Foreign Investments in Hungary
Foreign investments have been given full protection and legal safety since 1988 in Hungary. The most important elements of this protection are equal tratment of natives and foreigners amoung others concerning, foundation of companies and obtaining company shares, protection of ownership, and free repatriation of profit and capital after taxation.
Source: Law Act 1988: XXIV
Foundation of a company
Foreign natural persons and organisations registered by their domestic law may establish companies in Hungary without any restriction and authority permission connected with their foreign status (also as oneman company if it's foundation is allowed by the Company Law at all), may obtain shares of Hungarian companies and establish affiliates as well as commercial representations.
The most important conditions of foundation are
- deed of association duty signed by a lawyer or notary public
- foundation capital - in case of a general partnerships and a limited partnership there is no legal minimum, in case of a limited liability company the minimum level is HUF 500.000, in case of a company limited by shares HUF 5.000.000
- lawyer's representation in the registration proceedings
Foreign persons may be manager of a company established in Hungary without any restriction and authority permission the exemption from labour permission included.
The legal regulation concerning the types of companies is essentially based on solutions applied in Europe, with some differences in the details.
A company starts to exist by force of registration by the Registration Court. Avarage time of registration is 10-15 days.
Avarage foundation costs
- registration fee, min. HUF 15.000, max. HUF 600.000 depending on company form and type of registration process
- fee of publishing HUF 5.000
Source: Law Act 2008: IV
A company registered in abroad may establish a branch office in Hungary. There is no capital minimum in such cases but the founder shall take the capital being necessary for activity continously at the disposal of the branch office. With the exeption of representation activity - the branch office may show an enterprising activity under the laws regulating the activity of domestie enterprises and may conclude contracts to the favour of the founder.
The branch office and the founder bear general and unlimited liability for activity of the branch office.
The persons employed with the branch office are in legal relation to the founder. Foreign employees employed with the branch office are governed by the general rules of employment of foreigners in Hungary.
The branch office starts to exist by force of registration by the Registration Court.
Registration costs:
- Registration fee: HUF 50.00
- Fee of publising: HUF 5.000
A company registered in abroad may establish a representation in Hungary.
The founder shall continuosly ensure capital being necessary for activity of the representation.
- The representation may prepare contract drafts to the favour of the founder, show activity in information and promotion but must not show indepent economic activity. The founder bears unrestricted and general liability for the activity of the representation.
The representation starts to exist by registration by the Court of Register.
Registration costs:
- Registration fee: HUF 50.00
- Fee of publising: HUF 5.000
The persons employed with the representation are in legal relation to the foreign company.
For foreign persons employed with the representation the law rules concerning working activity of foreigners in Hungary are to be applied.
Source: Law Act 1997: CXXXII
Beyond above mentioned expenses following costs emerge in any case:
- lawyer's fee as agreed
- expenses like translation costs, company name search, public notary fee etc.
