Dr. Attila Jány, M.A.S., lawyer and Managing Partner at Dr Jány Law Office, Budapest, examines the growing importance of eastern-central Europe in a prosperous EU
It was widely believed that after the fall of the communist regimes in 1989-90 and the collapse of the Berlin Wall, the central European region would once again emerge as one of the engines driving Europe’s recovery from the economic crisis.
Prior to joining the European Union in 2004, Hungary was already known as the “best student” of the so-called eastern enlargement; EU norms were incorporated into its own legal system with unprecedented speed. As a result, the Hungarian legal system underwent significant liberalisation.
Excellent legal infrastructure
Since joining the EU, Hungary has established a well-functioning political, legal and justice system. Hungary’s thousand-year history has played out in the borderland between west and east; with its geographic location which is highly favourable from an economic point of view, its pleasant climate, its rich cultural heritage, famous hospitality, well-trained workforce, and last but not least, its reliable legal environment, Hungary has become a favourite for foreign investors and tourists. Hungary has a well functioning judicial system which ensures the rule of law, while the public administration reform has meant that electronic administration is now widely used and has made procedures faster and much less bureaucratic. The rapid development of the legal system and the infrastructure puts Hungary among the European destinations where it is fastest to establish a company: it takes just one hour and happens electronically, as does registering and enrolling with the Revenue & Customs Office. The register that comprises all real estates and businesses of the country is available to everyone through the internet.
Commercial opportunity
There are no restrictions on foreign companies and individuals when establishing businesses or becoming shareholders in Hungarian companies. Foreigners can also take on management roles in Hungarian companies, they can function as CEOs or be elected to the board of directors. When it comes to conducting business activity in Hungary, Hungarian law acknowledges different company structures. The company types most preferred by foreign investors are joint stock company, limited liability company and private limited company. The costs of setting up a company are also very favourable; a private limited company can be established with an equity capital of about 1,600 euros.
Recently there have been changes in the corporate tax structure; corporate taxes have been reduced to 10 per cent and 19 per cent – depending on annual income – which is a significant reduction compared to the 25 per cent before.
Hungary has signed double taxation treaties with several countries and follows the guidelines of the OECD agreement in this matter. Hungary joined the OECD in 1996, but transfer pricing regulations have been in effect since 1992.
There are no restrictions on foreigners or foreign companies for purchasing real estate in Hungary. Companies and individuals from the European Economic Area may acquire real estate on the same conditions as Hungarian citizens, usually without the need for special permission. In some cases it may be necessary to obtain administrative authorization, which, however, is almost never denied. Hungary also offers favourable conditions to foreign individuals for working and settlement.
Contact details
For further information visit: www.jany.hu