Open a Representative Office in Hungary
Open a Representative Office in HungaryUpdated on Friday 19th November 2021
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A businessman may not choose to establish an actual company. Some businessmen, specially foreign investors, choose to open a representative office in Hungary instead. Representative offices are organizational entities of foreign companies that have no separate legal identity of their own. As such, they may not engage into activities that generate profit or any other form of income. Hungarian law allows such entities to be established in the country. The main law that governs representative or liaison offices is the Branch Act. Our Hungarian law firm can help you get started on your representative office in the country.
You are welcome to get in touch with experienced lawyers at our law firm in Hungary. They will provide you with detailed information regarding establishing a representative office in Hungary and how this entity works. In addition, it is recommended to acquire legal assistance to understand the structure of these representative offices because they vary from company to company.
Activities of a representative office in Hungary
As per the Branch Act, the representative offices in Hungary can be 100% foreign-owned. However, these offices are not allowed to undertake any profit-generating activities. If you want to open a representative office in Hungary, you must know these facts;
- This office can only promote the business of the parent company;
- It can undertake liaison activities;
- It is also allowed to conduct market research.
If you want to establish a representative office in Hungary, you can get in touch with our lawyers for details about the activities of such offices. You can obtain the legal services of our attorneys in Hungary if you need guidance regarding reserving a company name in Hungary. They can help you in picking an available and appropriate name for your entity.
Registration of representative office in Hungary
Although representative offices are not allowed to engage in commercial activities, they must still be registered. Registration of representative offices in Hungary can be done with the Court of Registration where the office is located. There is no minimum share capital requirement for creating a representative office but a registration fee of 50,000 Hungarian Forint has to be paid. After all requirements and fees have been complied with, the Court of Registration enters the application in its records. Representative offices can only start business operations after registration. Our attorneys in Hungary are can help you with the registration process.
Commercial representative office in Hungary
The same employment rules apply to the commercial representative office in Hungary as to the branch office. It is also an organizational unit that acts as an outpost of a foreign business without a legal personality. The activities of a commercial representative office are limited to carrying out information, propaganda activities on behalf of the foreign company, mediating and preparing contracts, etc. Furthermore, these offices are not allowed to perform business activities that yield profits. A commercial representative office is not deemed as a separate legal person, so it cannot do actual business in Hungary. As a result, such offices are not required to pay corporate tax or local business tax. However, the parent company will pay corporate tax where it has its headquarters.
If you want to register a representative office in Hungary, you can rely on the legal help of our lawyers. They can provide you with comprehensive assistance in this regard. Furthermore, you can get business consultation from our lawyers in Hungary. Their contribution can help you avoid making typical mistakes and take a reliable business approach in the Hungarian business market.
Branch representative office in Hungary
The representative branch office in Hungary acts as an outpost of a foreign business. This office does not have a legal personality; however, it is a separate organizational unit of the foreign business association. Therefore, this office needs to be registered in the Hungarian company registry.
You can get legal assistance from our lawyers to open a representative office in Hungary. To obtain our lawyer’s services, you must present the articles of association of the parent company. In Hungary, the representative branch office is deemed as an individual company form, so it pays corporate tax, local business tax, and all taxes required by the law.
In addition to establishing a representative office in Hungary, if you want to open a company in this country, you can trust the legal assistance of our lawyers. They will provide the details about the types of companies in this country. This legal assistance can help you comply well with the requirements.
Limited activities of Hungarian representative offices
Representative offices in Hungary can only conduct certain activities. These are some that are listed by our Hungarian lawyers:
1. Mediation of contracts between its foreign principal company and Hungarian business entities and private individuals;
2. Preparation of contracts that have been entered into by its foreign principal and Hungarian companies;
3. Information drives and promotional activities of goods, services, and rights sold or provided by its foreign principal;
4. Represent its foreign principal company during exhibits, fairs, professional lectures, and other identical events done in Hungary.
If you have any further queries regarding the activities of representative offices in Hungary, you can interact with our lawyers.
In addition to this legal service, you can also interact with our Hungarian lawyers to open a bank account in this country. Our lawyers will not only help you in opening a personal bank account but also a corporate account in Hungary.
Ownership of real estate in Hungary for your representative office
Foreign companies may purchase real estate for the establishment of representative offices in Hungary. If the foreign company is registered in a country that is a member of the European Union or the European Economic Area, it may acquire property as long as it is not considered as agricultural land. For foreign companies that are neither registered with the European Union, nor the European Economic Area, they may still purchase real property as long as it is not tagged as agricultural land or natural preservation area. Our law firm in Hungary can help you determine if you are qualified to acquire real estate in the country.
Taxes on corporate income in Hungary
As a foreigner, you are only required to pay corporate income tax (CIT) on your income generated from the Hungarian branch's business activities. Please find below the corporate income tax percentage in Hungary:
- From January 1, 2017, the corporate income tax rate is a flat 9% of the positive CIT base;
- The minimum corporate tax base is calculated as 2% of the total revenue;
- General VAT (value-added tax) is 27%, and the reduced rate is 18%;
- The tax rate is 9% for the foreign owner of a real estate holding company.
There can be a lot of legal implications when you set up a representative office in Hungary. Contact our law firm in Hungary to obtain their legal services in this matter. They will provide you with legal assistance throughout the process.