Hungarian Company Guidance

Limited Liability Company – KFT

KFT’s are corporate entities established with a predetermined sum of member deposits, i.e. the issued capital, in which the members’ obligation is limited to the provision of their deposit, as well as of other asset contribution potentially defined in the Articles. Foreign resident owners are expected to provide their respective cash deposit in convertible currency, or in HUF from a convertible HUF account held with a Hungarian bank. Following registration, the members’ rights and their share in the company’s assets are represented by their respective business quotas. Any individual or legal person of any nationality can become a quota holder in a KFT. The managing director can only be an individual but without limitation on nationality. The members are entitled to establish a Supervisory Board to control the company’s operations, with a total number of members between 3 and 15.

Hungarian Companies Potential Uses

A Hungarian company is suitable to hold other resident or non-resident companies and to receive dividends from such companies, which can then be re-distributed without being subject to dividend withholding tax to its own parent company resident in any country.

When the EU parent-subsidiary directive can be applied, dividends can be distributed from any EU company to an offshore company through the Hungarian company without being subject to dividend tax or dividend withholding tax.

Benefits of a Hungarian Entity

  • No negative offshore perception.
  • Excellent geographical location in the heart of Europe.
  • Hungary is a member of the EU.
  • The company can obtain an EU VAT number and trade within the EU without being subject to VAT.
  • Upon request, the Hungarian tax authorities will certify that the entity is a Hungarian taxpayer, meaning that the company can enjoy the benefits provided by the 60 double tax treaties signed by Hungary.
  • Any corporate entity can be a quota holder-shareholder in the company, meaning that the business quota or share can be owned by an offshore company, ensuring both privacy and full entitlement to ownership rights.
  • Data of the beneficial owner is not recorded.
  • Though the foundation process can be executed in a relatively short time period. The company can start operating immediately upon submitting the application for registration.
  • Registration of beneficial owner – No registration.
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