Business in Hungary

Business in Hungary

Hungary presents excellent chances for international businesses for investing there with its growing economy in the center of Europe. Despite the fact that the country has the status of European Union membership, Hungary has a minimum rate of corporation tax in comparison with the other states of the EU. Thus finding a business for sale in Budapest or any other city in Hungary is an awesome idea for everybody who wants to start a commerce activity.

There are a lot of business opportunities in Hungary. Among fields of business that expanding very quickly is the automobile sector. Companies that build facilities there increasing in number at a rapid speed.

Additionally, the government of Hungary intends to the digitalization of processes that are connected with administration deals. It means that registration of firms or drawing up the documents can be carried out everywhere via the official sites sitting at home. So such a system literally makes life easier and helps to handle business duties faster.

How to start a new business in Hungary?

As it was said before nowadays a great number of administrative could be done online. The shareholders can sign the paperwork with the usage of modern gadgets, via Internet from any point in the world.

Doing business in Hungary is actually an uncomplicated process if only the client is aware of all requested documentation and information. It is advisable to find a good lawyer that could help to deal with enrollment. Moreover, before signing the corporate paperwork client should have a consultation with an experienced accountant that will help with all necessary documents. The whole procedure can take between 5 and 10 days.

Before registration of a new company in Hungary, shareholders have to get the government access to Managing Director’s personal account in any administration to be listed as a full member in the system of taxation and other official administrations.

While forming a corporation, it is advised to take more time to select the best bank since nonnative businesses and businesses with foreign owners may have some difficulties with opening a bank account according to the stringent internal processes of the banks.

Hungary allows the formation of Private joint stock companies (in Hungarian, Zrt) and Limited liability companies (Kft), which are the most prevalent types of legal organizations. Companies there are required to have at least one Hungarian bank account. Holding foreign bank accounts are permitted as well, but only in case of declaring to the tax department about them.

Business etiquette in Hungary

Launching a small business in Hungary involves certain specific considerations. Shareholders must be aware of them, so let’s check the main points of doing business there.

Accounting system

The Accounting Act and the Norms of Taxation Act, which adhere to the general laws of the European Union, specify the majority of accounting rules in Hungary. Nevertheless, this system has some specific aspects.

Billing

Every sales transaction must be recorded with a sales check, which can be even written, or an invoice that has some official requirements. Among them are specifying the three dates (delivery date, invoicing date and payment deadline). Also, it is important for creating and saving invoices to use devices and register them online to be appropriate for “the National Tax and Customs Office” system.

Yearly statistics

By the end of May, the majority of businesses provide a simplified annual report covering the previous fiscal year. It is composed of the balance sheet, the loss and profit statement, and the Additional Notes, which provide information not included in the other two publications concerning the corporation, accounting practices, and financial data.

Equity

The sum of all capital contributions made by the owners to the business is called ‘equity’. The issued of share capital (is used for an establishment of business), the retained profits of the prior periods, different reserves, and the overall result of the actual year are the components of equity.

To set up a company the average share capital should count about € 8,300.

System of payment and employment

The laws governing employment are laid forth in the Hungarian Labor Code, every employee is equal and nationality doesn’t matter. Also, immigrants that stay in Hungary for at least 183 days in a row within a 12-month period must pay resident taxes.

Employment agreement

The contract for work in Hungary must be in written form and include accurate identification of contractual parties, the start date, the duration of the agreement, any probationary periods, the location and hours of work, the gross monthly wage expressed in HUF, and the position.

Payment

A great recommendation about payroll is hiring a professional administrator to control payments for workers and taxes. All this system is online, too. Thus the service provider must have the necessary authorizations from the employer before submitting any paperwork or tax returns.

Taxes on wages

Every month, employers deduct 13% of the overall salaries as social contribution tax. Employers take 15% personal income tax and 18% social insurance from the total salary and pay these amounts on the employees’ behalf. Normally, the workers get 66.5% of their total income.

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