Hungary Company Formation: Low-Tax EU Company (Kft)

What if you could own an EU company that pays just 9% corporate tax? Hungary makes it possible. It has the lowest corporate tax rate in the European Union, gives you full access to the EU single market, and lets you complete the whole setup by remote incorporation — no trip to Budapest needed. Formation is fast, affordable, and open to foreigners with no local partner required. This guide walks you through the structures, taxes, costs, and steps, so you know exactly what a Hungarian company can do for you.

Why Choose a Hungarian Company?

Here is a question worth asking: why pay 20–30% corporate tax elsewhere in Europe when Hungary charges 9%?

Hungary is not a classic offshore tax haven. It is something more useful: a low-tax EU member state. That combination is rare. Key advantages:

• 9% flat corporate tax — the lowest in the EU since 2017. It applies to both trading and investment income.
• One person is enough. A single shareholder and director — who can be the same person or company, resident or not.
• EU single market access. Trade freely across all EU member states. Your company also gets an EU VAT number, which lets you trade at 0% VAT with other EU businesses.
• Zero withholding tax on dividends, interest, and royalties paid to foreign corporate owners (15% applies to individuals — more on structuring below).
• Low startup cost. No government incorporation fee. The HUF 3,000,000 minimum capital (approx. US$9,600) can be withdrawn right after incorporation.
• Fast setup. Registration typically completes in about one week once documents are ready. A ready-made company (shelf company) is even faster.
• EU funding. Hungarian companies may qualify for EU grants and subsidies — useful extra fuel for startups and growing businesses.
• Stable government, strong infrastructure, skilled and affordable workforce, and easy visa and residency options for founders.

Which Hungarian Company Type Is Right for You?

Most foreign owners never look past the first option — and for good reason.

1. Kft (Limited Liability Company). The most popular choice. One member, one director, HUF 3 million capital, limited liability. Members hold a "quota" instead of shares. Cost-effective and flexible. The rest of this page focuses on the Kft.
2. Zrt (Private Company Limited by Shares). For larger businesses that want to issue shares (ordinary, preference, employee, interest-bearing, or redeemable). Minimum capital: HUF 5 million.
3. Nyrt (Public Limited Company). For going public. Minimum capital: HUF 20 million. Cannot use simplified electronic filing.
4. Bt / Kkt (Limited / Unlimited Partnership). Simple partnership forms, less common for foreign investors.
5. Branch office. Lets a foreign company operate in Hungary without creating a new legal entity — but the parent stays liable for the branch's activities.

Top Uses of a Hungarian Kft

One company, many jobs. A Hungarian Kft works well for:

• International trading and EU market entry (especially attractive for non-EU investors)
• Investment holding — tax-free dividends and deductible royalty payments
• Asset protection and estate planning
• Minimizing taxes through the 9% rate and 70+ treaties
• Owning and protecting intellectual property
• Confidentiality via corporate ownership or nominee services

Corporate Features at a Glance

How Much Does It Cost?

Good news first: Hungary charges no government fee to incorporate a Kft, and no license is needed for standard offshore activities.

Our complete Hungary company formation cost is US$2,300. This covers incorporation of your Kft, the registered office address, the local agent, your tax numbers and EU VAT number, and hands-on guidance through banking. The HUF 3 million share capital is your own money — you deposit it, show proof, and can withdraw it once the company is registered.

What Do You Need to Incorporate?

The document list is shorter than you might expect. To set up a Hungarian Kft, you submit:

• Passport or European ID (for natural persons), plus each member's details and address
• For corporate owners: a company register extract naming the representative — under 3 months old, apostilled, and translated into Hungarian
• Signed constitutive documents: articles of association, deed of foundation, or a Founders' Resolution, depending on the structure
• VAT registration (obtained swiftly alongside company registration)
• An appointed accountant before incorporation (a service we provide)
• A Hungarian bank account for the company
• A registered local address — virtual office services satisfy this requirement

A Hungarian registered attorney must countersign all documents and file them with the Court of Registration. If you sign abroad instead of in Hungary, you sign before a notary or at your nearest Hungarian consulate — this is what makes fully remote formation possible with a power of attorney.

The Registration Process, Step by Step

Five steps stand between you and a live EU company:

1. Document preparation (1 day+). A Hungarian attorney drafts the constitutive documents; founders sign, attorney countersigns.
2. Bank account opening (1 day).
3. Court filing. Documents go to the Court of Registration for formal registration and a tax ID number. Filing must happen within 30 days of concluding the constitutive documents.
4. Mandatory registrations. The new company is registered with the tax authority (NAV), the municipality, the chamber of commerce, the Statistical Office (KSH) for its statistic number, and the pension authorities.
5. Employee data submitted to the tax authority, if applicable.

Documents you sign (before a notary or consul if abroad): Articles of Incorporation, list of shareholders, managing director declarations (company seat, prohibitions, financial contributions, acceptance and conflicts of interest), a delivery agent agreement for foreign owners, and a power of attorney if we represent you.

Two filing routes:

• Simplified electronic filing: uses standard document templates; the Court of Registry decides within 1 working day. Not available for public limited companies.
• Standard electronic filing: lets you customize the constitutive documents; registration can take up to 15 days.

How long overall? With simplified filing, registration itself completes in about 4–5 business days. Allow 2–3 weeks end-to-end with standard filing, or less than a week with a shelf company. See our Hungary formation service page for details.

How Are Hungarian Companies Taxed?

Here is where Hungary earns its reputation. Since 2017, the corporate income tax rate is a flat 9% on all income — trading or investment. That is the lowest in the EU. The essentials:

• Corporate income tax: 9% flat. Losses carry forward five years, deductible up to 50% of the current year's taxable income.
• Local business tax: 0–2% on cost-adjusted turnover, depending on location. Dividends, royalties, and capital gains are exempt.
• Withholding tax: 0% on dividends, interest, and royalties paid to foreign corporate owners. Individuals pay 15% — so foreigners should hold their Hungarian company through a corporate entity, not personally.
• VAT: 27% standard, applying only inside Hungary. Reduced VAT rates of 5% and 18% apply to specific goods and services. Your EU VAT number enables 0% VAT trading with foreign EU companies.
• Payroll: if you hire staff, employers pay a 13% social contribution tax on gross salary, and employees pay an 18.5% social security contribution.
• Treaties: 70+ double taxation treaties, including the EU, USA, Canada, China, Hong Kong, Singapore, Switzerland, India, and Russia.

How Is Hungary Company Formation Changing in 2026?

Hungary just made an already easy jurisdiction easier. In November 2025, the Hungarian Parliament approved an 11-point tax package for 2026 (reported by Helpers Finance, 24 November 2025, and confirmed in PwC's Hungary tax summaries): the corporate-tax advance-payment threshold rises from HUF 5 million to HUF 20 million, moving an estimated 10,000–15,000 companies from monthly to quarterly filings, while the VAT-exemption revenue cap climbs from HUF 18 million to HUF 20 million — with further legislated increases to HUF 24 million by 2028. The 9% rate itself was left untouched.

In our 25 years forming companies across Europe, we have noticed something: jurisdictions rarely compete on rate alone for long. Hungary is now competing on friction — cutting the reporting workload for small and foreign-owned companies while its headline rate stays parked at 9%. That combination matters more for a one-person Kft than another point off the tax rate ever would.

Looking ahead, and with the usual caveat that tax policy can turn: the phased increases already written into law through 2028 suggest Hungary will keep leaning toward small-company simplification. One hedge — groups with revenue above €750 million fall under the OECD's 15% global minimum top-up tax, so very large multinationals should not build plans around the 9% headline rate. For everyone else, it stands.

Corporate Details Worth Knowing

Privacy and Disclosure

Be aware: directors, shareholders, and company bank accounts of a Hungarian Kft are publicly accessible, and accounting information must be disclosed. If confidentiality matters to you, use a nominee service or invest through a separate corporate body.

Quotas, Not Shares

A Kft does not issue shares. Each member holds one "quota" reflecting their proportional rights and ownership. Only a Zrt or Nyrt can issue actual shares.

Trading Restrictions

Most business activities are free. Special licenses apply to regulated activities (banking, insurance) — banks, for example, must be companies limited by shares licensed by the Central Bank of Hungary. A Kft cannot sell shares or raise funds from the public.

Opening the Bank Account

A local forint (HUF) account is mandatory; EUR and USD accounts can be added. Recommended banks: OTP Bank, Raiffeisen Bank, Erste Bank, and K&H Bank. You can open the account in person (we assist with translations) or remotely through an attorney we help you appoint.

Legislation and Language

The governing law is Act V of 2013 in the New Civil Code (replacing Act IV of 2006). Hungary's civil law system is based on German law. Legislation and corporate documents are in Hungarian, often with English and German translations. English is spoken by about 16% of the population and is common in business.

Local Presence and Ongoing Compliance

You need a registered local agent/secretary and a Hungarian registered address, though your primary business address can be abroad. One annual general meeting must be held in Hungary. Post-registration compliance includes filing annual financial statements and tax returns, and reporting any changes in structure, ownership, or management to the Court of Registration. Miss a reporting deadline and penalties run from HUF 50,000 to HUF 900,000 — which is why our registered office, mail forwarding, and accounting services exist: no deadline slips through.

Other Facts

• No foreign exchange controls
• Company names must be unique and end with the structure type (Kft, Kkt, Bt, Zrt, or Nyrt)
• Kfts are exempt from registration duty and publication fees
• We also assist with tax numbers, work and residence permits, social security administration, bank accounts, and company liquidation

FAQ

• Can a foreigner start a business in Hungary?

  Yes. Hungary allows foreigners to own and run companies without a local partner, local director, or residency. One non-resident person can be both the sole member and managing director, and the whole process can be handled remotely through a power of attorney.

• How much does it cost to form and renew a Hungary company?

  Our complete formation package is US$2,300, covering incorporation, registered address, local agent, and tax/EU VAT numbers. There is no government incorporation fee. Ongoing annual costs cover the registered office, agent, and accounting; the HUF 3 million share capital is deposited and can be withdrawn after registration.

• How long does it take to register a company in Hungary?

  With simplified electronic filing, the Court of Registry decides within 1 working day and registration completes in about 4–5 business days. Standard filing can take up to 15 days — allow 2–3 weeks end-to-end. A ready-made (shelf) company is faster still.

• Do I need to visit Hungary to incorporate?

  No. You can sign the documents before a notary or at your nearest Hungarian consulate and grant power of attorney to a Hungarian attorney, who files everything and can even open the bank account. Fully remote incorporation is standard practice.

• How do I start a limited company (Kft) in Hungary?

  Get in touch with us. We prepare the constitutive documents with a Hungarian attorney, register the company at the Court of Registration with proof of a registered address, then open the bank account and arrange secretary or nominee services if needed.

• Why is Hungary a great place to start a business?

  A flat 9% corporate tax — the lowest in the EU — plus full EU single market access, an EU VAT number for 0% intra-EU trading, a skilled workforce, low costs, and possible EU grants and subsidies. It suits startups and established international businesses alike.

Ready to Start Your Hungarian Company?

Hungary gives you the EU's lowest corporate tax, single market access, and a company you can form remotely in about a week — with no government fee and capital you get back. Since 1996, Offshore Protection has built structures like this for thousands of clients. Contact us today for a free consultation and let's build yours.