Hungary Country Profile business trade issues

Hungary

DOING BUSINESS

Local business incentives - Legal forms of companies - Registration and licensing procedures - Legal framework - Foreign exchange control - Regulations concerning equity investment - FDI inflows - Expertise of the political risk

Local business incentives

Hungary has implemented free trade zones to encourage investments. All companies settled in these zones (called Offshore companies) are considered as foreign companies and do not have to fulfil State's regulations, (regulations concerning customs duties, international trade …). Besides, tax allowances encourage investments. The Hungarian Investment and Trade Development Agency (ITDH) provides support and assistance to international investors.

Legal forms of companies

Form	Number of partners/shareholders	Minimum and/or maximum capital	Liability	Registration fee	Release of financial documents
Korlatolt felelosségû tarsasag ( Kft) is a Private Limited Company.	No limitation.	HUF 3 million minimum, cash contribution should be at least 30 %.	Liability is limited to the amount contributed.	2% of the initial capital + publication fees HUF 10,000	No, unless the capital is superior to HUF 50 million or if the Kft totally belongs to a subsidiary which annual net turnover is superior to HUF 300 million.
Részvény tarsasag ( Rt) is a Public Limited Company.	No limitation.	HUF 20 million minimum, cash contribution should be at least 30 %.	Liability is limited to the amount contributed.	2% of the initial capital + publication fees HUF 15,000	Yes
Közkereseti tarsasag ( Kft) is a general partnership	No limitation.	No minimum capital.	Partners' liability is several and indefinite.	N/A	No
Betéti tarsasag (Bt) is a limited partnership.	Two types of partners: active partners (General Partner) and sleeping partners (Limited Partner).	No minimum capital.	Unlimited liability for at least one partner (General Partner). Unlimited liability for at least one sleeping partner (Limited Partner).	N/A	No

Registration and licensing procedures
Establishment of status must be authenticated by a lawyer or a notary. Further steps related to constitution and registration of the future company must be made through legal representative. Status must mention the company's corporate name chosen by the founders as well as the purpose of the future company. For Kft companies, members must be identified through certificates from the Trade Register, for foreign companies and/or through bank certificates for individuals.
Status must be deposited in three copies with the commercial court of the place of establishment within 30 days after the founders' signature of the documents. Court has to register partnerships within 30 days and corporations within 60 days.

Foreign exchange control
The currency exchange scheme comes from the Law n°95 of November 9, 1995 which came into effect on January 1st, 1996. In Hungary, free conversion of currencies is carried out: the Hungarian currency, the Forint (HUF), is freely convertible for foreign investors. Profit and capital transfers are authorized with no period of time or statement at the central Bank, provided that involved sums are deposited in a bank account on convertible Forints.

Regulations concerning equity investment
A majority holding interest in the capital of a local company is legal. 10% holding interest in stock by foreigners requires getting a preliminary approval delivered by the government after certified authorization from the Central Bank.

Foreign Direct Investment inflows in Hungary

FDI inflows	2003	2004	2005	World rank (*) 2005
FDI inflows (USD million)	2 137	4 654	6 699	40/141

Source : UNCTAD - World Investment Report
Note : (*) World Rank = UNCTAD Inward FDI Performance Index. It is a measure of the extend to which a host country receives inward FDI relative to its economic size. It is calculated as a ratio of the country's share in global FDI inflows to its share in global GDP.

Last modified in 2006 - ongoing update