One of the advantages of incorporating a company in Hungary is that there is no obligation to deposit the share capital in the bank, and 100% of this capital can be spent immediately after incorporation on company-related expenses. Until March 15th, 2014 the minimum capital is HUF 500 000 (cca EUR 1,700), while after this date it will be increased to HUF 3 000 000 (cca EUR 10,000). However, this change will be a formality for most business owners because the capital will still not needed to be deposited.
This sounds like a big change in legislation but it will actually not have a massive impact in practice. Why? There is no obligation to deposit the full capital in the bank account and 100% of the capital can be spent on company expenses and this will not change with the new limit. For example, the start-up costs of the company formation and all related services (e.g. accounting services, registered office, or a resident permit application for the director) can be deducted from the share capital, so in case of a tax audit (which is common for foreign owned companies in the first few months) the authorities will not question the whereabouts of the funds. Alternatively, if the share capital is not spent by the time of the audit (on start-up expenses or other deductibles such as wages or office/material costs), you may have to present this amount in cash/on the bank account.
Companies registered before 15 March 2014 will have to raise their capital in accordance with the new legislation by 15 March 2016. However, if there is a modification in the company structure between March 2014 and March 2016, the increase in the share capital will also have to be implemented at that time.
If you need further info on the minimum capital increase or any of our business solutions, please contact Key Account Manager Lívia Buzás at email@example.com. We would be happy to advise you on how to best structure your company’s capital and implement this new regulation to serve your needs the best!
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