Investing in Hungary via an LLC: Benefits and Precautions

Published on April 29, 2026 and written by Cyril Jarnias

Investing in Hungary Through a Real Estate Civil Society (SCI)

Investing in Hungary through a Real Estate Civil Society (SCI) offers unique opportunities for investors attracted by the dynamic economic development of this Central European country. With favorable taxation, relatively low real estate costs, and growing demand for residential and commercial buildings, Hungary is emerging as a promising destination for investments.

However, managing an SCI abroad and adapting to Hungarian regulations can represent a significant challenge. Therefore, it is crucial to explore the tax and economic benefits while remaining vigilant about potential pitfalls to safely maximize investment returns.

Optimizing the Legal Structure for Investment in Hungary

Types of Legal Structures Available for Investors in Hungary

In Hungary, the main legal structures accessible to real estate investors are:

• Kft (Korlátolt Felelősségű Társaság): equivalent to the French SARL, a limited liability company.
• Zrt (Zártkörűen Működő Részvénytársaság): a private limited liability company, suitable for larger-scale investments.
• Real Estate Civil Society (SCI): this structure, very common in France for the collective management of real estate assets, does not exist under Hungarian law and therefore cannot be directly established in Hungary. Foreign investors must turn to the local equivalent, namely the Kft, to structure their real estate investments.

Structure	Existence in Hungary	Liability	Minimum Number of Partners	Minimum Share Capital
SCI	No	Unlimited	2	Free
Kft	Yes	Limited to capital	1	3 million HUF (~€8,000)
Zrt	Yes	Limited to capital	1	5 million HUF (~€13,000)

Specifics of the SCI in the Hungarian Context

• The SCI, as an asset management structure, has no legal existence in Hungary. French investors cannot replicate this scheme locally and must use a Kft to obtain a limited liability structure.
• The statutes, management flexibility, and taxation of the French SCI therefore do not apply directly.

Tax and Legal Benefits: SCI (in France) vs Kft/Zrt (in Hungary)

Criterion	SCI (France)	Kft (Hungary)	Zrt (Hungary)
Taxation	Income Tax or Corporate Tax depending on option	Hungarian Corporate Tax (9%, one of the lowest in Europe)	Hungarian Corporate Tax (9%)
Transfer	Ease of share transfer	Ease of share transfer	More suitable for large structures
Management	Flexible, custom statutes	More formal, mandatory management	Formalized governance
Liability	Unlimited and proportional	Limited to the amount of share capital	Limited to capital
Accounting Obligations	Less burdensome than a commercial company	Strict accounting, mandatory annual filing of accounts	Strict accounting

Advantages of the Kft for Investing in Hungary

• Taxation at 9% on profits, which is very attractive.
• Liability limited to the amount of share capital.
• Flexibility for acquiring and managing multiple real estate properties, and possibility of having a single partner.
• Relatively simple and well-defined registration and management procedures.

Practical Aspects for Optimizing the Legal Structure

• Registration Procedure: creating a Kft requires a founding deed, opening a bank account, depositing the share capital (minimum 3 million HUF), and registration with the commercial court.
• Share Capital: the minimum amount is low (approximately €8,000), facilitating access to the structure for individual or group investors.
• Tax Obligations: maintaining accounting according to Hungarian standards, filing and paying corporate tax, VAT if applicable, and complying with annual account filing obligations.

Potential Pitfalls to Avoid

• Confusion between French SCI and Hungarian structures: the SCI does not exist in Hungary; it is essential to use the Kft to benefit from limited liability and favorable taxation.
• Accounting Obligations: neglecting the rigor of Hungarian accounting can lead to penalties or unexpected costs.
• Errors in drafting statutes: the Kft statutes must be adapted to the investor’s objectives and drafted with the assistance of a specialized local lawyer.
• Underestimating management costs: bank fees, accounting fees, and local taxes must be anticipated.
• Compliance with ownership rules for foreigners: certain restrictions exist for the direct acquisition of agricultural land or certain types of properties by non-residents.

Advice from Local Experts and Case Studies

• Professionals recommend engaging a Hungarian lawyer and accountant from the setup phase.
• Success Case Study: a French investor structured a portfolio of several apartments in Budapest via a Kft, benefiting from reduced taxation and centralized management. Using a local manager helped limit administrative risks.
• Failure Case Study: an attempt to manage real estate through a French SCI, without adaptation to Hungarian legislation, led to blockages in land registration and double taxation.

Specific Recommendations for Foreign Investors

• Always prefer the Kft as a real estate investment structure in Hungary, ensuring precise drafting of the statutes.
• Surround yourself with local professionals (lawyer, notary, accountant) to secure each step.
• Anticipate recurring management and compliance costs.
• Systematically check the legal status of the property via the Hungarian electronic land registry before any purchase.
• Adapt the structure based on the size and objectives of the project (Kft for one or more properties, Zrt for larger operations).

Investing in Hungary requires adapting French practices to the local legal and tax reality. Success depends on mastering the appropriate structures (Kft), rigorous preparation, and local professional support.

Advantages of an SCI for Real Estate Purchase in Hungary

Important
In Hungary, the Real Estate Civil Society (SCI) structure, as it exists in France, is not legally recognized. Therefore, it is not possible to create a classic SCI for real estate purchase in this country. The closest equivalent is the Hungarian LLC (KFT), but its use has distinct specificities. The following advantages should be considered in this context.

Criterion	SCI (France)	KFT (Hungarian LLC)	Direct Purchase in Personal Name
Collective Management	Yes	Yes	No
Facilitated Transfer	Yes	Possible	No
Tax Benefits	Depending on setup	Yes, local taxation	Yes, local taxation
Administrative Transparency	Medium	Good	Good
Creation/Management Cost	Low to moderate	Moderate to high	Low

Main Advantages of Using a Corporate Structure for Real Estate Purchase in Hungary

• Facilitated Asset Management
  • Holding via a KFT allows for collective and structured management of real estate properties.
  • Ideal for multiple investors or family members wishing to precisely define each person’s rights and obligations.
  • Possibility to easily include or exclude a new partner through share transfer.
• Simplified Estate Transfer
  • Transferring shares is simpler than direct property transfer; it notably avoids certain administrative burdens during inheritance.
  • Example: transferring shares to one’s children indirectly transfers property ownership to them without reappearing before the local notary.
• Potential Tax Benefits
  • Very favorable Hungarian taxation: rental income tax limited to 15%, full exemption on capital gains after five years of ownership.
  • Broad deduction of actual expenses related to the property (renovations, loan interest, etc.).
• Flexibility in Partner Management
  • Free distribution of capital and powers according to the agreement between partners.
  • Ease in organizing stable co-ownership among heirs or business partners.
• Increased Administrative Transparency
  • The statutes clearly govern decision-making modalities, thus avoiding frequent conflicts in classic co-ownership.
  • Mandatory but simplified keeping of registers and annual accounts compared to classic French commercial companies.
• Comparison with Personal Name Investment
  • In personal name:
    • Initial simplicity but total lack of flexibility in case of partner entry/exit or estate transfer.
    • Less suitable for collective projects; each co-owner must approve any major decision (sale/rental).
  • Via company:
    • Suitable for complex and/or family long-term estate strategies
    • Superior tax optimization if multiple properties are held.
• Costs Related to Creation/Management
  • Formation:
    • Mandatory legal fees/statute templates
    • Required minimum share capital
  • Annual Management:
    • Mandatory accounting
    • Potential fees if using a local accountant

Concrete Example:
A couple wishes to invest together and then gradually transfer the Hungarian real estate assets to their adult children. With a KFT-type company:

• They can freely distribute the shares,
• Organize their transfer through progressive donation,
• Significantly reduce the administrative cost related to actual owner change compared to a direct purchase where each transfer requires complete notarial intervention.

Key Takeaway:
Structuring via a company offers flexibility, tax optimization, and estate transfer ease significantly superior to the classic “personal name” scheme, especially when aiming for multiple real estate acquisitions or evolving family/estate management.

Pitfalls to Avoid When Investing via an SCI in Hungary

Complexities and Administrative Costs

Creating an SCI or a real estate company in Hungary involves specific administrative steps: drafting and authenticating statutes by a notary, name reservation, registration with the commercial court, publication in the Official Journal, obtaining a tax number.

Costs vary depending on the legal form and level of support:

Formality	Approximate Amount (HUF)	Approximate Amount (EUR)
Name Reservation	5,000	15
Drafting/Authentication of Statutes	100,000 to 300,000	300-900
Commercial Court Registration	50,000	150
Publication in Official Journal	20,000	60
Simplified Publication Fees	0 to 5,000	0-17

These costs are in addition to recurring operating expenses: bank account opening, accountant fees, local filing obligations.

Tax Risks and Legislative Changes

Hungarian tax legislation can evolve rapidly, with frequent changes to tax rates, VAT regimes, and filing obligations.

Foreign investors are exposed to risks of double taxation or non-compliant tax optimization issues.

It is essential to stay informed of legal developments and ensure that the chosen structure remains adapted to the estate strategy.

Little-Known Local Legal Obligations

Hungary imposes specific obligations: registration with local social security in case of employment, affiliation with the chamber of commerce, compliance with business registry transparency standards.

Lack of Hungarian language skills, unfamiliarity with deadlines and administrative procedures can lead to delays or penalties.

Need to Consult a Local Expert

It is highly recommended to engage a local legal or tax expert to:

• Understand the specifics of Hungarian taxation.
• Draft adapted and compliant statutes.
• Manage tax and social filings.
• Anticipate regulatory changes.

Problems Related to Co-ownership and Shared Management

In an SCI, shared property management can generate conflicts between partners, especially in case of disagreements on rental management, resale, or additional investments.

Hungarian law may provide different rules on decision-making, profit distribution, or partner exit.

It is advisable to detail in the statutes the management modalities, share transfer, and dispute resolution.

Understanding the Local Real Estate Market

A lack of knowledge of the Hungarian real estate market can lead to unprofitable investments (location, rental attractiveness, long-term valuation).

Local specifics (urban planning regulations, capital gains taxation, preemption rights) must be mastered before any purchase.

Practical Tips to Anticipate and Manage These Pitfalls

• Establish a realistic budget including all administrative and operating costs.
• Have a tax audit performed by a local expert before any acquisition.
• Draft custom statutes, adapted to the partners’ needs and Hungarian law requirements.
• Implement clear governance for SCI management and anticipate potential conflicts.
• Train in the Hungarian real estate market or surround yourself with local professionals to assess property profitability.
• Regularly monitor legislative changes and adjust the structure if necessary.

Key Takeaway:

Investing via an SCI in Hungary offers opportunities but requires increased vigilance on local administrative, tax, and legal aspects. Professional support is a guarantee of security to avoid the most common pitfalls.