Why to consider Hungary as an ideal location for investing?

29 Jan 2018
Why to consider Hungary as an ideal location for investing?

Tax benefits and incentives

From 1 January 2017, the standard rate of corporate income tax for Hungarian and, in some cases, foreign companies decreased to 9%.

As Hungary is a member of the European Union, various financial sources for investment or development supported by the EU are  available for companies. There are certain tax credits available as well.

One of the most important tax incentives for companies is the development tax allowance which can be deducted from the amount of corporate income tax (up to 80 percent of the calculated corporate income tax). This type of allowance can be claimed depending on the amount of the investment, the industry and the region in which the investment is performed. Besides the development tax allowance, there are additional tax allowances or tax credits for companies providing support for cultural, sport and film-making purposes. Tax base deduction is available also for investing in startup companies and up to the direct costs of research and development.

Advantages  of investing in Hungary

Hungary has a central position in Europe with well-developed infrastructure and excellent transportation connection to each neighboring country. The country is well-known for its highly skilled workforce and long tradition in education of technical universities. The relatively cheap and educated labor force guarantees the best value for money for investors. The multilingual workforce makes the communication for the foreign investors easier.

Costs of setting up a company

The costs of setting-up a business varies based on the form of business to be established. The most common forms are the limited partnership, limited-liability company and company limited by shares.

Costs include administrative charges and minimum contribution. Administrative charges are similar for each form, however the minimum capital requirements to establish a business with are significantly different.  For a limited partnership,  no minimum initial capital is required. Meanwhile a limited-liability company can be established with a minimum capital of HUF 3 million,  a company limited by shares can be unquoted with a minimum capital requirement of HUF 5 million, or quoted with a minimum capital requirement of HUF 20 million.

The minimum administrative charges of establishing a business consist of duty payable on the registration application (HUF 100,000 i.e. approx. EUR 330), duty payable on the simplified registration application (HUF 50,000 i.e. approx . EUR 165), disclosure fee for publication in the Company Gazette (HUF 5,000 i.e. approx. EUR 17) and registration at the Chamber of Commerce and Industry (HUF 5,000 i.e. approx. EUR 17). There can also be other charges for  signature specimens, official translations etc., but these out-of-pocket costs vary case-by-case. 

Read More here. 

Article by Szabolcs Szeles, Audit Director at HLB Hungary, member of HLB's Central Eastern Europe Group. Contact Szabolcs on This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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