IJJAS LAW FIRM
COMPANY FORMS IN HUNGARY
Hungary offers a variety of company forms to choose from, each with its own unique advantages. Choosing the right company form is essential to ensure the success and longevity of your business. In this essay, we will discuss the different company forms available in Hungary and the benefits and drawbacks of each.
Limited Liability Company (LLC)
The LLC is the most popular company form in Hungary. This type of company provides limited liability protection to its shareholders. It means that their personal assets are not at risk if the company fails. The shareholders' liability is limited to the amount of their share capital contribution.
An LLC requires a minimum share capital of HUF 3,000,000 (approx. EUR 8,200), and at least one shareholder and one director. LLCs must also have a registered office in Hungary.
The advantages of an LLC include limited liability protection, flexibility in terms of ownership and management, and ease of incorporation. However, there are some drawbacks, such as the requirement for a minimum share capital and certain administrative obligations.
The most common company form is the Limited Liability Company (LLC). Non-resident foreign citizens can also be the owners and managing directors of a Hungarian company. The bank account of the company can be opened relatively quickly. The Hungarian and a European VAT number (upon request) is provided to the new company at the time of its registration.
The company formation process can be finished quickly because if you use our services, then you will have direct contact with a qualified attorney-at-law who has authorization to proceed in the company incorporation at the company court, therefore you will not lose time and money with unnecessary intermediaries.
Private Limited Company by Shares (PLC)
A Private Limited Company by Shares, also known as Zrt in Hungary, is a popular form of business entity that offers several benefits to entrepreneurs and investors.
The company is owned by its shareholders. The shareholders are only liable for the company's debts up to the amount of their capital contribution. It means that the personal assets of the shareholders are not at risk if the company is insolvent.
To establish a Zrt in Hungary, a minimum share capital of HUF 5 million is required. At least one founder is also required, who can be a natural person or a legal entity. The company must have a board of directors or a CEO to manage its operations and to make strategic decisions.
A Zrt in Hungary is subject to various legal and regulatory requirements. For example, the company must file annual financial statements and pay corporate income tax. In addition, it must comply with data protection regulations and other legal requirements that apply to businesses operating in Hungary.
The process of forming and managing a Zrt. can be complex and require expertise in Hungarian corporate law.
Entrepreneurs and investors can seek the help of experienced lawyers like Dr. Balázs Ijjas, who specializes in corporate law and can advise on all aspects of establishing and operating a Zrt. in Hungary. With his expertise, he can help entrepreneurs and investors navigate the legal and regulatory landscape and ensure that their Zrt operates in compliance with all relevant laws and regulations.
A Limited Partnership (Bt.) is a business entity in Hungary that consists of two types of partners: general partners and limited partners. The general partners are responsible for the management of the partnership and have unlimited liability for the partnership's debts. The limited partners are passive investors who have limited liability and are not involved in the management of the partnership.
To establish a Bt. in Hungary, a minimum share capital is not required. The partnership must have at least one general partner and one limited partner, but there is no limit to the number of partners that a Bt. can have. The partnership agreement must be in writing and must be registered with the court of registration. A Bt. is subject to a range of legal and regulatory requirements, including the filing of annual financial statements and compliance with data protection regulations.
A branch office is a part of a foreign company that conducts business in Hungary. A branch office has no separate legal personality from its parent company, and the parent company is liable for its debts.
The advantages of a branch office include the ability to establish a presence in Hungary without the need to form a separate company, and the ability to utilize the parent company's existing resources and reputation. However, the main disadvantage is the parent company's liability for the branch office's debts.
In conclusion, the choice of company form in Hungary depends on a variety of factors, including the nature of the business, the amount of capital required, the desired level of liability protection, and the administrative and regulatory obligations.
At our law firm, we can help you choose the right company form for your business and assist you with all aspects of the incorporation process. Contact us today to learn more about our services and how we can help your business succeed in Hungary.