How to Set Up an Entity in Hungary

Setting up a legal entity in Hungary offers companies an appealing gateway into Central Europe and the European Union. With a corporate tax rate of just 9 % (one of the lowest in the EU) and full access to the Single Market, Hungary stands out for businesses seeking a cost-efficient base in the region.

While the process is reasonably straightforward compared to many jurisdictions, it does involve registration with courts, preparation of notarised documents, and ongoing compliance with tax and labor law. The main challenges lie in understanding Hungarian corporate law, fulfilling documentation requirements, and navigating language or administrative nuances. On the benefit side, foreign investors gain flexibility, the ability to hire in the country directly, and a favorable tax regime.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult official sources before acting.

What does “opening an entity” mean in Hungary?

Opening an entity in Hungary means establishing a locally-registered company (or branch) through the relevant court registration process, which gives the business legal personality in Hungary and allows it to operate commercially in that jurisdiction.

Entity overview in Hungary

Below is a summary of key parameters for entity formation in Hungary. While the process is broadly similar across entity types, the most common structure used by foreign investors is the limited liability company, or a Korlátolt Felelősségű Társaság (Kft.).

Step-by-step guide: How to open an entity in Hungary

Step 1: Choose the right structure

The choice of business structure in Hungary depends on whether you are a Hungarian citizen, resident, or foreign investor. Citizens and residents—including EU/EEA nationals—have equal rights to form and own companies, typically choosing between partnerships (Bt. or Kkt.) for smaller ventures and limited companies (Kft. or Zrt.) for more formal operations. Limited companies are treated as independent legal entities, meaning they can own assets, enter into contracts, and assume liabilities separately from their owners.

Foreign companies and non-residents can establish a presence in Hungary without restriction. The most common route is through a limited liability company (Kft.), which provides flexibility and strong legal protection. Larger or capital-intensive operations may form a private or public limited company by shares (Zrt. or Nyrt.), while multinational groups sometimes open a branch office (fióktelep)—legally part of the parent company—or a representative office (képviselet) for non-commercial activities such as market research and liaison. This structure choice determines how the business operates, is taxed, and interacts with Hungarian authorities.

Step 2: Verify business name availability

You must check the company name in the Hungarian Company Register maintained by the Ministry of Justice. The name must be unique and end with the appropriate suffix (e.g., “Kft.”). You can search and reserve names via the register at the official portal.

Step 3: Prepare incorporation documents

You will need to prepare and notarise key documents. Typical documents include:

• Articles of Association / Memorandum of Association (including registered office address, scope of business)
• Founding resolution or deed of incorporation
• Details and identification of shareholders and directors (passport/ID, address)
• Statement of the initial share capital and its payment method
• Appointment of a legal representative or authorized signatory

Step 4: Register with the Court of Registration

You can apply electronically to the Court of Registration (Cégbíróság) to create an entity. The court will review and, once approved, issue a certificate of incorporation and a registration number. At registration, the company also receives its tax number automatically.

Step 5: Register for tax and social security

Following corporate registration, you must register with the National Tax and Customs Administration of Hungary (NAV) for your corporate tax number and, if required, apply for a VAT number (the threshold is triggered by turnover or intra-EU supply). Employers must register with the social security system to handle employer contributions.

Step 6: Open a corporate bank account

You will need to open a corporate bank account in Hungary to handle share capital and subsequent operations. Many banks require the physical attendance of the director or authorized signatory and may request Hungarian address proof. Once the account is open, the deposit of share capital (if applicable) must be arranged.

Step 7: Set up payroll and employment compliance

If you plan to hire employees in Hungary, you must register as an employer, execute compliant Hungarian-language employment contracts, withhold required social security and tax contributions (employer’s contribution approximately 13%), and submit monthly declarations. Labor law mandates a written contract, a standard 40-hour work week, probation up to 3 months, and minimum annual leave starting at 20 days.

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Post-registration obligations

After incorporation, companies in Hungary must comply with ongoing obligations:

• Tax and financial reporting: File annual corporate income tax returns, submit audited financial statements (if audit threshold is met) under Hungarian accounting standards.
• Corporate registers: Maintain up-to-date information on directors, shareholders, and beneficial owners and notify the Court of Registration promptly of changes.
• Compliance tracking: Monitor tax, labor, and corporate filing deadlines—delays may lead to penalties.
• Licenses and renewals: Some business activities may require specific permits or licenses from relevant ministries or municipal authorities.
• Recordkeeping: Maintain accounting, payroll, and HR records according to Hungarian law (typically retention for 5–10 years).
• Employment law compliance: Continue to comply with Hungarian labor, benefits, and social security law for all employees.

Taxes and financial considerations

• Corporate income tax: 9% corporate tax on company profits.
• VAT: Standard VAT rate 27%; reduced rates of 18% and 5% apply to specified goods/services.
• Payroll/social contributions: Employer social tax is approximately. 13% of the gross wage. Employee social security contributions total about 18.5%. VAT registration is mandatory for turnover that exceeds ​​HUF 18 million in a calendar year.
• Accounting standards: Companies must follow Hungarian accounting standards and, where required, file audited financial statements.

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Expand internationally with Deel

Whether you’re hiring through an EOR or establishing your own local entity, Deel’s all-in-one platform gives you everything you need to expand into Hungary—quickly, compliantly, and with confidence. From market entry to ongoing operations, Deel helps you hire, onboard, and manage teams seamlessly from day one.

With Deel, you can:

• Test new regions using Deel’s local entities through our Employer of Record service—hire employees compliantly, delegate payroll and taxes, and access localized employment contracts.
• Open entities with Deel Entity Setup, where our team manages everything—from incorporation and tax registration to coordination with local experts.
• Centralize your compliance and records with Deel Entity Management, including automated filings, calendar reminders, and visibility across all entities.
• Integrate with Deel Global Payroll and Deel HR for compliant payments, benefits, and workforce oversight—all in one platform.

For companies transitioning from the EOR model to owned entities, Deel ensures a smooth handover and consistent compliance every step of the way. Enter new markets, onboard talent, and manage your global workforce—all through one unified platform.

FAQs

How long does it take to open an entity in Hungary?
Typically, around 1–3 weeks after submission of complete documents and legal representation. Find out how long setup takes with our Entity Setup Calculator.

What is the minimum capital required?
For a Kft., HUF 3,000,000 (≈ $7,000 USD).

Can foreign companies own 100% of an entity in Hungary?
Yes—by and large, foreign entities may fully own Hungarian companies, though exceptions may apply in regulated sectors.

Do I need a local director or representative?
No general Hungarian residency requirement for directors in most sectors, but you might need a legal representative or attorney for registration.

How much does it cost to register an entity?
The court filing fee may be nominal or free for first registration; legal and notary costs are typically around €1,500 (≈ $1,600 USD), depending on complexity. Find out the setup cost with our Entity Setup Calculator.

Can I hire employees before the entity is fully registered?
Generally, no, you should complete registration, tax/employer registration, and payroll setup first. However, using Deel’s Employer of Record model allows you to hire employees immediately while your entity is being set up.

Can Deel help me open an entity in Hungary?
Yes. Deel Entity Setup manages the end-to-end process—from registration to payroll compliance — in Hungary, on your behalf.

Does Deel offer ongoing compliance and payroll support?

Yes. Deel offers both managed services and self-service tools to help you stay compliant.

If you’re using Deel Entity Management, Maintenance, EOR, or Payroll, our team handles payroll, benefits, filings, and compliance obligations on your behalf.

For teams managing their own entities, Deel Compliance Hub makes staying compliant simple by providing real-time regulatory updates, risk alerts, and workforce insights across 150+ countries. Proactively manage compliance with our Compliance Monitor, Workforce Insights, and an AI-powered Worker Classifier, staying ahead of changing employment laws.

Can I switch from Deel EOR to my own entity later?
Yes. Deel supports seamless transitions when you’re ready.