Hungary: Formation of companies

As mentioned in the ‘Acquisition of companies’ section, Act V of 2013 on the Civil Code of Hungary which contains the general provisions of all legal persons, including the rules of formation thereof.

The most popular form of companies in Hungary with about 50% of business associations is the limited liability company (in Hungarian: korlátolt felelősségű társaság, kft.) with the minimum share capital of HUF 3,000,000 (approx. EUR 7-8,000). The foundation of a limited liability company is currently free of duty.

The second most popular form suitable for generating income, acquiring assets, and employing local staff in Hungary is the limited company (in Hungarian: részvénytársaság, rt.) in Hungary but this form is used to carry out major business activities and involving high equity that may be collected from the public (rights and obligations are embodied by shares) with the minimum share capital of HUF 5,000,000 or HUF 20,000,000 (approx. EUR 12,000 and EUR 50,000).

If the investor wishes to establish a local presence only to intermediate the establishment of a contractual relationship, or advertise the mother company or provide client contacts, and not perform business activity for generating income, the suitable form is a representative office.

Below provided is an approximate timeline of a limited liability company: