Foreign investors can set up their operations in Hungary through a variety of structures. They can incorporate commercial companies or non-for-profit structures (which can take the form of associations or foundations). Those who want to open a foundation in Hungary must abide by the requirements of the Hungarian Civil Code.
The incorporation process is similar with the one available for those who opt to open a company in Hungary, in the sense that the structure must have statutory documents, a registered address, registration papers issued by the Court of Registration, etc. For all these, our specialists in company formation in Hungary can offer tailored assistance and legal representation.
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What types of foundations are available in Hungary?
Currently, it is possible to open a foundation in Hungary registered as one of the following:
- public-benefit private foundation;
- private interest foundation.
The 2 types of entities are regulated under the rules of the Hungarian Private Foundation Act, which establishes these 2 structures based on their purpose for which they are incorporated.
The 1st category refers to a structure that has as a primary goal the public interest (which can take the form of projects related to education, research, healthcare, etc.), while the 2nd category has a private purpose, and it is incorporated for the benefit of specific individuals.
Its purpose is, in general, to manage the assets of high-net individuals, similar to a trust. This is why this latter form of foundation is also referred to as a foundation trust. However, there are important differences between the foundation trust and the trust, and our specialists in Hungarian company formation can offer advice on the particularities of each entity.
The main characteristics of Hungarian foundations
The foundation is defined by a set of basic characteristics. In the list below, our consultants present some of these important traits:
- the foundation is a legal person, as per the provisions of the Civil Code (Section 3 (378) Act V of 2013);
- in order to complete the process of company registration in Hungary for a foundation, investors must subscribe a minimum capital of HUF 600 million;
- the capital does not need to be subscribed in full during the registration, it can be provided within the 1st year following the incorporation (Section 3 – 382, Act V of 2013);
- the law does not stipulate a maximum period of time for which the foundation can exist, unlike the trust, whose lifetime is limited at 50 years;
- however, it must be noted that the foundation can cease to exist in the case in which its assets are below HUF 600 million for 3 years.
How long does it take to open a foundation in Hungary?
The duration of the registration process varies based on the type of entity incorporated, the rules and formalities founders must abide by, but also on the documentation provided or the additional paperwork that may be required. For instance, investors can open a Hungarian company in around 2 weeks, while a foundation can be registered in 30 days.
The registration in 30 days is possible for the simplified incorporation procedure (according to the Courts of Hungary), while the standard incorporation can take up to 60 days. The process can be completed online, but it is not mandatory, as the in-person procedure is also available, depending on the preferences and the availability of the founders.
Our consultants can offer full legal support during the incorporation steps regardless of the preferred method of registration. You can also rely on us for post-incorporation assistance, for instance, for tax and accounting, services which can be performed by our experienced accountants in Hungary, so do not hesitate to contact us for more information.