APGI Hungary International Business Company

Hungary IBC Company Incorporation

Hungary International Business Company Overview:

This jurisdiction is no longer offered due to the lack of advantages of establishing a company in Hungary. We have maintained this page for education purposes only.

The Republic of Hungary , which covers an area of about 93,000 square kilometers in Central Europe, has borders with Austria, Slovakia, Yugoslavia, Romania, Croatia, Slovenia and the Ukraine. It is predominantly flat, lies in the Carpathian Basin and is divided into three parts by the Danube and Tisza rivers. The highest peak rises to 930 meters. Hungary's climate is temperate.

The population of Hungary is currently around 10.4 million. The largest cities are Budapest, the capital (2 million inhabitants), Debrecen ( 210,000), Miskolc (190,000) and Szeded (180,000).

Both the road and rail networks focus on Budapest. Construction work on the motor ways is on the increase, and at the end of 1996 motor ways will link Budapest with the surrounding countries. All important rail lines are now electrified.

Modernization of the telecommunications is under way, starting with the part-privatization of MATAV Rt, the Hungarian telecom utility. In most parts of the capital dialing is available with excellent digital exchanges, although the number of telephones, per capita, is low.

All the world's big courier services are actively represented in Hungary.

Hungarian is the only official language, although ethnic minorities use their own languages to converse. Among younger people, English and German are the most commonly spoken foreign languages.

The local currency is the Hungarian Forint ( HUF ).(US$1.00 equals approximately 267 HUF [2002.05.20]). A new Act on Foreign Exchange was enacted at the end of 1995. This Act made the Forint freely convertible for all current expenditure, although some controls remain for portfolio investment and real estate purchases.

The Magyars arrived from Central Asia in AD 896 and occupied Hungary 's present territory. They established themselves as a European Nation with close links with their neighbors. During the second half of the millennium, Hungary was occupied by the Turks and the Austrians, and after the First World War, it gained independence in 1918.

Hungary found itself occupied by Russian troops at the end of the Second World War, as it had entered the war on the side of Germany.

After 45 years of occupation, the first truly free elections since the end of the Second World War were held in 1990. Hungary became an associate member of the European Union in 1993, and applied for full membership in 1994.

Multi-Party Parliamentary Elections are held every four years.

INCORPORATION OF HUNGARIAN OFFSHORE LIMITED LIABILITY COMPANIES OR CORPORATIONS.

By submission of the Memorandum and Articles of Association to the Regional Company Registration Court, together with a list of Members; specimen signatures of the first Directors and documentary evidence from a Hungarian bank that at least half of the company's authorized capital has been paid up in full in cash. Due to the backlog of company formations, all companies are first registered within 5-10 days of filing and then fully incorporated retro-actively, the incorporation date being the date of filing. The foundation also requires special registration process. Further, there is an annual reporting liability towards the Hungarian Ministry of Finance.

Restrictions on Trading:

Cannot trade within Hungary or undertake the business of Banking, Deposit taking, Insurance Assurance, Re-Insurance, Fund Management, Leasing or any other activity associated with the finance industry.

The powers and objects of a Hungarian company are contained within the Memorandum of Association and have to be specific. Should a Hungarian Company wish to diversify into another field of activity the Regional Company Registration Court should first be notified and ratified at a Meeting of the Members.

A Registered Office is required and must be in Hungary.

The Hungarian Regional Company Registration Courts have no facility for approving company names prior to Registration. Names are approved or refused at the time of filing.

Due to the costs associated with registration and paid up capital requirements, shelf companies are in relative short supply but are available.

TIMESCALE:

Subject to a proposed name being approved by the Regional Company Registration Court a company can be first registered within 5-10 days and then fully incorporated retro-actively.

NAME RESTRICTIONS:

Any name that is identical or similar to an existing company. Any name that is considered undesirable. Any name that may imply a field of activity associated with the finance or insurance industry and any name that may imply an association with Government. The names of all Hungarian Companies must include such words as to express or imply a specific scope of activity, e.g. Trading, Distribution, Investment, Consulting, etc.

MANAGEMENT:

The minimum number of directors required for a KFT company is one. An RT company requires three. The directors of either a KFT or RT company may be natural persons or bodies corporate, and be of any nationality. A majority of directors however must be resident in Hungary.

The Hungarian Companies Act does not provide for the appointment of a company secretary.

Minimum number of shareholders is one.

SHARE CAPITAL:

• KFT - Minimum HUF 1 MILLION (approximately US$7,000)
• RT - Minimum HUF 10 MILLION (approximately US$70,000)

At least half of the authorized capital has to be paid in cash at the time of registration. The balance of authorized capital has to be issued and paid in cash within 365 days of registration.

KFT - Companies do not have shares. Quotas (representing Equity participation) are issued to members which are registered with the Regional Company Registration Court.

RT - Companies may issue registered or bearer shares, but if issued to non-residents of Hungary the shares do not carry voting rights.

TAXATION:

A Hungarian offshore company pays 2.7% effective tax on its pre-tax profits, and a further 3.25% withholding tax on dividends.

DOUBLE TAXTATION AGREEMENTS:

Hungary has an extensive network of double taxation agreements. The countries include:

Australia, Austria, Belgium, Brazil, Bulgaria, Canada, China, Czech and Slovak Republics, Denmark, Egypt, Finland, France, Germany, Greece, India, Indonesia, Israel, Italy, Japan, Republic of Korea, Luxembourg, Malaysia, Malta, The Netherlands, Norway, Pakistan, Poland, Spain, Sweden, Switzerland, Thailand, United Kingdom and the United States.

There are also treaties that are signed but not in force with Albania, Republic of Ireland, Kazakhstan, Kuwait, Moldova, Mongolia, Morocco, Portugal, Romania, Russian Federation, South Africa, Tunisia, Ukraine, Uruguay and Vietnam.

The treaties in force allow for the reduction of withholding taxes relating to dividends, royalties, rentals, technical assistance fees, interest and shipping and aviation.

LICENSE FEES:

The Registration Duty of a company as an offshore vehicle is HUF 800 (US$5.51).

FINANCIAL STATEMENT REQUIREMENTS:

The balance sheet must be filed not later than 31 May annually. An auditor must be appointed for single member KFTs and all RTs.

LOCAL REQUIREMENTS:

As a matter of local company law the company MUST maintain a registered office address within the jurisdiction of incorporation and must also appoint a local resident company secretary. We would generally provide these services as part of the domiciliary service fee.

Schedule Of Fees

Basic Fees: Hungary IBC	€ EURO	$ US DOLLAR
Annual License Fee:	---	---
Annual Registered Office fee:	---	---
Annual Registered Agent fee:	---	---
Incorporation Fees:	---	---
TOTAL FIRST YEAR FEES:	ON REQUEST	ON REQUEST
Additional Services:	€ EURO	$ US DOLLAR
Corporate Seal	---	---
Open Bank Account in Hungary	---	---
Power of Attorney	---	---
Certificate of Good Standing	---	---
Notarization per document or set	---	---
Apostille per document or set	---	---
Nominee Director	---	---
Nominee Shareholder	---	---
Annual Fees:	€ EURO	$ US DOLLAR
Maintenance Fee (due in January)	---	---
Nominee Director	---	---
Nominee Shareholder	---	---