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Hungarian Legislation for Foreign Investments

Hungarian Legislation for Foreign Investments

Updated on Wednesday 24th June 2015

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Hungarian-Legislation-for-Foreign-InvestmentsBefore it became a member state of the European Union, Hungary has made a priority of attracting foreign direct investments. The main features that make Hungary a good investment destination are its infrastructure, workforce and its geographical position. The country’s legislation encouraging foreign direct investments (FDI) provides very solid reasons for businesses wanting to expand.

The Foreign Investment Act of 1988 in Hungary

It is worth considering the fact that Hungary has started encouraging FDI since 1988 through the Foreign Investment Act that has been amended throughout the years in order to provide greater protection for foreign and domestic investors as well. The Act provides the main legal framework that guarantees foreign investors will benefit from the same treatment that Hungarian investors have. The Hungarian Foreign Investment Act protects non-residents investors in case of company liquidation by allowing them to repatriate profits and capital. The main provisions of the Hungarian Foreign Investment Act are to create suitable grounds for international cooperation between Hungary and foreign investors coming in the country, to encourage the injection of foreign capital in the country’s economy and to increase the country’s technological development.

The Investment and Trade Development Agency in Hungary

The Investment and Trade Development Agency (ITDH) was first established in 1993 with the main purpose of supporting Hungarian companies and foreign businessmen to find investment opportunities in Hungary. In 2011 the ITDH has undergone massive change when its economic development department started operating under the Ministry of National Economy in Hungary.  Within the ITHD the government has enabled the National Development Program II (NDPII) in order to receive EU funds for FDI and the Smart Hungary investment incentive created in order to attract foreign investments in underdeveloped parts of the country.

Other laws that protect foreign investors in Hungary

Other than the investment agency and Foreign Investment Act, Hungary has a complex legislation protecting companies. Among the most important laws in Hungary we have the Business Organization Law enabled in 2006, the Enterprise Law issued in 2009, the Competition Law and the Privatization Law  enabled in 1996, respectively 1995. The laws on Bankruptcy, Securities and the Commodity Exchange Law in Hungary, released between 1991 and 1994,  are also worth mentioning al. The most important aspect is that all these laws apply the same to Hungarian and foreign investors.

What investment opportunities does Hungary provide for foreign investors?

Hungary promotes the following sectors when it comes to foreign direct investments:

  • -        the automotive sector,
  • -        the electronics industry,
  • -        the information and technology sectors,
  • -        the research and development sector,
  • -        the biotechnology industry.

All these domains benefit from tax incentives and direct incentives through EU funding.

Considering the great investment opportunities and incentives the country provides, our Hungarian lawyers can offer you more details about favored regions where you can set up a company in. You can also contact us for information about company registration in Hungary.

 

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