Hungary is a great country to live and do business in. Located in the heart of Europe, it's an EU member state with a developed economy and a good climate for investment and innovation. Hungary came onto the world startup stage more than ten years ago and hasn't turned back since. State policies have been adjusting to accommodate the growing interest of entrepreneurs, and Budapest has become one of Europe's most desirable startup hubs.
If you have been thinking about starting your business and being self-employed in Hungary, you are in luck. We have gathered the information on all steps you will need to register a company and start working with clients.
Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.
Sole proprietorship (egyéni cég)
The best legal form for starting your own business in Hungary is the sole proprietorship, sometimes also called a sole trader. Sole proprietorships are one-person businesses with no legal personality. The private entrepreneur bears unlimited liability with all his/her assets for obligations originating from the company's activity.
This business form is ideal for individuals who provide services, such as accountants, consultants, and others. However, certain professions cannot register as sole traders: primary agricultural producers, veterinarians, lawyers, private patent attorneys, or notaries.
It is relatively easy to set up as a sole trader in Hungary compared to the other business forms available in the country. Although the sole trader will need to comply with tax laws and make social security contributions, the demands are more relaxed than those for large companies which require annual audits.
Registering a sole trader in Hungary
Individuals who want to start sole proprietorships no longer have to apply for a sole trader permit. There is a client gate system in place, an access point to the electronic administration in Hungary. This system enables you to take care of the paperwork and register a company online, simplifying the once complicated procedure. Before beginning your registration process, it is good to consult an accountant; they can help you select an activity code and get useful tax information.
To start your sole trader business, you need to submit a notice of the start of activity. You can do this free of charge, either via the client gate system or in person. The documents to submit with this notice are a valid personal identification document, an official address card, your tax number, and a certificate or license (if your business requires it). You also need to know the activity code of the business you want to register.
Once you have notified the state of the start of business activity, they will enter you in the register right away and send you the certification that marks the beginning of your business; it contains your tax number, the selected business activity, registration number, and your personal data. The sole trader permit that was once mandatory is now issued only upon your request, and it is free of charge.
Sole proprietors in Hungary can start their business activities immediately after that certificate is issued. The newly opened sole proprietorship needs to register with the tax authorities; this process doesn't require any fees and happens within 15 days of applying for company registration. A foreign resident can register as a sole proprietor if they have a residency permit in Hungary.
The sole trader must always indicate the registration number and sole trader designation (or its short form - "e.v.") next to his/her name or signature.