Going Offshore - Crowe Horwath International

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Horwath MAK Member Crowe Horwath International 14. HUNGARY Geographical Location The Republic of Hungary is situated in Central Europe and has borders with Austria, Slovenia, Croatia, Serbia, Romania, Ukraine and Slovakia. Its climate is temperate, and the country is predominately flat. Lake Balaton, Central Europe’s biggest lake is a main tourist attraction, as is the Danube, reaching seven countries as flows from Germany to the Black Sea. Summary The Hungarian authorities are keen to encourage foreign investment and have almost deregulated it, so Hungary now serves as a hub for western investment into Eastern Europe. More and more western companies are setting up joint ventures, manufacturing and service centers with the aim of providing Eastern Europe with goods, capital and expertise. Hungary was very successful in attracting foreign investment, with a total inflow of US$ 7 billion in the last four years. There are practically no import or export controls for more than 90% of goods and services. The Hungarian commercial Banking and financial system is the most advanced in the region and includes the subsidiaries of major Western Banks. Audit | Tax | Advisory | Risk 28 © 2013 Horwath Mak
Horwath MAK Member Crowe Horwath International SN DETAILS HUNGARY 1 Types of company: (a) Type of company preferred for international transactions: Kft (LLC, GmbH) or Rt (Ltd, Plc,AG) - two types of Rt: private share company (ZRt); and public share company (NyRt). (b) Shareless companies: Bt (Ltd, Pshp, KG) - not recommended for offshore activity. 2 Capital requirements: Kft: HUF 500,000 (approximately USD 2,600/EUR 1,900); ZRt: HUF 5,000,000 (appraximately USD 26,000/EUR 19,000); and NyRt: HUF 20,000,000 (approximately USD 105,000/EUR 76,000). 3 Fees paid to authorities to incorporate: Kft: HUF 15,000 (approximately USD 80/EUR 60); ZRt: HUF 105,000 (approximately USD 550/EUR 400); and NyRt: HUF 605,000 (approximately USD 3,200/EUR 2,300). 4 Annual fees paid to authorities: 5 Taxation rates applied to companies generally: 6 Minimum number of members: Annual report to the Registrar of Companies (Court of Registration): HUF 3,000 (USD 16/EUR 11) Taxation rates: Standard corporate income tax (CIT): 10% (on profit) up to HUF 500 million (USD 2.5 million or EUR 1.85 million) tax basis; 19% (on profit) over HUF 500 million tax basis: Beneficial tax rates: royalty income: 50% tax benefit Tax exemptions: dividend received; dividend paid (no WHT); capital gain (unless real property holding companies): local business tax (LBT): 2% on net income. (a) The taxation of companies in 2(a): As above One 7 Directors and secretary: (a) Must there be a resident director/secretary? No (b) Are corporate directors allowed? No (c) Is a local registered agent required? No. (d) Are "shadow" directors required to be registered? The concept of "shadow director" is unknown. 8 Annual meetings: A minimum of one each year, not later than 31 May. Minimal purpose to approve the annual return and balance sheets. No restrictions on the place of the meeting. 9 Is an annual return filed with details of directors and members? Not compulsory. However these details are disclosed by the public Company Registry. Audit | Tax | Advisory | Risk © 2013 Horwath Mak 29
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Going Offshore - Crowe Horwath International

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