Company Formation Survey 2008


	Home ANGUILLA ANTIGUA ARUBA BAHAMAS BARBADOS BELIZE BERMUDA BRITISH VIRGIN ISLANDS BRUNEI CAYMAN ISLANDS COOK ISLANDS CYPRUS ENGLAND & WALES GIBRALTAR GUERNSEY HONG KONG HUNGARY IRELAND ISLE OF MAN JERSEY LABUAN LIBERIA LUXEMBOURG MADEIRA MALTA MARSHALL ISLANDS MAURITIUS NEVIS PANAMA ST. KITTS ST. LUCIA ST. VINCENT AND THE GRENADINES SAMOA SÃO TOMÉ E PRÍNCIPE SEYCHELLES SINGAPORE SWEDEN SWITZERLAND TURKS & CAICOS VANUATU


		1. Company law	Continental (German type) Corporate Law with some Anglo-Saxon characteristics; Act No. IV of 2006 on the Business Associations.
		2. Types of company:
		(a) type of company preferred for international transactions:	Kft. (LLC, GmbH) or Rt. (Ltd, Plc, AG) - two types of Rt: 1. private shares company (ZRt.); 2. public shares company (NyRt.)
		(b) shareless companies:	Bt. (Ltd. Pshp; KG) - not recommended for offshore activity.
		3. Capital requirements:	Kft.: HUF3,000,000 = approx. USD15,400 = approx. EUR12,000. Rt.: HUF20,000,000 = approx. USD103,000 = approx. EUR80,000.
		4. Costs to incorporate, excluding government fees:	Negotiable, depending on the kind of the company and the complexity of the work
		5. Fees paid to authorities to incorporate:	Kft. and ZRt.: HUF125,000 = approx. USD650 = EUR500. NyRt. (public shares company): HUF625,000 = approx. USD3,200 = EUR2,500 plus additional USD50-100 for minor fees such as public notary's fee.
		6. Annual fees paid to authorities:	Nil.
		7. Taxation rates applied to companies generally:
		(a) the taxation of companies in 2 (a)	• Standard corporate income tax (CIT): 16% on profit (however the royalty and interest income is taxed only at 8%; dividend received is exempt; dividend paid is also exempt from WHT). • “Solidarity tax”: 4% on profit of all kind of income. • Local business tax (LBT): 2% on net income until (royalty, interest and dividend income is exempt). • Innovation contribution (R&D Tax): 0.3% on net income.
		8. Method of incorporation:	• The legal owners (members, shareholders) subscribe the Articles of Association and other necessary corporate documents. • The concept of professional incorporator is not known. • Application to company registration and the duly signed set of corporate documents are submitted to the Court of Registration for approval. The company may start the regular business activity right after the application is filed.
		9. Who may incorporate - specify what, if any, local representatives/ professionals required?	Any private or legal person; no professional incorporating agent is required.
		(a) are ready made companies available?	Yes, but unusual.
		10. Length of time to incorporate:	Maximum 30 days by the law. However, the company may start regular business activity right after the application form is filed with the Register of Companies. The period between the date of application and the date of full registration is called “pre-corporation period” which has to be closed by financial and tax returns.
		11. Minimum members:	One.
		12. Registered office:	A registered office must be maintained in Hungary.
		(a) Can the registered office be a bank/ lawyer/ accountant's office (brass plate)?	Yes.
		13. Directors and secretary:
		(a) Must a director/ secretary be resident?	No. However, in securing the Hungarian tax residency of the company, the appointment of a Hungarian director is advisable.
		(b) Are Corporate Directors allowed?	No corporate director is permitted.
		14. Appointee directors/ secretary possible?	Yes
		15. Amount of fees payable to appointee directors/ secretary:	Negotiable.
		16. Meetings:	One per annum at least (minimal purpose: approve the annual return and balance sheets); no restriction on the location.
		17. Annual return:	All companies are required to file an annual return made up to the 31 May.
		(a) Must financial statements of a company be audited?	Yes.
		18. Is disclosure of profits required by filing balance sheets with annual returns?	Yes.
		19. Are there any exchange control or other financial restraints imposed upon a company?	Liberal exchange control regime with limitations on cross-border cash transactions.
		20. Companies formed in the last year:	Several thousands.
		21. Number of companies on the company register altogether:	More than 100,000.
S I T E M A P BACK TO TOP		22. How, if any, is migration into and out of the jurisdiction achieved?	Changing domiciliation of companies is not permitted.
		23. Is migration out of your country provided for?	See 22 above.
		24. Any amendments to company law over the last 12 months:	• The amendment of the company law and company registration law was accepted by Parliament in 2006 in a move towards simplification and less bureaucracy; further amendments are expected in 2007. • The scope of application of transfer prices is extended and arms’ length principles will apply to in kind contributions, capital decreases and liquidations. • Several rules pertaining to investment tax incentives are amended and revised. A new tax incentive is introduced in relation to basic research, applied research and experimental development activities. • The withholding tax on dividend paid to any foreign corporate member or shareholder was demolished with effect from 1st January 2006. The exemption continues in 2007. • Capital gain is exempt from CIT since 1st January 2007.
		25. Anticipated amendments to company law over the next 12 months:	Further significant simplifications are expected in the company registration process which will speed up final registration.
			Compiled by Gabor Szabo, Law Offices of Dr. Gabor B. Szabo & Partners