How to open a business in Hungary in 2026: Kft or sole proprietor - a step-by-step guide

In brief

You can open a business in Hungary in a few days and without a residence permit: a foreigner has the right to own a Hungarian company outright, and the 9% corporate tax rate is record-low for the European Union. The most popular form is a Kft (an LLC equivalent) with a minimum capital of 3 million forints. Registration is only possible through a Hungarian lawyer, accounting is mandatory, standard VAT is 27%. For living in the country, the business on its own doesn't give a residence permit - a separate procedure is needed.

Below - the choice of form, real startup costs, step-by-step Kft registration, taxes, and the pitfalls where newcomers lose money.

What business forms exist and who each one suits

Hungarian law recognizes several organizational forms. For an entrepreneur from abroad, three actually work: Kft, Bt, and egyeni vallalkozo (sole proprietor). The choice depends on whether you need limited liability, how many partners you have, and what turnover you're planning.

In practice, 8 out of 10 entrepreneurs choose Kft: limited liability, a structure clear to banks and partners, the ability to tie it to Business residence permit. Btcheaper to launch (no capital requirement), but one of the partners is liable for debts with all their property - this is a serious risk. Sole proprietorsuits a freelancer or a craftsperson: less bureaucracy and simpler bookkeeping, but personal liability isn't limited.

Minimum capital and startup costs

For a Kft the law requires registered capital of 3,000,000 forints- that's about 7,500 euros at the 2026 exchange rate. An important nuance: the money doesn't need to be frozen in an account before registration. The capital can be contributed later and put straight into circulation - for rent, salaries, purchases. A contribution in property (equipment, machinery) is also allowed, not just money.

Besides the capital, budget for accompanying startup costs:

• Lawyer's services- on average from 65,000 forints + 27% VAT for standard Kft formation (more expensive for a complex structure or non-residents).
• Registration fee and duties- symbolic under the simplified procedure, around a few thousand forints.
• Legal address- if you don't have your own office, renting an address costs from 10-20 thousand forints a month.
• Accountant- mandatory; subscription service for a small firm starts at roughly 30-50 thousand forints a month.
• Document translation and apostillefor a foreigner - a separate expense line.

So the real budget for launching a Kft (excluding the working capital itself) is roughly from 150-250 thousand forints in one-off costs plus monthly service. A sole proprietorship is noticeably cheaper: no capital needed, simpler bookkeeping.

Step-by-step Kft registration: what and in what order

Registering a Hungarian company is an electronic procedure through the Company Registration Court (Cegbirosag). You can't file documents yourself: by law, only a Hungarian lawyer files applications with the court. Here's what the path from decision to a working firm looks like.

• Step 1. Choosing the form and name.You determine the form (usually a Kft), check the uniqueness of the name, the composition of founders and director, the size of the shares.
• Step 2. Legal address.The company needs a registered address in Hungary - owned or rented.
• Step 3. Preparing the founding documents.The lawyer prepares the charter (founding agreement) and accompanying forms, checks the founders' data.
• Step 4. Signing and countersigning by the lawyer.The founding document is signed and certified (countersigned) by a Hungarian lawyer - without this, registration is impossible.
• Step 5. Filing with Cegbirosag.The lawyer electronically files the package with the Company Registration Court.
• Step 6. Registration.Under the simplified procedure the firm is entered in the register within 1-3 business days (under the standard procedure - up to 8-10 days). The company gets a registration number, a tax number, a VAT payer number (including EU VAT), and a statistical number.
• Step 7. Opening a bank account.After registration you open a corporate account - covered separately below.
• Step 8. Registering for tax and accounting purposes.You sign a contract with an accountant, register for VAT and the local business tax if needed.

The registration process is integrated with registering with the tax authority (NAV), so there's no need to separately chase a tax number - it's assigned together with registration.

The lawyer's role and what documents you'll need

The involvement of a Hungarian lawyer isn't a formality or a way to make money off a foreigner, but a direct requirement of the law. A lawyer is mandatory both when forming the company and for any subsequent corporate changes: changing the director, address, redistributing shares, liquidation. It's the lawyer who bears responsibility for the correctness of the documents filed with the court and for identifying the founders.

The standard document package for a foreign founder:

• an international passport (a notarized copy is sometimes required);
• proof of residential address;
• a Hungarian tax identifier (the lawyer helps obtain it);
• company data: name, types of activity (TEAOR codes), shares, director;
• a document for the legal address;
• for remote registration - a power of attorney to the lawyer.

Many actions can be done remotely by power of attorney without coming to Hungary, but the bank often requires the director's personal visit. Keep in mind: foreign-language documents usually need to be translated, and in some cases apostilled.

Opening a bank account

After the company is entered in the register, the next mandatory step is a corporate bank account. Without it, the firm can't accept payments, contribute capital, or pay taxes. As part of compliance (KYC/AML), Hungarian banks thoroughly check foreign owners, so opening an account is often the most unpredictable stage in terms of timing.

What's important to know:

• most banks require personal presencethe director's, when opening the account;
• you'll need founding documents, an extract from the register, a passport, sometimes a description of the business model and source of funds;
• the bank may request proof of real presence (substance): address, contracts, activity;
• timelines - from a few days to a few weeks, depending on the bank and the client's profile.

To avoid wasting time on refusals, study the requirements for non-residents in advance - we cover this in detail in the article on how to open a bank account in Hungary. Proper document preparation and a clear business model sharply raise the chances of passing compliance on the first try.

Accounting and reporting

Hungary takes bookkeeping seriously: for a Kft and Bt, accounting is mandatory, and handling it yourself without knowledge of local legislation is practically unrealistic. So an accountant is just as mandatory a business partner as a lawyer.

What's included in regular reporting:

• VAT returns- monthly or quarterly depending on turnover, filed with NAV electronically.
• Annual financial statements- a balance sheet and profit-and-loss statement, filed and published.
• Corporate tax return- once a year.
• Local business tax (HIPA)- a filing with the municipality.
• Payroll and contribution reporting, if there are employees.

Since 2021, Hungary has used a real-time invoice reporting system: data on issued invoices is transmitted to the tax authority almost instantly. This means cheating on VAT won't work - everything is transparent. For a sole proprietor bookkeeping is simpler, especially under special regimes, but basic reporting still needs to be kept.

Business taxes: 9% corporate, 27% VAT, and the local tax

A low tax burden is the main reason entrepreneurs go to Hungary. Corporate tax here is 9% - the lowest in the European Union. But the tax picture is broader than one rate.

27% VAT- the highest standard VAT in the EU, but reduced rates (5% and 18%) apply to a number of goods and services. Local business tax (helyi iparuzesi ado, HIPA)each municipality sets it, its maximum is 2% of adjusted revenue; in Budapest it's close to the maximum.

For small business there's the special regime KATA: a fixed tax of 50,000 forints a month, covering personal income tax, pension, and social contributions. But since the 2022 reform, KATA has been heavily restricted - it's available only to sole proprietors on their main employment, with an income limit of 18 million forints a year, and invoices can only be issued only to individuals, not companies. This kills KATA for most B2B freelancers. We break down the full tax picture in the overview of taxes in Hungary in 2026.

The business residence permit connection

A common misconception: 'I'll open a company - I'll get a residence permit.' The mere fact of owning a Hungarian firm doesn't give a residence permit. Business is a tool, but resident status is arranged through a separate immigration procedure, and the immigration service (OIF) assesses whether the activity is real: office, turnover, employees, the economic rationale for your presence.

What to pay attention to:

• after the 2024-2025 migration law reform, requirements for a business residence permit tightened - a formal 'shell company' won't pass;
• the immigration service looks at substance: real activity, not just an entry in the register;
• for long-term planning, a business residence permit can become the first step toward permanent residence and then toward Hungarian citizenship(ordinary naturalization - 8 years of residence, with an exam on constitutional basics in Hungarian);
• those considering entry through investment should study a residence permit by investment (a golden visa)- this is a separate route, more predictable in status.

If your goal is specifically to live in Hungary, the choice of business form and structure needs to be thought through with immigration in mind from the start, not fixed after the fact.

What we check before the start: risks and due diligence

Before registering a company, at BRIDGES GLOBAL we run the client's project through a check that saves money and nerves. Here are the key points we look at.

• The purpose of the business.Real commerce, tax optimization, or a bridge to a residence permit - the choice of form and structure depends on this.
• Source of funds and compliance.Hungarian banks strictly check the origin of the money; an unprepared client risks an account refusal.
• Tax residency.Where you pay taxes as an individual, whether there's a double taxation risk, how it correlates with your country's treaties.
• Substance.Whether real presence is sufficient for the bank and the immigration service.
• Types of activity.Some are licensed (finance, medicine, food service) - this changes the timelines and requirements.
• The connection to immigration.Whether the business structure conflicts with future getting of a residence permit or permanent residence.

Such an upfront audit costs incomparably less than redoing a registered firm, capital frozen without an account, or a residence permit refusal because of an 'empty' company.

Common entrepreneur mistakes

Over years of practice, mistakes repeat with surprising consistency. The costliest of them:

• Betting on self-registration.In Hungary this is physically impossible without a lawyer - attempts to save money end up costing time.
• Ignoring bank compliance.The company is registered, but the account can't be opened for months - the capital is frozen, the business is stalled.
• Counting on KATA 'out of old habit.'After the reform, the special regime almost doesn't work for B2B - many find this out after the fact.
• Underestimating the 27% VAT.They factor a European 'average' VAT into prices and lose margin.
• A shell company for the sake of a residence permit.The immigration service sees the lack of activity and refuses.
• Saving on an accountant.Late reporting in Hungary quickly turns into fines.
• Not accounting for the local HIPA tax.In Budapest, up to 2% of revenue is a noticeable expense line people forget about when planning.

Almost all of them are cured by one thing - competent preparation before the first legal action.

Bottom line

Hungary is a strong jurisdiction for business in the EU: 9% corporate tax, fast registration, 100% foreign ownership, access to the single market. For most people the Kft form with 3 million forints of capital is optimal; sole proprietorships and Bt are niche solutions for freelancers and partnership projects.

That said, you can't open a company without a Hungarian lawyer, accounting is mandatory, VAT is high (27%), and bank compliance requires preparation. And most importantly - business on its own isn't equal to a residence permit: if the goal is relocation, the structure needs to be designed for immigration from the start.

If you're planning to live and work in Hungary, start with two articles: Hungarian citizenshipand a residence permit by investment. BRIDGES GLOBAL specialists can help you choose the business form and connect it with legal status.