usually done by an attorney or authorised representative through the official portal (submissions made electronically tend to be completed faster).  

Some documents needed for the application, which are to be electronically presented to the court, are:  

  • Uploaded signed Articles of Association.  
  • Bank certificate for capital deposit (if cash).  
  • ID documents and evidence of the appointed managers.  
  • Proof of registered office, which includes lease or ownership documents or a service contract for the registered office.  
  • Affidavits showing specified specimen signatures, powers of attorney, and blank spaces constituting the same.  
  • For documents that are foreign, if there is an apostille and a translation is provided, then it is applicable. 

In case the documents presented are complete, and the other conditions for the application are met, the court will register the company and issue a company registration number (company ID).

Step 5 — Tax Registration (NAV) and VAT

When you finish registering the company, you will need to do the following:

  • Tax Registration (NAV): For a company to have an adó szám (tax ID) in Hungary, it needs to be enrolled with the NAV. Some registration agents do NAV registration ahead of court registration, or do it soon afterwards.  
  • VAT Registration: Register for VAT if you anticipate taxable turnover or EU supplies/receipts. Non-residents participating in taxable activities in Hungary may face additional VAT registration obligations. Standard VAT is 27%. 

Step 6 — Social Security, Payroll, and Local Taxes  

Employers in Hungary must:

  • Enroll as an employer with NAV. You will need to set up payroll withholding and work out employer social contributions (refer to the tax section below).  
  • Identify if the local municipality (of your registered office) has local business tax registration obligations.  

Step 7 — Full Company Bank Account and Operational Launch 

You can open a standard corporate account with a bank after company registration. Some banks may upgrade the temporary account to a standard account. You may also use the account for business transactions. If you need to do any fund transfers internationally, banks are required to do the usual KYC/AML checks on foreign shareholders and beneficial owners, as is standard.

Documents required for Kft registration

For expediency, the following provides the outline of a typical documentary package:

For individual shareholders or directors (Hungarian or foreign): –  

  • Passport or national ID (certified copy for filing).
  • Proof of residential address.
  • Specimen signature or signature card for the company register.

For foreign corporate shareholders:  

  • Certificate of incorporation and current extract from the commercial register (issued recently — e.g., within 30-90 days), apostilled or consularised as required.
  • Memorandum & Articles of Association (or equivalent), with certified translation into Hungarian.
  • Power of attorney to the representative who signs on behalf of the foreign entity (apostilled & translated). 

Corporate formation paperwork:  

  • Articles of Association (statute/founding deed).
  • Bank certificate confirming capital deposit (or documents proving in-kind contributions).
  • Lease or title deed for registered office (or contract with registered office provider).
  • Signed appointment of managing director(s).
  • Proof of payment of the registration fee, if applicable.

Important: all foreign documents typically require an official Hungarian translation and frequently an apostille. Work with an authorised translator and formation specialist to avoid delays.

Tax & Payroll Obligations After Registration: What to Expect  

Corporate Income Tax  

  • The corporate tax rate is 9% on taxable profits. This is a remarkable benefit of Hungary’s tax system. Corporate tax is more or less paid for each tax period and is calculated based on the local accounting/tax rules.  

VAT (Value Added Tax)  

  • The standard rate of VAT is 27% with reduced rates of 5% and 18% which are applicable to certain categories such as medicines, books, accommodation, and a few more. Registration is required if the estimate of taxable turnover exceeds the threshold or taxable supplies are made in Hungary. There are special rules for cross-border EU supplies.

Local Business Tax (Municipal Trade Tax)  

  • Local business tax is charged on a local tax base, a maximum of 2% of an adjusted base. This is paid to the local government in charge of the area where the business activities are conducted. Please look at the local municipality’s regulation where your office is registered.  

Employer social contributions & Payroll  

  • Payroll and employer social contributions need to be paid for by the employer for employees’ income tax and social security contributions to be withheld. Verify current rates with a payroll specialist, but historically, the employer social contribution rate has been fixed at 13% along with ancillary payroll fees. 

Withholding taxes and transfer pricing 

  • Payment across borders might attract withholding tax rates or transfer pricing documentation requirements. If you’re a member of a multilateral association, ensure that you have prepared appropriate transfer pricing documents for all intra-group dealings. 

Drafting a compliance return for VAT, payroll, and other due taxes on a monthly or annual basis would be best left to a local accountant. Hungarian compliance and filing systems are meticulous and operate through NAV.  

Common pitfalls and how to avoid them 

  • Documents lacking Hungarian translation or authentication, such as missing registered office or proof of address, can be resolved by preemptively securing registered office contracts, certified translations, and apostilles.  
  • Documents lacking a registered office and proof of address are fixable by securing leases with reputable providers to satisfy the Hungarian address verification requirement.  
  • Documents lacking proof of address, bank verification, or clear contribution valuation fail to meet the court’s requirements. Bank certificates and documented expert evaluations fulfill this requirement.
  • Overlooked VAT & Location-Based Taxes – VAT in Hungary is particularly high, and there may be a local business tax as well. Solution: Relevant cash flows and VAT incidence, as well as the municipal business LBT, should be modeled. 
  • KYC/AML Bank Verification Delays: For banks, a complex and layered structure of ownership may raise red flags and trigger in-depth scrutiny. Solution: For non-Hungarian shareholders, certify the ID, proofs of address, and corporate extracts in advance.  

A Guide for Foreign Founders  

  • Hire a local formation lawyer: In Hungary, there are attorneys who file incorporations with the company registry online, which saves time and boosts accuracy.  
  • Choose the registered office provider early on – Many professional registered office companies provide the services of receiving and forwarding mail.  
  • Design the banking relationship early on: foreign-owned local banks and some international banks have packaged deals for foreign incorporations; verify the KYC policies before sealing the deal.  
  • Set up the payroll system before hiring – Ensure compliance with payroll and social contributions, although most companies outsource payroll as a risk management strategy.  
  • Explore tax optimization, incentives, and rebates: Speak to a tax adviser on R&D incentives, IP regimes, and the possible value addition of a holding structure.

Set Up Your Kft Today with Commenda

If you want a seamless process, we aid international clients in company registration, registered office, required document translations, tax registration, and ongoing filings. Our services are comprehensive — drafting the Articles of Association, filing at the registry, NAV registration, and setting up payroll — allowing you to shift your focus to operations.  

Schedule a consultation for a tailored quote and timeline to start your Hungary company formation with Commenda.

FAQS

Q: Can I register an LLC online in Hungary? 

A: Yes, filings are electronic at the company register, which is usually done by a lawyer or an authorized representative. The completion rate is much higher.  

Q: Do I need a Hungarian resident director?

A: There is no need for a statutory Hungarian national director. Foreign managers are allowed. However, a local registered office is required.  

Q: How long does it take to register?  

A: Registration at the court can be done in days if all documents are ready, but full operational readiness (bank account, VAT, payroll setup) usually takes 2–6 weeks.  

Q: What is the minimum capital?  

A: 3,000,000 Hungarian Forints (three million forints).  

Q: What is the corporate tax rate?  

A: 9% corporate income tax.  

Q: What is the VAT rate?  

A: The standard VAT rate is 27%, but certain goods and services may be subject to lower rates.