Business Immigration to Hungary

When it comes to arriving to Hungary and applying for a residence permit, the legal regulations allow a special type of permit: the residence permit for the purpose of employment or other gainful activities (“Business Immigration”).

Hungarian regulations

According to Act II of 2007, third-country nationals have the right to apply for a residence permit of such kind in three cases.
The first option is if they perform actual work for another person or under the direction of another person for remuneration, under a contract of employment relationship. The second option is if they perform work but in an individual, self-employed way and the third possibility is if they engage in any gainful business activity by being the owner or director of a business association, cooperative or other legal entity or if the third-country national is a member of the executive, representative or supervisory board of such entity. The latter – which is the most advantageous for an entrepreneur with a mostly stable income or adequate funds – is most commonly known as business immigration.

Required documents for the application

If a person wishes to receive a permit to reside in Hungary, certain basic conditions have to be met. Firstly, a valid passport is needed and the applicant has to justify the reason for arrival at the territory of Hungary. Furthermore, he/she has to have sufficient financial means which supports the accommodation and other living costs in Hungary and an all-inclusive health insurance (or financial resources for covering these costs) are also necessary. The applicant cannot endanger the national security, public policy, public health of the country and cannot stand under any restraints, expulsion or exclusion which constitutes as an obstacle for arriving to Hungary. Moreover, the third-country national has to submit a declaration that in case the application is denied, he/she will immediately leave the territory of the European Union.
If an application is submitted with the purpose of establishing a business entity, the business plan of the company has to be attached which constitutes a credential evidence of the fact that the company can support a way of living in Hungary. The regulations stipulate another way: the entity has at least 3 employees but from a practical point of view, it can be more problematic for a newly founded company.

The procedure

The application for the residence permit shall be submitted at the consular officer which operates in the country where the applicant resides. If the application is granted by the regional directorate, the consular office will also issue a permanent residence visa which is valid for 30 days, therefore it is advisable to visit the competent regional directorate of the Office of Immigration and Nationality at the soonest possibility in order to receive the residence permit and register the accommodation in Hungary.
After submitting the required documents and paying the administrative service fee, the regional directorate will make a decision within 21 days. The permit for business purposes is valid for 2 years and can be extended for an additional 2 years’ time. If the third-country national possesses a residence permit of such kind, he/she can also apply for a national permanent residence permit which is valid for 5 years and can also be extended with another 5 years.

Founding a company

For third-country nationals it is advisable to choose Hungary for business immigration purposes as the country has a reasonably low tax rate when it comes to companies (only 10%). There are multiple company types to choose from, maybe the most favourable and commonly used is the „Kft.”, that is, a private limited-liability company. A business entity like that can be founded by only one or multiple persons as well, with different regulations pertaining to them, respectively. There are some common requirements though, such as the paying-up of the capital which is HUF 3.000.000,- (If a single-member private limited liability company is founded, this amount has to be paid in its entirety, whereas if there are multiple founders, they can pay the half of the capital and can pay the rest in 1 year after the company is registered. Important to note that this amount shall not be deemed as escrow, the company can use and spend this amount.) The founder/s must draft and sign a charter document with legal assistance and in 30 days, he/they must submit an application of company registration to the competent court. Signing a rental or sale and purchase agreement of a real estate is also necessary but as it can be more time-consuming, it is advisable to start this process before entering to Hungary in order to reach to an agreement with a lessor/owner as soon as possible. After that a form has to be submitted about the contract to the competent Land Registry Office.

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