If you are a foreign investor and you open a company in Hungary or you have shares in a domestic company in the country, you will be repatriating your profits. The process of repatriating your profits in Hungary is bringing out your profits from your business in the country to where you or your company resides. The repatriation of profits in Hungary is provided for under the Foreign Investment Act of 1988. This law provides that foreign companies shall be treated similarly and equally with domestic corporations. Thus, they are allowed to take their profits out from the country and convert it to the same currency as they had invested.
The process of profit repatriation from Hungary
After the process of company formation in Hungary, it will begin operating and gain profits. It will have to repatriate the profits it has earned in conducting business. To do so, a year-end financial statement has to be prepared because it is the basis for repatriation of profits in Hungary. The profits that may be repatriated may either come from selling goods or products within the country or from exporting them. The foreign investor only has to fill up a repatriation form in a Hungarian bank and submit it along with the financial statement. The bank then evaluates and processes the request and releases the remittance in four to six weeks. Since the remittance will be in the same currency as that invested, the profit repatriated from Hungary will be based on the official exchange rate.
Limitation on profit repatriation from Hungary
When a foreign investor decides to begin the process of company registration in Hungary and establish his enterprise in the country, he must be aware that the currency to be used in the regular course of its business will be that of the country’s currency, the Forint. Therefore, before the foreign investor can repatriate the profits from Hungary, the company must make sure that the income has been deposited in its account. Another limitation is that a company can only apply for repatriation of profits in Hungary at the end of the year, after it has declared its annual dividends. That is why a company in Hungary that is foreign owned must properly declare its year-end financial statements. Perhaps the biggest limitation on repatriating profits in Hungary is the foreign currency reserves. There is a possibility that the amount of foreign exchange reserves of Hungary cannot keep up with the amount of profits repatriated.
The repatriation of profits represents an activity that is included in the activity of our accountant in Hungary, who is qualified to handle any matter concerning the income, transactions, taxes and any other assets of a company.
The procedure is done by applying specific computation methods, and by taking into consideration the taxes charged to businesses for this type of income.