The business environment in Hungary is vibrant and multifaceted, bolstered by the country’s strategic location in Central Europe, stable political and economic systems, and a high level of industrialization and urbanization. Companies in Hungary are diverse, falling under various types that range from one-person enterprises to large multinational corporations. The choice of business entity largely depends on the business owner’s requirements for liability coverage, taxation, business purpose, and operational complexity among other factors.
1. Limited Liability Company (Kft)
The Limited Liability Company, or ‘Korlátolt felelősségű társaság’ (Kft) in Hungarian, is the most common type of company in Hungary. A Kft is characterized by its independent legal status and limited liability, meaning that owners, or members, are only financially responsible up to the value of their capital contributions. The minimum starting capital for a Kft is relatively low, currently set at HUF 3 million (approximately €8,500).
2. Joint Stock Company (Rt)
Joint Stock Companies, known in Hungary as ‘Részvénytársaság’ (Rt), have similar characteristics to Kft’s, including independent legal status and limited liability, but are usually more suitable for larger businesses. They can be divided into private or public companies, with the key difference being whether shares are publicly tradable. The minimum capital for an Rt is HUF 20 million for private joint-stock companies, and HUF 100 million for public ones.
3. General Partnership (Kkt)
General partnerships, or ‘Közkereseti társaság’ (Kkt) in Hungarian, are formed by two or more persons who carry on a business under a common name. The partners in a Kkt have unlimited liability, which means they are personally and jointly liable for the partnership’s debts. There is no minimum capital requirement for a Kkt in Hungary, making it an accessible option for smaller enterprises.
4. Limited Partnership (Bt)
Limited Partnerships, or ‘Betéti Társaság’ (Bt), are characterized by having two types of partners: general partners with unlimited liability, and limited partners whose liability is limited to the amount of their capital contributions. Bts have no minimum capital requirement either, but their structure is more complex compared to Kkts.
5. Branch Offices and Representative Offices
Foreign companies often opt for establishing a branch office or a representative office in Hungary. While branch offices can carry out a broad range of commercial activities similar to those of Kfts or Rts, representative offices are only allowed to carry out non-profit activities, such as market research or representation.
6. Sole Proprietorships
Sole proprietorships are business entities owned and operated by a single person. A sole proprietor has unlimited liability, meaning they are personally liable for the business’s financial commitments.
Conclusively, whether you opt for a liability-limited Kft or Rt, a partnership-based Kkt or Bt, a branch or a representative office, or take the sole proprietor route, the diverse options cater to the varied business needs in Hungary. It’s essential to be well-informed about the pros and cons of each before deciding which suits your venture best.
Sure, here are some related links for exploring the diverse landscape of companies in Hungary:
1. Hungarian Investment Promotion Agency
2. ITDH Hungary
3. Hungarian Government
4. Hungary Today
5. Budapest Business Journal
6. Hungarian National Trade Office
7. Portfolio Hungary
8. American Chamber of Commerce in Hungary
9. Central European Investment Consulting
10. Deloitte Hungary
Note: These links will guide you to various authoritative resources related to business and investment in Hungary.