Last updated: June 25, 2021
Dateline: Budapest, Hungary
Many are now saying that the Eurozone is dead. The currency is getting closer and closer to the value of the US dollar while prices on everything still remain high.
Looking close enough you can see that Eastern Europe is pulling the strings to bring in the foreign investment it KNOWS it needs to survive the economic pit in which it’s been languishing, 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 to bring their business — and more importantly — their money to Hungary.
HUNGARY ENTREPRENEUR RESIDENCE PROGRAM
The Hungarian Entrepreneur Residence Program (HER) was designed to give non-European Union nationals the opportunity to gain temporary residency by establishing a business within Hungary. This is a relatively affordable and fast process to get residency in a European nation.
Starting a business in Hungary is a relatively quick process. By starting your own company in Hungary, you won’t be required to get a work permit but you will need to invest at least 10,500 euros to form a Limited Liability Company (LLC) to start your business.
To start a business, you’ll need to have a local bank account. It can be difficult for non-EU citizens to open a bank account, but it’s possible with the right help.
After you register your business and fill out all the required paperwork, you can apply for temporary residence. Once you’ve submitted your application, it can take up to 45 days to be approved or denied by the immigration office.
When you apply for temporary residency, you’ll need to have a business plan for your Hungarian company. A business visa to form your company will cost around 3,990 to 8,990 euros.
As a temporary resident of Hungary, you’ll have travel access to the Schengen area of Europe. You can stay for up to 90 days without needing a visa.
What makes Hungary a better location to start your business than other central European nations? Some commonalities include an awesome geographical location interconnected with the rest of the continent and excellent infrastructure to support a growing business.
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.
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 same time you initially registering your new company.
Hungary also has a real estate residence program. For this, you’ll need to form a company and buy two properties valued at 100,000 euros each with the name of your company. You can then rent these properties out to recoup some of your initial investment.
HOW TO GET HUNGARIAN CITIZENSHIP
Once you’ve been approved for residency, your spouse and children can apply for the same temporary residence permit. This permit is valid for two years and can be extended to three years. A family reunification visa costs 600 euros.
After three years of living in Hungary on a temporary residence permit, you can apply for permanent residency. To qualify, you’ll need to have spent at least 270 days in the EU each of the three years. You’ll also need to be able to prove that your business is making a profit and able to support yourself and your family.
After eight years of living in Hungary, as long as you have an income and meet all other requirements you can apply for citizenship.
Hungary does not have a citizenship by investment program. However, after establishing a Hungarian company, you can obtain a residence permit to live in the country and then obtain Hungarian citizenship through naturalization.
BENEFITS OF HUNGARIAN RESIDENCY AND CITIZENSHIP
I target the idea of Hungarian residency towards non-European citizens as a gateway to hassle-free access across the continent, and more importantly, as an option for using your investments where 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, and diversify your investments to where it best suits you.
LIVING IN HUNGARY
Hungarian residency as a non-EU national can be as easy as declaring a location of residence and enough income to support yourself which makes it even easier to set up your business. All one has to do is apply before their 90-day tourist visa expires.
Hungary already hosts a large European expat community, and non-Europeans are catching on, with people discovering that Hungary – especially Budapest – is extremely livable. Andrew even listed it as one of his favorite cities in Europe for a 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.
Another reason to spend time in Hungary is its high-speed internet. Hungary has been ranked as having one of the fastest internet speeds in the world, approaching 200 megabits per second.
HAVE CHILDREN, PAY ZERO TAX
Hungary, like many other European countries, is dealing with a declining birth rate. In 2019, the birth rate in the EU averaged around 1.5 births per woman.
In an effort to promote Hungarian citizens to have more children, Hungary has introduced a new tax incentive. Women with four or more children qualify to pay zero tax on their personal income in Hungary.
This program is only for Hungarian citizens, not residents. To qualify, you need to be a woman with Hungarian citizenship who has four or more children. These children can be natural-born or adopted from within Hungary. This tax exemption only covers the woman’s income tax. It doesn’t apply to the husband or to any dividends.
So if you’re an entrepreneur interested in gaining visa-free travel access to the EU, looking for a country with fantastic perks for start-ups, a clear trajectory for gaining citizenship, and even a few bonus perks for starting a family, be sure to consider Hungary.