Published on and written by Cyril Jarnias
Hungary offers a favorable environment for foreign entrepreneurs looking to establish their businesses. With one of Europe’s lowest corporate tax rates (9%) and its strategic position at the heart of the European Union, the country attracts numerous investors. However, choosing the right legal structure is crucial for your project’s success. Here is a comprehensive guide to help you make the best choice in 2025.
Most Popular Legal Structures in Hungary
Hungary offers several legal forms for businesses. Here are the main options to consider:
1. Kft (Korlátolt felelősségű társaság) – LLC
The Kft is the Hungarian equivalent of the LLC. It’s the most common form for SMEs in Hungary.
- Minimum capital: 3 million HUF (approximately €8,000)
- Limited liability for members
- Flexible management
- Suitable for small and medium-sized enterprises
2. Zrt (Zártkörűen működő részvénytársaság) – Private Limited Company
The Zrt is a non-listed joint-stock company, suitable for medium to large-sized businesses.
- Minimum capital: 5 million HUF (approximately €13,500)
- More formal structure than Kft
- Ability to issue shares
- Suitable for businesses with significant growth ambitions
3. Nyrt (Nyilvánosan működő részvénytársaság) – Public Limited Company
The Nyrt is a publicly listed joint-stock company, intended for large corporations.
- Minimum capital: 20 million HUF (approximately €54,000)
- Most complex structure
- Ability to raise funds on financial markets
- Suitable for large enterprises and multinational corporations
Sole Proprietorship or Company: What to Choose in Hungary?
The choice between a sole proprietorship and a company depends on several factors:
Sole Proprietorship (Egyéni vállalkozó)
- Simple to establish and manage
- No minimum capital required
- Unlimited liability for the entrepreneur
- Simplified taxation with the KATA regime (flat tax)
- Ideal for freelancers and small-scale activities
Company (Kft, Zrt, Nyrt)
- Limited liability for members
- Greater credibility with partners and clients
- Easier access to funding
- Favorable taxation (9% corporate tax rate)
- Suitable for larger-scale and long-term projects
Good to Know:
The sole proprietorship status in Hungary is particularly advantageous for small-scale activities thanks to the KATA tax regime. However, for more ambitious projects or those requiring significant investments, forming a company offers better protection and growth opportunities.
Key Factors for Choosing Your Legal Structure in Hungary
To determine the most suitable structure for your project, consider the following elements:
1. Nature and Size of the Business
A small consulting business may opt for sole proprietorship status, while an industrial enterprise would benefit from incorporating as a company.
2. Number of Partners
If you’re starting alone, sole proprietorship or single-member Kft are relevant options. For a project with multiple partners, Kft or Zrt will be more appropriate.
3. Capital Requirements
Companies make it easier to raise funds, whether from banks or investors.
4. Taxation
The KATA regime for sole proprietors offers very favorable taxation for small incomes. For higher incomes, the 9% corporate tax rate becomes very competitive.
5. Growth Ambitions
If you’re aiming for strong growth or international expansion, the company structure (Kft or Zrt) will be more suitable.
Steps to Establish Your Business in Hungary
Regardless of the chosen legal form, here are the main steps to establish your business in Hungary:
- Choose a unique business name
- Prepare the company’s articles of association
- Open a bank account and deposit the capital
- Register with the Company Registry (Cégbíróság)
- Obtain a VAT number
- Register with tax and social security authorities
Good to Know:
The business establishment process in Hungary is relatively fast. Expect approximately 5-7 business days for a sole proprietorship and 2-3 weeks for a company.
Conclusion: Making the Right Choice to Succeed in Hungary
Choosing the right legal structure is a crucial step for your business success in Hungary. Take the time to analyze your project, objectives, and resources in detail before making your decision. Don’t hesitate to consult local experts to guide you through this process.
Hungary offers an attractive framework for entrepreneurs, with favorable taxation and simplified procedures. Whether you choose a sole proprietorship or a company, you’ll benefit from an environment conducive to developing your business at the heart of Europe.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
