How any entrepreneur can get a Hungary residence permit

Dateline: Budapest, Hungary

Many are now saying that the Eurozone is dead. The currency is getting closer and closer to the value of the dollar while prices on everything still remain high.

Looking close enough you can see that Eastern Europe is pulling the strings to bring in foreign investment it KNOWS it needs to survive the economic pit it’s been languishing in, and Hungary is reversing this by opening up for foreign investment.

Although several years ago the tax situation in the country looked unfavorable, it has turned around, arms wide open for people bringing their business – and most importantly – their money to Hungary.

I target the idea of Hungarian residency towards non-European citizens as a gateway to marauding across the continent and more importantly; spreading out your investments anywhere they are most welcome.

Having a Hungarian residency allows you free movement to manage and invest money in any member state of the European Union.

That’s right; the ability to open bank accounts, purchase shares and buy property from Ireland to Cyprus… diversifying your investments to where it best suits you.

Hungarian residency as a non-EU national can be as easy as declaring a location of residence and enough income to support yourself making it easier to set up your business. All one has to do is apply before their 90-day tourist visa expires.

What makes Hungary a better location to start your business that other central European nations? Some commonalities include an awesome geographical location interconnected with the rest of the continent and excellent infrastructure to support this.

Being a country that was under Communist rule up until 1990, Hungary offers industrial sites galore that are very attractive to manufacturing companies. While Ireland levies a reduced 10% corporate income tax on manufacturers, Hungary offers much more affordable labor and a central location in emerging Europe.

Available offices and science parks are ready to enable the kick-start of your business. To add to this, Hungarians are generally well trained and well educated. The level of industrial growth for 2014 is proof of this environment.

Europe is infamous for its “socialist” brand of high taxation. However, Hungary offers a flat rate of 16% on income tax, much less than its borderline-socialist counterparts in the EU.

As for the actual process of setting up a business, after Hungary’s accession to the EU a little over a decade ago, a lot has changed. English is more widely spoken, along with German and French.

The Hungarian government offers a “one-stop-shop” that registers your company in the tax system at the time of registering your new company.

Hungary already hosts a large European expat community, and non-Europeans are catching on, with people discovering that Hungary – especially Budapest – is extremely livable. So much so that Andrew listed it as one of his favorite cities in Europe for low cost of living.

Comparable to other European nations, the cost of living in Hungary is manageable, with the possibility of renting a fine apartment in the middle of the charming Jewish quarter for 400 Euros monthly.

All one has to do is walk down the street in the middle of the week to see that places are full. People are out, living it up. Bars and restaurants change often, improvements are visible to the city only after several months.

As long as you can handle colder winters (with the help of thermal spas, of course) Hungary can provide you with a comfortable lifestyle and enough room for your company to grow.

Andrew Henderson
Last updated: Dec 28, 2019 at 6:15AM

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9 Comments

  1. Prajwal

    Hi Oscar, thanks for the list, what do you think of Estonia & its new E-Residency program? (its new virtual residency program) ?,

    Reply
  2. Andrea Gerak

    Thanks for featuring my little country!!

    Having lived in several countries in Europe, Hungary and especially Budapest is still my favorite, not only because I am patriotic, despite of being a nomad.

    I have many expat friends from all over the world who moved to Hungary because of the feeling or vibration or energy Hungary has, they found a “special something” about the country and its people.

    Whatever you might hear in the mainstream media about Hungary and its politics, take it with a grain of salt – or just don’t give a damn and go about minding your business and creating your own life. It’s a wonderful place, with all its bumps and controversies.

    Two points I would add to this article:

    1. Budapest is the top of course, but you might want to check out the country side, too, where life is even cheaper than in the capital (the Western half of the country normally is more costly than the Eastern half). The biggest cities (Miskolc, Debrecen, Pecs, Szeged, Gyor) are university towns. Shop around, and you can find smaller places as well where investment, innovation, creating new jobs and generally improving people’s lives are welcomed. Beautiful locations in the country, awesome food, wine music and other culture, friendly folks.

    2. Despite of the fact that Hungarians tend to be open minded and welcoming, they can be also protective: if they have any notion of that a foreigner company would take away their land or other property, or exploit them in any other ways, many will hate you and you can close shop as fast as you have opened it. They need to see very clearly what is in FOR THEM.

    I would have a few more tips but don’t want to make a too long comment on somebody else’s blog.

    Good luck in Hungary, I hope you will love each other 🙂

    Andrea Gerak
    http://www.andreagerak.com/travel

    Reply
  3. mike

    Hi Oscar: Finally…a ray of hope for Americans. How is it that Americans can open bank accounts given the bullying of the USA’s IRS? Are the Hungarians on a different system? It is very difficult as an American to open an account in most areas/countries outside the USA.

    Reply
    • Andrea Gerak

      Hi Mike, I guess Oscar will reply to you as well. There are banks where you only need a passport to open an account as a foreigner – don’t have to be an EU citizen. Hope for Americans, indeed!

      Reply
  4. DavidH

    Yes, Hungary is not a bad place to base yourself and it has some interesting neighbours. For those who follow flag theory here are a few possible pointers:

    1. Hungarian corporation tax is 10%, which is OK. Just watch out for municipal taxes which can bump this up a bit

    2. Forming a Hungarian company is one possibility but there are others. Just picking one of very very many possibilities: a UK company can elect to have its foreign branches exempt from UK corporation tax. So forming a Hungarian branch of a UK company is one possible route to go. This puts a UK face on things which might help and would be easier to close than a Hungarian company. Any Hungarian corporate profits would suffer the 10% HU corporation tax and there is no branch remittance tax back so that’s the end of it corporation tax-wise.

    3. Social insurance costs if you are an employee are very high. HU has a horrible method of grossing up the salary for adding the social insurance costs and applying the flat rate 16% on that. So…. if you are a true flag theory follower consider basing yourself in Hungary and your business elsewhere. Hungary has some interesting double tax treaties which use the exemption method. Talk to a tax expert if this is confusing. Anyway, choose the right country with the right DTT and you have the possibility to earn a salary in a business elsewhere (and even quite close) and suffer no additional HU personal taxes.

    Also, this might be especially attractive option for those with a B2C business so that you can avoid the eye watering VAT rate of 27% in Hungary

    4. If you are smart you can use the EU social security conventions to your advantage and pay these where your business is bases (assuming its in the EU that is)

    5. Base yourself up in the north west – Gyor say, and you are a short distance from both Vienna, Austria and Bratislava, Slovakia. Slovakia does not tax dividends which itself opens up some possibilities.And of course Hungary in in the EU so there are no w/holding taxes on inter-co dividends. Also, this gives you Vienna airport (lots of connections) as an additional travel option to Budapest.

    6. Reversing things a bit, basing yourself in Slovakia but have a business in Hungary is a reasonably well-trodden path.

    7. Other neighbours: Romania (lots going on there), Serbia for a downright adventurous (I would not recommend it personally, but its worth a look) and the list goes on….

    Reply
  5. Nora

    Hi Oscar.
    I am from Singapore. May I know which is the easiest country to get permanent residency or a second passport. I have been reading up on this and most countries require some sort of investment.
    – If I do not have a business or do not plan to live in the country, which country can I apply for permanent residency or a second passport?
    – I do not want to have to park a lot of money there either. Hence, which is most cost effective too.
    – How long is the application process?

    Reply
  6. Tim

    How much does it cost to apply for residency in Hungary? How much income per month do I need and how do I provide proof (Oz bank statement)? How long does the residency last for? Can I renew it?

    Reply
  7. Roger

    The article merely gives some very general thoughts about Hungary, and doesn’t do what it promised in the title – tell us how an entrepreneur can get a visa to set up in Hungary. Anyone?

    Reply
  8. PeacefulLife

    I had no issues in Hungary and love the spas and the energy. In the V4, Hungary is my first choice. I spent sooooo much time in Slovakia and even being of Hungarian/Slovak blood, I was screwed over so many times. I have applied for my 2nd time for Hungarian citizenship through my grandparents. Studied the language a lot and 8 months later still waiting for a reply from my simplified naturalization application. Budapest is beautiful. I like Hungarians. Fun and open. Slovakia and Poland are just to depressing and Prague is great as well. My 2 forints on my experiences.

    Reply

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