The main legislation that must be followed by those who want to establish a branch in Hungary is the Branch Offices and Commercial Representative Offices Act CXXII of 1997, which must be respected during the commercial activities carried out by the branches of foreign companies.
If you choose to invest in Hungary by expanding your company here, our team of local incorporation agents is at your disposal.
Table of Contents
What is a branch?
The main difference between a branch and a legal entity is that for all the actions of the branch the foreign company is responsible and only certain activities can be performed by branches without the approval of the parent company.
Parent companies must provide the necessary assets to branches in order to perform any activities. When branches are requested to provide lists with assets, the properties of the foreign company are also included. Every year, the financial accounts of branches established in Hungary must be submitted along with the balance sheets of the parent companies.
| Quick Facts | |
|---|---|
| Applicable legislation (home country/foreign country) |
Hungarian law (Hungarian Accounting Act, Companies Act, Foreign Investment Act, etc.) |
|
Best Used For |
implementing the same business model of the parent company / less accounting obligations / suitable for the financial industry (banking, insurance) |
|
Minimum share capital (YES/NO) |
Not required |
| Time frame for the incorporation (approx.) |
Obtaining governmental approval: one week / the overall setting up: 3-4 weeks |
| Management (Local/Foreign) | A local branch manager has to be appointed (no residency requirements) |
| Legal representative required (YES/NO) |
Yes (the branch manager) |
| Local bank account (YES/NO) |
Yes, it is required for all companies in Hungary, as a part of the incorporation process. |
| Independence from the parent company | Although the branch is registered separately from the parent company, it is a unit that is dependent on the parent company abroad. |
| Liability of the parent company | Fully liable for the debts of the branch |
| Corporate tax rate | 9% |
| Possibility of hiring local staff (YES/NO) | Yes |
| Documents required for the registration |
– the articles of association of the parent company, – its registration certificate, – the decision to open a branch, – the standard application form, – information on the registered address in Hungary, – the list of directors, – information on the person appointed as the representative, specimen signatures. |
|
Institution in charge with the registration |
The procedure to establish a branch in Hungary is completed through the Hungarian Court of Registration. |
|
Tax registration obligations |
The branch is required to register for taxation with the National Tax and Customs Administration and to comply with the tax reporting procedures applicable by the law. |
| Tax reporting | The branch has to maintain its books of accounts and prepare financial statements in accordance with the accounting formalities available in Hungary. |
| Taxes charged to a Hungarian branch |
A branch is liable to the payment of the corporate tax, value added tax, employment taxes and other taxes imposed to Hungarian legal entity (the main difference being that the taxes are calculated only to the income obtained from operations carried out here, not on the global income of the company). |
| Audit obligations (yes/no) |
Yes |
| Audit exemptions |
Investors can establish a branch in Hungary and not be required to completed audit formalities only when the headquarters of the parent company is registered in an EU member state. |
| When can a branch start its activity? |
Only after the Hungarian Court of Registration issues all the documentation and certificates. |
| Fees for company registration for a branch |
HUF 50,000 |
| Tax number required (yes/no) | Yes |
| Accounting legislation applicable to foreign branches |
The Hungarian Act on Accounting |
| Termination of business operations of a branch |
The parent company is required to address Hungarian authorities, by submitting a decision of termination of the Hungarian branch. The decision must be submitted within 60 days since the date when the decision was taken. The branch will be deleted from registers if the company doesnt have any outstanding debts to pay. |
| Institution in charge with the liquidation of a branch |
The Hungarian Court of Registration |
| Notary proceedings (yes/no) |
Yes |
| Ways in which our team can help in registering a branch |
Our consultants can help you establish a branch in Hungary, can put you in contact with a local notary public and can provide legal representation throughout all stages of registration. Likewise, our team can offer professional post-incorporation services (tax consultancy, accounting, etc.) or if you want/need to close down the business. |
A major advantage of opening a branch in Hungary is that it is not necessary to subscribe a minimum share capital. If the company is located outside EEA member states or no special treaties are signed, a permit must be received before registering a branch.
Our team of specialists in Hungarian company formation can present more details on other requirements applicable to branch offices. We can also help you if you are interested in setting up a branch office in Singapore, through our Singapore partners.
If the parent company enters the liquidation process and its assets must be seized, the assets of the branch are also subject to enforcement. The procedure is the same if the branch is subject to enforcement – the parent company’s assets may be seized in order to cover the branch’s debts.
The procedure of registering a branch in Hungary in 2025
Before starting to operate in Hungary, the company must register with the Court of Registration. Unlike local companies, foreign companies must present many more documents at registration. A dossier must be prepared and it must contain the documents presented below; more information on these papers can be provided by our team of consultants in company registration in Hungary:
- the standard application and the certificate of registration of the foreign company;
- the share capital certificate, as well as the memorandum and the articles of association of the parent company;
- the decision of opening a branch and a list with the directors and the secretary, as well as the registered address of the parent company;
- the name of the branch and its registered address and the name of the representative appointed with power of attorney;
- the specimen of signature for the person responsible with the branch’s decisions.
The Court of Registration will issue a certificate of registration, necessary to register the branch for taxes and VAT. Also, if the branch has any employees, the social services must be announced regarding the incorporation of the branch.
The process of opening a branch in Hungary doesn’t take longer than five working days if all the documents are in good order and are deposited on time. The timeframe is shorter compared to other European countries, such as Spain, where opening a branch can take approx. 6 weeks and starting a Spanish LLC – up to 4 weeks.
Tax registration obligations
As mentioned above, a branch must register for VAT as well. In 2025, the standard VAT is 27%, but reduced rates of 18%, 5% and 0% are available. VAT payers must submit VAT returns on a monthly, quarterly and yearly basis. 2025 brings several news concerning the charge of the VAT.
For instance, companies in Hungary can opt for VAT exemption in other EU member states, provided that they do not carry out their operations through a permanent establishment in those countries. The same is true for EU companies operating in Hungary in 2025 and the rule applies as long as the companies’ revenues are below EUR 100,000 in a financial year.
A branch office in Hungary is also liable to the payment of the corporate income tax, which is calculated based only on the overall income obtained from the activities carried out here. At the moment, the corporate income tax applicable here is charged at the rate of 9%.
We invite investors to request in-depth information on the current taxes applied to branch offices from our specialists in company registration in Hungary, who can help you throughout the entire tax registration procedure, as well as through the process of opening the branch office.
Concerning VAT, it must also be noted that if a company completes transactions with other EU companies, Intrastat reports must be submitted as well. For more on how to open a branch in Hungary, please watch the video below:
Please mind that if you want to open a branch in Hungary in 2025 and if the headquarters of the parent company is situated in a country with which Hungary did not sign a tax treaty, additional taxes can apply.
What are the tax regulations for Hungarian branches in 2025?
Given the fact that a local or foreign company will set up the branch office with the purpose of developing a commercial activity, this will create certain tax obligations for this company type. Foreign businessmen who want to open a Hungarian company should be aware that the branch office is liable to local taxes in accordance with the accounting regulations available in Hungary.
For this purpose, one should become familiarized with the regulations prescribed by the Hungarian Accounting Act, which presents the tax obligations imposed to branch offices set up here by foreign companies. A detailed presentation on this law can be provided by our team of consultants in company formation in Hungary, who can also provide you with accounting services.
In case you need legal services in another country, for example in India, we recommend our partner law firm – Lawyer-India.com. For company formation services in another jurisdiction, for example in Brazil, we invite you to get in touch with our partners – CompanyFormationBrazil.com.
From a taxation view point, the branch office will be treated as a permanent establishment in Hungary, which means that the entity will only be liable to local taxes for the income obtained in a financial year from the business operations developed in this country.
The branch office set up here must also register with the National Tax and Customs Administration, an institution which will issue a tax identification number. Being registered for taxation purposes means that the company has to maintain certain accounting documents as per the applicable legislation.
Accounting obligations during the financial year
Those who open a company in Hungary (as a corporate body or as a branch office) are obligated to maintain double-entry books and during the financial year, they have the obligation to complete and publish various accounting documents, such as the annual accounts or the simplified annual accounts.
Besides these, companies can also prepare consolidated annual financial statements. These include the profit and loss account statement, the balance sheet and the supplementary notes. These documents must be submitted with the local authorities by the companies obligated to prepare them. Of course, our accountants in Hungary can prepare the documents and submit them on behalf of the company.
Employment of foreign workforce
Investors who establish a branch in Hungary have the right to employ both local and foreign workforce. The difference in the employment procedure can be given by the nationality of the future employees (when it comes to foreigners), because for EU nationals, simpler procedures apply (they do not need visas or work permits).
For those who arrive from non-EU countries, the immigration formalities can be much more complex and they may take a longer period of time to be completed, as the legislation requires in this case work visas and work permits.
Given that the branch is an extension of a foreign company and it is included in the same group of legal entities owned by the parent, the existing law also grants the right to transfer employees working in other non-EU companies belonging to the parent to the branch opened in Hungary.
This is formally known as the intra-company transfer (ICT) and it is addressed solely to 3 categories of employees, as follows:
- trainees;
- specialists;
- managers.
Those who establish a branch in Hungary can also transfer employees from other non-EU branches of the same group. The conditions under which this transfer can be made vary in accordance with the type of employee that will be transferred.
For instance, the duration of the intra-company transfer permit for a trainee is 1 year, while for a managerial position, the validity is 3 years. However, we mention that the Hungarian law grants the right to renew the permit (upon renewal, the same period of time will be granted, namely 1 or 3 years).
Our consultants in company formation in Hungary can provide in-depth details on the requirements of the ICT program.
Legal obligations for companies operating in the online sports industry
A novelty brought in 2023, which has been maintained in 2025 as well, is addressed to those who want to set up a branch that will develop online sports services on the Hungarian market.
Thus, all companies that will set up a branch must have a minimum of 5 years of business activity in this sector in an EEA country. The law stipulates that those who will open a branch in 2025 as online sports operators will have to deposit a capital of EUR 2,5 million.
The rules for 2025 have been established under the 2022/66/HU and 2022/67/HU laws. The law states that these types of companies are required to appoint a representative. If you want to set up a branch in 2025 in this industry you must know that the representative has to be a Hungarian citizen who is currently residing in Hungary. Additionally, the person must have a suitable educational background in law or economics.
Other types of online operators are to be taxed in 2025, following the EU’s DAC7 law. The new legislation regulates the activity of online retail entities, which must pay the retail tax. The tax is to be charged only for the sale of goods to Hungarian clients and it applies to both domestic and foreign companies, starting with 1 January 2025. The infographic below presents details on how to open a Hungarian branch:
What is the data on foreign companies in Hungary?
Typically, foreign investors prefer to set up here a limited liability company or a joint stock company. However, common ways to open a company in Hungary as a foreign investor are represented by the branch office and the subsidiary, these being types of entities that are regulated by the national commercial law for the purpose of expanding a local or a foreign business on the local market.
Foreign businessmen have to know that Hungary is one of the most important recipients of foreign direct investments in the European Union (EU); foreign businesses or foreign-owned companies operating here can be found in most of the economic sectors that represent the Hungarian economy, the following data being available:
- it is estimated that around 70% of the large companies operating in Hungary (defined as legal entities employing more than 250 workers) are foreign-owned;
- also, around 70% of foreign owned companies operating on the Hungarian market have their seat in EU countries (at the level of 2020);
- in 2022, the highest number of foreign owned companies in Hungary were incorporated by Ukrainians (3,953 companies), Germans (3,950), Austrians (3,764), Slovakians (2,871) and Romanians (2,460);
- it must also be noted that companies with foreign ownership employ around 25% of the total Hungarian workforce.
The country’s main investors are from EU countries, with Germany as the main investor (accounting for 13% of all the investments), the Netherlands (10,3%) and Luxembourg (10,1%). Foreign investors interested in Hungarian company formation prefer to invest in the manufacturing sector (accounting for 38% of all the investments).
If you need more details in regards to establishing or managing branches in Hungary, please feel free to contact our company formation specialists. Our team of specialists can help you in all the steps related to the process of company incorporation in Hungary; you can also rely on our specialists for tax registration or for obtaining various permits and licenses necessary for certain business activities.