Setting Up Your Business in Hungary: GEOS Guide for Global Expansion

This article is apart of our weekly series associated with the The Global Subsidiary Index. The series is designed to help businesses identify the best countries for establishing a subsidiary based on key operational factors. GEOS provides a data-driven ranking of jurisdictions worldwide, assessing across 40+ criteria to bring you insights into global expansion opportunities.

Each country on the index is scored on an overall score out of 100, with each individual criterion out of 5 or 10. Higher scores indicate a more favorable environment for businesses. By leveraging these insights, companies can make informed decisions on where to establish a legal presence.

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Hungary’s market is quickly becoming a hub for innovation. Its universities and research centers draw global investors and top talent looking for long-term growth. Projects like the Centre of Excellence in Production Informatics and Control (EPIC CoE) turn advanced research into real-world solutions in automation and AI.

This focus on digital manufacturing drives productivity and creates well-paying jobs, improving the outlook for business in Hungary. It’s also helping slow the brain drain that once sent skilled workers abroad.

With a growing startup scene, strong global ties, and steady investment in high-tech industries, Hungary keeps gaining ground. The country is carving out a solid spot in Central Europe’s economy, where innovation and opportunity go hand in hand.

Why Should You Expand to Hungary?

The Hungary market is often called Central Europe’s gateway for business expansion, and it earns that title. With a GEOS Global Subsidiary Index score of 64.4, business in Hungary offers both opportunity and structure for global companies.

In recent years, Hungary faced high inflation, hitting the highest rate in the European Union in 2023 due to rising energy costs. However, government policy has helped cool inflation and stabilize the economy. Fiscal adjustments, public investments, and targeted support programs have all played a part in sustaining growth.

For companies looking to enter the Hungary market, these measures signal a more stable environment to build, invest, and expand.

Central Europe’s Gateway for Business Expansion

The country offers low corporate taxes, a skilled workforce, and solid infrastructure, all within the EU single market. Hungary’s main trading partners include Germany, Austria, Italy, and other EU countries, reflecting its deep integration into European and global markets.

Foreign trade plays a crucial role in Hungary’s export-oriented economy, making it an attractive destination for businesses looking to expand and access key international markets. Still, employers should be ready for paperwork-heavy compliance and moderately high labor costs that can slow setup.

A Mid-Range Economy with Steady Buying Power

Hungary’s GDP per capita score is 6/10, reflecting a healthy, mid-range economy that continues to grow. In 2024, GDP per capita reached USD 23,310.8, backed by stronger consumer spending and a rising middle class. People are earning more, spending more, and helping drive a stable local market.

Why it matters:

• Rising incomes support demand across retail and services.
• Labor remains affordable compared to Western Europe.
• Manufacturing and tech sectors keep the economy diverse.

Hungary’s cost-to-talent ratio makes it appealing for companies that want to serve both local and export markets without overspending.

Elaboration That’s Slow but Reliable

The GDP growth score of 3/5 shows Hungary’s strength in consistency. The economy grew by 0.5% in 2024 and is expected to pick up to around 2% in 2025. Exports, manufacturing, and household spending are gradually rebounding as inflation cools and interest rates fall.

What’s driving growth:

• A strong automotive and electronics base.
• Recovering consumer confidence.
• Easier financing as the central bank cuts rates to 6.5%.

Growth may be moderate, but it’s steady, which is ideal for long-term planning and sustainable operations.

Stable Politics but the EU Keeps a Close Eye

Hungary scores 5/5 for political risk, reflecting a stable and predictable business environment.. The country operates as a parliamentary republic under Prime Minister Viktor Orbán, with the next election set for 2026. Being part of the EU adds a layer of regulatory consistency, though occasional tensions with Brussels still arise.

What to know:

• Low political volatility and steady policy direction.
• Some EU funding delays tied to governance issues.
• Strong domestic support for foreign investment.

Overall, business in Hungary benefits from low risk and dependable leadership — making it a solid base in a region where predictability matters.

A Financial System That Runs Smoothly

The Hungary market earns a 5/5 financial infrastructure score, and it’s well-deserved. The banking system is modern, reliable, and open. The Hungarian Forint (HUF) has been fully convertible since 2001, allowing businesses to transfer funds and access advanced financial tools without unnecessary obstacles.

Key highlights:

• Reliable digital banking and cross-border transaction systems.
• FX reserves reached USD 42 billion in 2024, boosting financial stability.
• Strong international ties reduce financing risks.

For companies exploring business in Hungary, the financial system stands out as efficient and internationally connected — a real advantage in Central Europe.

Hungary delivers affordability, skilled talent, and strategic access to EU and regional markets. With a GEOS Index of 64.4, steady GDP performance, and political stability, the Hungary market continues to attract growing numbers of global firms. The paperwork can be detailed, but the long-term opportunities make the investment worthwhile.

Expanding Sectors Shaping the Hungary Market

While manufacturing anchors the Hungary market, other industries are quickly stepping up. The ICT sector is thriving thanks to government-backed innovation programs and a surge in startup activity.

Budapest now serves as a key tech hub for Central Europe, attracting steady foreign direct investment and foreign capital from companies across European countries looking for skilled talent and lower operational costs within the European Union.

The chemical industry is also expanding. It fuels industrial production in pharmaceuticals, plastics, and energy production, helping diversify Hungary’s economy beyond traditional exports. Alongside it, the electronics industry continues to grow, keeping the business sector competitive and boosting Hungarian exports to major trading partners like Germany and Austria.

The agricultural sector remains a vital part of the country’s economy, especially across rural regions. Hungarian agriculture produces essential major crops such as wheat, corn, and sunflower. These feed directly into the food industry, where modern food processing facilities turn local ingredients into export-ready products for EU markets.

Key strengths:

• Strong base in agriculture and food processing, backed by export growth.
• Expanding ICT, chemical, and electronics industries that attract new foreign investors.
• A diversified market economy supported by innovation and infrastructure.

Government Spending and Economic Growth

The Hungarian government plays a major role in sustaining the Hungary market. Through public investments and targeted financial assistance, it continues to strengthen infrastructure, research, and education. These initiatives support both the private sector and broader economic activity across the Hungarian economy.

Highlights:

• Government spending drives industrial output, especially in the automotive industry and manufacturing.
• The national bank maintains flexible monetary policies to manage inflation and support lending.
• Domestic demand and household consumption keep the services sector and retail trade active.

The labour market remains healthy, with the employment rate strong and the unemployment rate among the lowest in Eastern Europe. Rising wages and a highly trained workforce continue to draw foreign investment and support steady business in Hungary.

A Broader Economic Outlook

Overall, Hungary’s economy balances opportunity with stability. Foreign trade stays robust, supported by reliable infrastructure and access to EU export markets. Growth across the agricultural sector, electronics sectors, and ICT sector reinforces Hungary’s position as one of Central Europe’s most dynamic economies.

With strong foreign investors, a skilled labour force, and a forward-thinking Hungarian government, business in Hungary continues to expand. The country’s export-oriented market economy and strategic location make it a reliable base for companies looking to grow across Central Europe and beyond.

Tax, Regulatory Environment & Foreign Direct Investment

The Hungary market offers plenty of opportunity but comes with some complexity. The flat 9% corporate tax rate, one of the lowest in the EU, draws investors from around the world and keeps business in Hungary competitive within Central Europe.

But compliance takes effort. Businesses must handle detailed filings, regular reporting, and local rules that can surprise newcomers. For companies expanding into Hungary, understanding the system early helps avoid costly mistakes later.

Low Corporate Taxes, High Appeal

Hungary’s corporate tax rate score is 6/10, but that number doesn’t tell the full story. Since 2017, the country has maintained a flat 9% corporate income tax, giving it one of the most competitive rates in Europe. Both resident and non-resident companies pay CIT on Hungarian-source income, making the system straightforward but paperwork-heavy, an important factor for anyone planning to grow business in Hungary.

Why investors like it:

• 9% flat rate applies across the board.
• Transparent tax base adjustments tied to accounting profits.
• Follows OECD-aligned global minimum tax (Pillar Two) rules, with full rollout expected by 2025.

Still, investors should note Hungary’s minimum tax base rule: if declared profits fall below 2% of total revenue, the tax authority may trigger a review. While this supports compliance integrity, it adds another layer of admin for smaller or low-margin firms operating in the Hungary market.

Tax and Accounting

The tax and accounting score of 6/10 reflects Hungary’s clarity but also its depth. Accounting standards align closely with IFRS, but companies must make detailed statutory adjustments when filing. VAT and local business tax (LBT) requirements are among the more complex in the EU, and foreign investors doing business in Hungary often rely on local expertise to stay compliant.

Key points:

• VAT filings are frequent and require supporting transaction-level detail.
• Local Business Tax (LBT) applies in every municipality where a company operates—capped at 2%, but based on adjusted revenue.
• Energy suppliers and certain producers face extra profit taxes of up to 41%, gradually easing after 2025. These extra profit taxes are a form of windfall taxes, introduced as a temporary fiscal measure to capture high profits during periods of economic or energy market surges.

Local experts warn that VAT compliance and LBT allocation rules are where many new investors underestimate their workload. While corporate taxes are low, the admin around them isn’t — a reality that’s part of running a compliant business in Hungary.

Frequent Compliance and Reporting Obligations

Hungary earns a compliance reporting score of 3/5, mainly because of its structured, recurring filings. Annual reports, tax returns, and advance notifications are mandatory for most entity types doing business in Hungary.

What to expect:

• Pillar Two notification forms must be submitted by February 2026 for calendar-year taxpayers.
• QDMTT advance returns are due annually by November, even when no liability applies.
• Detailed local filings for VAT, payroll, and social contributions.

The regulatory landscape rewards discipline—businesses that systematize reporting early face fewer surprises later and are more likely to thrive in the Hungary market.

Fiscal Policy and Tax Environment

Hungary’s fiscal policy aims to balance competitiveness with fiscal discipline. The government closely monitors the budget deficit, with recent efforts focused on narrowing the deficit-to-GDP ratio to maintain economic stability. Shifts in government spending priorities, such as public investment and utility subsidies, play a significant role in influencing fiscal stability and the overall tax environment.

Few Restrictions on Foreign Ownership

Hungary scores 8/10 for openness to foreign Ultimate Beneficial Owners (UBOs). Foreign investors can own Hungarian entities outright, with minimal approval processes.

Highlights:

• The Anti-Money Laundering Act established a central UBO register (Tényleges tulajdonosok központi nyilvántartása) to track ownership transparency.
• The threshold for disclosure is 25% ownership or voting rights, in line with EU standards.
• Penalties for non-compliance can be significant—up to HUF 400 million (≈ EUR 1.3 million) for service providers and HUF 2 billion for financial institutions.

This framework makes Hungary one of the more transparent markets in the region for corporate structures, though companies must ensure their filings stay up to date.

Strong GDPR Standards

Hungary’s data management score is 4/5, showing strong alignment with EU GDPR requirements that shape how business in Hungary handles data. The Hungarian Parliament built these standards into national law through Act CXII of 2011, keeping the Hungary market consistent with wider European Union regulations.

In practice:

• GDPR applies to both EU-based and non-EU entities offering goods or services in Hungary.
• Regulators enforce compliance strictly across key sectors.
• Clear consent tracking and privacy notices in Hungarian are essential for full compliance.

Incorporation & Compliance Essentials

Setting up a company in Hungary is straightforward but requires careful planning. Most businesses complete registration in one to two months, including tax setup and document certification. The process is well-defined, though notarization, translations, and a few in-person steps can slow things down without local guidance.

Hungary’s transition to a market economy has strengthened the private sector, with privatization and the growth of private enterprises shaping the current business landscape and encouraging new company formation.

Local Representation

Hungary scores 3/5 for resident director requirements. Every company needs a local representative who can handle legal notices and liaise with authorities.

• Limited liability companies (Kft.) can appoint one or more managing directors.
• Private companies limited by shares (Zrt.) can form a board or name a single executive officer.

A local contact keeps operations smooth, especially for tax filings and banking. When more than one director is involved, coordination helps avoid delays in decision-making.

Paperwork Still Takes Effort

Hungary scores 2/5 for original paperwork, meaning notarization and apostilles are still part of the setup process for business in Hungary. Articles of association, incorporation forms, and powers of attorney all need official certification and, in most cases, a Hungarian translation.

Tips for smoother setup:

• Use notaries experienced in corporate filings.
• Confirm that all apostilles meet Hungarian standards.
• Double-check every document before submission to avoid back-and-forth.

Public notaries play a central role, and multiple document reviews are common. Partnering with a reliable local expert helps businesses enter the Hungary market efficiently and stay compliant.

A Local Address Is Required

Every company must have a registered office in Hungary, earning a 4/5 score in this area. The address acts as the company’s legal base and official contact point for business in Hungary.

• Virtual offices may qualify, but they must meet legal criteria.
• Tax authorities can visit the site to confirm legitimacy.

Having a proper local address adds credibility and supports smooth compliance in the Hungary market.

Digital Processes, but Not Fully Paperless

Hungary scores 4/5 for government portal sophistication. Most filings can be done online through the Digital Government Agency (DKÜ), which has streamlined administrative tasks.

• Company updates, tax filings, and certificates are accessible online.
• Physical signatures are still required for notarized documents.

Full digital integration is a work in progress under the National Digitalization Strategy (2021–2030), but systems are improving fast.

Some In-Person Steps Remain

Hungary scores 2/5 for travel requirements. While much can be handled remotely when doing business in Hungary, certain steps still require being there in person.

• Opening a business bank account usually needs direct signatories.
• Notarization and authentication often happen face-to-face.

Plan for at least one short visit during the setup phase.

Workforce, Labour Market & Employment Considerations

When it comes to labor, the Hungary market is structured, modern, and aligned with EU standards. The laws are clear, but they leave little room for shortcuts.

Since joining the EU in 2004, Hungary has worked hard to harmonize its labor system, creating strong employee protections and predictable rules for employers. In recent years, Hungary’s employment rate has remained high, while the unemployment rate has shown moderate fluctuations, reflecting both economic growth and ongoing labor market challenges.

Detailed but Predictable Employment Laws

Hungary’s employment law complexity score is 6/10, showing a system that’s organized but demanding. The Labour Code (Act I of 2012) covers everything from hiring to termination. Every job must start with a written contract outlining pay, duties, and workplace details.

The law follows a rule called “unilateral cogency.” Employers can only make changes that benefit the employee unless the law specifically allows otherwise. It’s fair but firm, which means HR teams must stay alert and document every agreement carefully.

Hiring Foreign Talent

Hungary draws both EU and non-EU workers, but the paperwork varies. EU and EEA citizens can work freely with a residence registration. Third-country nationals need a joint work and residence permit, usually valid for two years.

Some senior executives and board members are exempt from permit rules if their company has foreign ownership. For temporary or specialized projects, like installation or maintenance work, simplified permits are available. Even then, employers must prove that no Hungarian candidate was available before hiring abroad when doing business in Hungary.

Employment Contracts and Working Hours

All employment contracts must be in writing. Most jobs are full-time and open-ended unless agreed otherwise. Probation can last up to three months—or six months if allowed under a collective agreement. During that time, either side can end the contract without notice or reason.

Work hours:

• Standard: 8 hours per day, 40 per week.
• Maximum: 12 hours per day, 48 per week under special conditions.
• Overtime is limited to 250 hours per year, or 300 hours with a union deal.

Overtime pay is generous. 50% extra on regular days, 100% on rest days or holidays, unless the employee agrees to take time off instead.

Employee Protections and Costs

Hungary scores 2/5 for employee friendliness, meaning courts tend to favor employees in disputes. Employers should keep records of performance issues, disciplinary actions, and reasons for termination. A lack of documentation can easily lead to reinstatement or compensation orders.

The employer payroll contribution score is 3/5. Employers contribute around 15% of gross pay (13% as of 2025) toward social security, while employees contribute 18.5%. These payments cover health insurance, pensions, and unemployment.

Labor costs are still lower than in Western Europe, but budgeting for them upfront prevents surprises when doing business in Hungary. The average gross salary in Hungary says a lot about the country’s economy.

It tracks wage growth and shows how competitive Hungary is compared to its Central European neighbors. The average salary in Hungary per person is HUF 7,264,800 per year (about HUF 605,400 per month), which equals roughly €18,832 annually or €1,569 per month. It’s a useful snapshot of where the labor market stands and how business in Hungary continues to grow.

Benefits and Time Off

Hungary’s benefits score is 3/5. Employees start with 20 days of paid annual leave, which increases with age. Parents get extra days based on the number of children. Maternity leave lasts 24 weeks, and unpaid parental leave is available until a child turns three.

Employees also get 15 paid sick days per year at 70% pay. After that, social insurance covers the rest. Public holidays are fully paid and include national and religious observances.

Unions and Collective Bargaining

Union influence in Hungary is moderate, earning a 3/5 score. Only about 9% of workers belong to unions, but collective agreements still cover roughly one-third of employees, especially in sectors like manufacturing, transport, and logistics.

Key points when doing business in Hungary:

• Five major confederations represent workers nationally.
• Collective agreements can set pay scales and working-hour rules.
• Works councils often handle communication between employees and management.

Unions aren’t as strong as they once were, but large employers still negotiate with them regularly.

Health, Safety, and Equality

Employers are legally responsible for safe working conditions. The law requires regular health checks, especially for employees using computers or machinery. Workers get 10-minute breaks every hour at monitors and eye exams every two years. Fines for noncompliance can reach HUF 10 million (about USD 43,000).

Hungary enforces strict anti-discrimination laws that align with EU equality directives. Employers must treat all employees fairly regardless of gender, age, or background. The Equal Treatment Authority can investigate, issue fines, and order public disclosure of violations. Demographic changes in the Hungarian population, such as an aging workforce and migration trends, are also impacting employment and workforce diversity.

Talent Availability & Salaries

Hungary’s market is quickly becoming one of Central Europe’s top locations for skilled professionals and innovation. The developer talent score of 4/5 shows a strong base in IT and engineering, especially in Budapest and Debrecen.

These cities attract both startups and global tech firms that value skilled workers and affordable costs. Government programs and accelerators keep pushing growth, helping Hungary gain recognition as a tech leader.

Tech and Engineering Drive the Market

Budapest has earned a reputation as a tech hub. Developers, data scientists, and engineers are in high demand, especially in fintech, healthtech, and cybersecurity. The most sought-after skills include:

• Full-stack development (JavaScript, React, Node.js)
• Data analytics and cloud computing
• UX/UI design, AI, and cybersecurity

The recruiting efficiency score of 8/10 shows that hiring in Hungary is faster than in many nearby countries. Skilled professionals have strong job prospects, keeping competition healthy and productivity high.

Reliable Business Talent Across Sectors

Beyond tech, Hungary has a dependable pool of professionals in marketing, sales, and finance, each scoring 3/5. The workforce is educated, flexible, and supported by strong business schools.

The services sector plays a crucial role in providing employment opportunities and attracting skilled professionals, especially in areas like trade, tourism, finance, and the digital economy. Global companies often hire locally for mid-level positions, while senior roles may attract talent from across Europe.

Competitive Pay That Encourages Growth

The salary benchmarking score of 6/10 highlights how Hungary balances affordability with competitiveness. Wages remain below Western Europe’s levels but continue to rise, particularly in tech and management. The trend creates a healthy middle ground for employers and professionals alike.

Language Skills Support Global Operations

Hungary’s language score of 3/5 shows strong English skills in major cities like Budapest and Debrecen. Most professionals in IT, marketing, and finance speak English confidently. Hungarian is still important for local roles and day-to-day operations.

The country’s literacy rate sits at 99%, proof of a well-educated workforce and solid communication skills. As more international companies expand into Hungary, bilingual and multilingual employees are becoming even more in demand.

A Diverse and Driven Workforce

Hungary’s market brings together skilled locals and growing international participation. Remote and hybrid work models have made it easier for global professionals to contribute to local teams. The result is a workforce that’s capable, motivated, and increasingly global in outlook.

Financial & Banking Considerations

Hungary keeps business costs reasonable. With an average budget score of 6/10, it’s a smart pick for regional headquarters or shared service centers. Operational costs stay moderate, and the financial system is transparent.

Businesses get predictability, though they should be ready for some extra paperwork along the way. Foreign currencies play a significant role in business transactions, and fluctuations in exchange rates can impact financial planning and stability.

Managing Expenses and Reporting

Expense management scores 3/5. It’s clear but detail-heavy. Companies must keep organized records and submit reports regularly.

• Detailed receipts: Every deduction needs proof.
• Structured reports: Frequent filings help meet audit standards.

Good accounting software or local support makes this process smoother when doing business in Hungary.

KYC Rules and Banking Procedures

Hungary’s KYC score of 3/5 shows a system that’s secure but a bit bureaucratic. Banks take anti–money laundering (AML) and counter-terrorism financing (CFT) rules seriously.

Key regulators include:

• Hungarian Financial Intelligence Unit (FIU) – tracks suspicious transactions.
• National Bank of Hungary (MNB) – oversees financial institutions.
• NAV tax authority – monitors accountants, real estate agents, and crypto-related firms.

Opening a business account often takes a few weeks. Directors usually need to appear in person to complete verification.

Immigration & Work Permits

Hungary’s immigration process is structured but manageable. It scores 3/5 for complexity, offering a smooth path for EU nationals and a more detailed one for non-EU employees. 

Labor immigration is rising fast. 69% of all first residence permits in 2023 were for work. Hungary now ranks 7th in the EU for employment permits, attracting talent in manufacturing, logistics, and tech.

Getting a Work Permit

Most non-EU professionals need a single permit that covers both residence and employment. The process usually takes about 90 days and includes a labor market test to confirm no local candidate is available.

• Apply through the Enter Hungary platform or at a Hungarian embassy.
• Submit proof of your job offer, housing, financial means, and health insurance.
• Permits are typically valid for up to two years and can be renewed.

EU citizens can work freely but must register their residence after 90 days.

Exemptions and Flexibility

Some groups don’t need a work permit when doing business in Hungary. These include refugees, long-term EU residents, posted workers, and short-term professionals such as au pairs. Employers can also handle applications for preferred hires, but employees still need to appear in person to confirm identity and documentation.

Unique Hungary Expansion Insights: Export Oriented Market Economy

Hungary continues to attract global investors looking for a strategic and cost-effective base in Europe. Its mix of strong infrastructure, skilled talent, and business-friendly tax rates makes it appealing for both startups and multinational firms.

When comparing business activity and economic indicators over the same period and the previous year, Hungary has shown notable changes in production volume across key sectors, reflecting ongoing growth and modernization. Still, understanding how business actually operates on the ground is key to making expansion smooth and successful.

Strategic EU Location

Hungary’s location puts it right in the center of Europe. It connects Western and Eastern markets with ease. Major highways, rail lines, and the Danube River keep goods moving fast. The country’s smaller size helps too—operations, travel, and communication stay simple and cost-effective.

Shelf Companies

You can buy a pre-registered company to speed things up. But most investors still choose fresh incorporation. It keeps compliance clean and avoids hidden risks.

• Banks often prefer new entities for transparency.
• Starting fresh also builds stronger local credibility.

Cultural Nuances

Trust drives business in Hungary. Relationships come first, and formalities matter. Meetings usually start with small talk before business begins.

• Use titles and last names until invited to do otherwise.
• Decisions come from the top, so senior-level buy-in is key.
• Polite persistence beats pushy sales tactics every time.

Skilled Workforce in the Automotive Industry

Hungary has a deep pool of tech and engineering talent. The country’s focus on STEM education pays off, especially in cities like Budapest and Debrecen.

• Labor costs stay lower than in most EU countries.
• Many professionals speak English, which supports global operations.
• R&D and shared service centers thrive thanks to skilled local teams.

How GEOS Simplifies Your Expansion into Hungary

Hungary’s business landscape is evolving quickly, with startups leading much of the momentum. The country has over 400 active startups, accounting for about 4% of all in Eastern Europe. Growth continues strong at 8% year over year, making Hungary one of the region’s most promising hubs for innovation and investment.

GEOS helps companies enter this market with ease. It manages incorporation, nominee director services, compliance filings, and local banking setup. Hungary’s regulatory framework is detailed, but GEOS keeps the process clear and compliant from the start.

AI-Powered Global Expansion Support

At the center of GEOS is Geovanna, an AI assistant built to support your business in Hungary. She handles tax filings, payroll compliance, and daily entity management. Her automation tools help teams stay organized and compliant while saving time on manual work.

Is Hungary the Right Fit for Your Business?

Hungary holds a GEOS Global Subsidiary Index Score of 64.4, balancing low corporate tax rates, solid infrastructure, and a highly skilled workforce. Ranked #51 worldwide and #12 in Eastern Europe, its startup ecosystem continues to gain international attention. For companies seeking a cost-effective base in the EU, Hungary offers both opportunity and long-term potential.

📩 Contact GEOS to plan your next move into Hungary’s market.

This article does not constitute legal advice.