Introduction to setting up a subsidiary in Hungary
Hungary has one of the lowest corporate tax rates in the EU and a number of double taxation treaties, making it an extremely tax efficient country. The establishment of subsidiaries is much quicker than branches (2-7 days) and is also more advisable from a legal point of view. Similarly though, the set-up is regulated by the Act on Hungarian Branch Offices and Commercial Representations of Foreign-Registered Companies. Some restrictions may apply for countries outside of the EEA concerning a Hungarian representative, but generally foreign investment is non-discriminatory.
What are the main formalities of a Hungary subsidiary?
- The minimum share capital required is HUF 500,000 (approx. € 1,700)
- The Memorandum & Articles of Association of the parent company
- Certificate of Good Standing (or equivalent current document) of the parent company
- The resolution of the parent company detailing its decision to form the subsidiary
- POA and signature specimens of the signatories of both the parent company and the subsidiary
The documents shown above must be electronically filed with the Companies Register, which is maintained by the Hungarian Court of Registration, in order to register the subsidiary.
Notary is required for the POA and signature specimens, and the Memorandum & Articles of Association and Certificate of Good Standing are required to be translated into Hungarian.
What are the accounting requirements of a Hungary subsidiary?
Registration of the subsidiary with the State Tax Authority occurs with its entry into the Hungarian Companies Register. Following tax registration, a tax identification number (EU VAT number) will be issued.
Annual tax accounts and monthly or quarterly VAT returns, depending on turnover, should be filed with the Tax Authority. This is managed by a Hungarian accountant.
A Hungarian bank account should be set up. The client may be required to visit the country in order to complete this, unless the parent company has significant and verifiable turnover.
Hungarian subsidiaries can take advantage of the low profit tax, at just 10%, unlike branches in the country.
For further information on accountancy services and tax rates in Hungary, please visit our partners Accountancy in Europe.
Subsidiary Formation Packages
Inexperience with the complexities of Hungarian subsidiary formation can make the process difficult to negotiate. We are experts in the requirements of European incorporation and our subsidiary formation packages provide a variety of services to guide you through this process. These services include registration of the subsidiary and bank account set up, among others. Our experience and skill will ensure that every aspect of your formation is proficiently managed on your behalf.
For further information on Hungarian subsidiaries please contact us or send an enquiry.