Hungary residency by opening a company

The organisational and legal form must be:

• a limited liability company — Ktf;

• a joint stock company: public — Nyrt, non-public — Zrt.

Four out of five Hungarian companies are limited liability companies.

The minimum authorised capital, depending on the legal entity:

• Kft — 3+ mln forints, or €7,700+;

• Nyrt, Zrt — 5+ mln forints, or €12,700+.

Founders can be one or more individuals and legal entities. If a company has several founders, each has the right to obtain a residence permit.

The founders appoint either one director or a board of directors. Foreigners can work as directors in their own companies without a separate work permit. A founder increases their chances of obtaining a residence permit if they work as a company director.

Activity fields. Some activities require a licence, such as insurance, pharmaceutical manufacturing, banking, and investment services.

Most of Hungary’s companies are registered in the trade sector; technical and scientific companies are in second place, followed by construction companies.

The applicant’s minimum income from the company’s operations is €1,500. The Migration Service assesses the business’s ability to provide for the applicant.

Entrepreneurial income is confirmed with a business plan if the company is new. A business plan for a residence permit is optional if the company hires five citizens of Hungary or other EU countries.

Agreements with Hungarian partners confirm the company’s readiness to operate.

The expenses for obtaining a residence permit include the cost of opening a company, the applicant’s health insurance, and the fee for application processing.

The applicant also confirms a bank account balance of €10,000. It is unnecessary to verify the monthly income.

Hungarian business residency is valid for up to 3 years: the first time a residence permit is issued for a year, with the right to extend for another two years.

The residence permit can be extended if the applicant:

• owns a company that provides income of €1,500+ per month;

• rents or owns residential property;

• spends at least 90 days within six months in Hungary.

When renewing a residence permit for opening a company, the family members of the main applicant can get residence permits.

After 3 years, the foreigner can re-obtain a residence permit with the same company.

A permanent residence permit is issued after 3 years of living in Hungary. A foreigner must not leave Hungary for more than four months in a row and for 270 days in three years.

An application for Hungarian citizenship is submitted after 8 years of living in the country with a permanent residence permit. An applicant for citizenship takes an exam to determine knowledge of the Hungarian language, culture, and Constitution. The first citizenship can be retained.

Companies in Hungary pay the following taxes:

• a corporate tax — 9%;

• a social tax — 13% of the wage fund;

• a municipal business tax — up to 2%;

• a VAT — 5 to 27%, depending on the category of goods or services.

Local authorities set municipal tax. There is no business tax in Budapest.

The VAT is paid by companies with a turnover of more than 12 million forints, or €30,500 per year. The tax is paid by the last VAT payer in the supply chain within the European Union. For example, a Hungarian company does not pay VAT if it supplies goods to a retailer in Germany.

Small and medium-sized businesses can use simplified taxation systems like KIVA and KATA.