Is company formation in Hungary limited in any way to foreign nationals and are there any differences in the process?
This question may arise in setting up a company for a foreign national in Hungary. What are the primary steps before founding? For example, register for a client portal account, or acquire a tax identification number or a TAJ (health insurance) number? In what form of relationship can you be an executive of the company? Who can be a delivery proxy?
The establishment of a Hungarian company by a European Union citizen is not restricted. Except, of course, in the cases where a Hungarian citizen would not be allowed to start a company. (e.g., ban). You can be a member of the company, or additionally, an executive too. The managing director has additional obligations, such as opening a company portal account and tasks related to the day-to-day work of the company, eg: compiling accounting documentation, opening a bank account, registering with chambers.
Before engaging in establishing a business in Hungary, it is worth checking out the benefits Hungary can offer.
The process is the same as for Hungarian citizens. If you do not speak Hungarian, it is necessary to translate the documents required for founding a company. The company formation in Hungary is a legal process and the involvement of a lawyer is required.
There are several forms of companies from which you may choose the right, though we generally recommend a limited liability company.
If either the directors or the members of the company do not have a resident address in Hungary, they need to appoint a delivery proxy. The delivery proxy will act not for the company itself, but the directors and the members. If you reside in Hungary and have an official address card, then you do not need a delivery proxy.
The delivery agent will receive the documents addressed to the foreign person in connection with the operation of the company and then has to forward those to him/her. In the case of a document sent to the delivery proxy by a court or other authority, it shall be presumed that the document became known to the foreign person on the fifteenth day after the lawful service to the delivery proxy.
The name (company name) and place of residence (registered office) of the delivery proxy of a foreign legal or natural person not resident in Hungary must be reported to the court of registration upon the establishment of the company.
The delivery proxy can be an organization with a registered office in Hungary or a natural person with a permanent residence. Members of the company, directors, and members of the supervisory board may not act as a delivery proxy.
Client portal account
We recommend that the client portal account be open, but not mandatory. I will write about this below.
A client portal is a tool for managing electronic administration with the government, including tax matters.
To log in to the Client Portal, you need to create a personal Client Portal ID. This is a registration process that you can initiate at any government office. It can be completed at a documentary office, government desk, or tax office customer service and even consular offices. It is worth booking an appointment and indicating if you do not speak Hungarian.
In the case of EEA nationals, an identity card or passport must be presented, otherwise, non-EEA nationals shall show their passport for registration.
Company portal account
After opening the client portal account, you can go on with creating a company portal account to which the company is assigned. You’ll be able to manage all the company related e-communication with the government through the company portal. If you do not speak Hungarian, it is worth appointing a company gate agent who will take over the documents instead.
Health insurance registration
TAJ (health insurance) card and contributions: An EEA national performing directorship duties in Hungary may not be subject to Hungarian social security rules if he/she has been insured in their home EEA country, and can prove this. If you manage the Hungarian company and do not have social insurance in any of the EU member states, then the Hungarian social security will apply.
Personal tax identity number registration
Personal tax identity number: any directors of a Hungarian company need to have a Hungarian tax identity number. This is their private tax id number, separate from the company’s tax numbers. The director, its agent, or accountant can apply for the Hungarian tax identity number. The process can be done at any tax office customer service in person or electronically through the client portal account. The registration can be done by the director, its agent or accountant. A proof of the identity, passport or EEA identity card is also needed to be presented.
Opening bank accounts
The tax regulations require all new Hungarian companies, including those that are established by foreign nationals, to open a bank account in the territory of Hungary. Bank accounts cannot be opened remotely, due to the strict anti-money laundering rules all clients shall visit personally the bank office and go through a client screening process before the bank could offer to open the account.
At least one bank account is a must in Hungary, though any other accounts may be opened outside of Hungary. Virtual or mobile app-based accounts, like for example Revolut, Monzo, Starling or N26 are also acceptable. The bank accounts opened in Hungary are automatically declared to the tax office. Additionally, the company needs to report to the tax office any accounts that are opened elsewhere.