Hungary is one of Central Europe’s leading business and logistics hubs, offering rapid access to both Western and Eastern European markets thanks to its strategic location. As a member of the European Union, companies operating in Hungary benefit from direct access to the Single Market and more than 450 million consumers.

The country offers well-developed infrastructure, a stable financial system and a strong presence of international investors. Hungary has particular strengths in:

• automotive manufacturing,
• business service centres,
• IT and technology services,
• the pharmaceutical industry, and
• financial and business services.

Hungary has been one of Central Europe’s leading investment destinations for international companies for decades. Its favourable geographic location, highly skilled workforce, well-developed supplier networks and modern business infrastructure all contribute to supporting business growth.

The strong presence of international companies has created a dynamic business ecosystem that provides an attractive environment for both manufacturing and service-based businesses.

A significant proportion of the administrative procedures required to establish and operate a business in Hungary can be completed through digital channels.

With proper preparation, company formation, regulatory registrations and the key administrative processes required for business operations can be completed quickly and in a predictable manner.

Business formation and day-to-day operations in Hungary are now largely based on electronic administration. Companies are required to use designated digital communication channels for interacting with public authorities and other government institutions.

To operate a business in Hungary, companies may need to establish, among other things:

• appropriate electronic identification solutions,
• access to the Company Gateway (Cégkapu), and
• the digital authorisations required for tax administration and official procedures.

Establishing the necessary digital infrastructure is an important step at an early stage of company formation, as it is a prerequisite for many administrative processes throughout the company’s operations.

This is particularly relevant for foreign shareholders and managing directors, for whom advance planning of digital administration requirements and authorisations may be especially important.

Businesses in Hungary can choose from several different legal forms. The most commonly used is the limited liability company (Kft.), which offers operational flexibility and limited liability for its owners.

For larger businesses or those with more complex operational needs, a private or public limited company may be a more appropriate choice. International corporate groups may also consider establishing a branch office or a representative office. When selecting the most suitable legal form, it is important to take into account the planned business activities, ownership structure, financing requirements and long-term business objectives.

Company formation in Hungary is generally a fast and well-regulated process. Establishing a company requires:

• preparing the company’s incorporation documents,
• providing the necessary information on the shareholders and managing directors, and
• submitting the required declarations.

Once the company has been registered by the Court of Registration, it receives the identification numbers and registrations required to commence its operations. The overall timeframe may vary depending on the chosen legal form, the ownership structure and any industry-specific licensing requirements.

Opening a corporate bank account is one of the fundamental requirements for commencing business operations. As part of their customer due diligence and anti-money laundering procedures, banks may require detailed documentation relating to the company, its shareholders and its managing directors.

Where the company has an international ownership structure, the account opening process may require additional preparation. It is therefore advisable to plan for this at an early stage of company formation. When selecting a banking partner, businesses should consider the size of the company, its international activities and its financing needs.

Following company formation, businesses must complete a number of mandatory registration and notification procedures. Alongside registration with the Court of Registration, companies are registered with the tax authority and receive their statistical identification numbers. Depending on the nature of the business activities, additional registrations or licences may also be required.

Once operations commence, businesses are required to interact regularly with the Hungarian tax authority (NAV), the Hungarian Central Statistical Office (KSH) and, where applicable, industry-specific regulators. The scope of these registration and reporting obligations depends on the company’s activities, size and employment structure.

Well-prepared administrative processes contribute to a smooth market entry and help reduce future compliance risks.

Following incorporation, companies must also ensure compliance with their accounting, tax and reporting obligations, which remain fundamental throughout the entire lifecycle of the business.

Although most businesses can be established and commence operations in Hungary relatively quickly, certain business activities may require additional licences, notifications or registration with the relevant authorities. The applicable requirements depend on the specific industry and the nature of the business activity.

Specific regulatory requirements may apply to, among others:

• financial services,
• healthcare activities,
• the energy sector,
• transportation,
• the food industry, and
• certain environmentally sensitive activities.

In some cases, businesses must obtain an official licence before commencing operations, while in others it is sufficient to fulfil the relevant notification requirements.

Identifying licensing and regulatory requirements at an early stage is an important part of preparing for market entry. Reviewing the necessary licences, registrations and regulatory procedures in advance can help improve project planning and reduce operational and compliance risks once the business is established.

Businesses operating in Hungary are subject to corporate income tax on the profits generated from their activities. The corporate income tax rules define, among other things, the calculation of the tax base, deductible expenses and the conditions for applying available tax incentives. Proper tax planning and timely compliance with corporate tax obligations are essential elements of sound financial management.

Value added tax (VAT) is one of the most important areas of taxation affecting the day-to-day operations of businesses. VAT compliance covers invoicing, filing obligations, as well as the tax treatment of both domestic and cross-border transactions. Well-designed VAT processes help reduce compliance risks and support efficient financial operations.

In addition to national taxes, businesses operating in Hungary may also be subject to local tax obligations. The most significant of these is the local business tax, which is levied by municipalities. The applicable rules and administrative requirements may vary depending on the company’s business activities and the location of its operations.

Transfer pricing rules play a key role in transactions between related parties. Companies must ensure that intra-group transactions are conducted on arm’s length terms and supported by appropriate transfer pricing documentation. Failure to comply with transfer pricing requirements may result in significant tax and compliance risks, making it particularly important for members of international corporate groups to assess these obligations at an early stage.

As tax legislation, tax rates and administrative requirements are subject to regular changes, businesses are advised to monitor official guidance issued by the competent authorities and seek professional support where appropriate.

For businesses operating in Hungary, compliance with accounting and tax obligations is a fundamental requirement. Companies must ensure that their bookkeeping complies with applicable legislation, prepare the required tax returns, and compile and publish their annual financial statements.

Accounting obligations may vary depending on the size, activities and ownership structure of the business. While some companies prepare their financial statements in accordance with Hungarian accounting standards, others may also have reporting obligations under IFRS or US GAAP. Well-designed accounting processes support regulatory compliance and ensure the availability of reliable financial information.

Throughout their operations, businesses are required to fulfil regular reporting and filing obligations to various authorities and institutions. These include, among others, VAT returns, summary reports, as well as statistical and regulatory reporting to the Hungarian Central Statistical Office (KSH) and the Central Bank of Hungary (MNB).

Well-designed reporting processes help reduce compliance risks, support timely fulfilment of statutory obligations, and contribute to the efficient administration of the business.

For international corporate groups and growing businesses, timely access to accurate financial information is becoming increasingly important. Regular management reporting supports decision-making, performance evaluation and financial planning.

In an international environment, it is often expected that Hungarian accounting data can be integrated into IFRS or US GAAP reporting frameworks. This may require the preparation of specialised bridge reports to ensure consistency between different accounting standards.

Beyond accounting compliance, businesses often require support in developing their financial processes and preparing the information needed for operational and strategic decision-making. Well-designed treasury processes, liquidity management solutions and accounting advisory services can contribute to more efficient operations and sustainable growth.

Addressing financial and accounting matters at an early stage is particularly important for rapidly growing businesses, international corporate groups and companies undergoing transformation.

Hungary is one of Central Europe’s key employment hubs, offering businesses a competitive labour cost environment and a highly skilled workforce. The country has particular strengths in shared service and business process outsourcing (SSC/BPO), financial services, IT, engineering and professional services.

At the same time, competition for talent is increasing in certain specialist fields, resulting in growing wage pressure. Employees also place increasing value on competitive remuneration and flexible working arrangements.

One of the key priorities for businesses is attracting the right talent, establishing competitive remuneration structures and ensuring compliance with local employment regulations.

As businesses grow, scalable HR processes, employee retention and the management of staff turnover become increasingly important. Choosing the appropriate employment structure also requires careful consideration, as different forms of engagement involve different legal and administrative obligations.

The fundamental framework of Hungarian employment law is set out in the Labour Code. Employment relationships must be established by means of a written employment contract, the standard full-time working week is 40 hours, and the probation period may generally be up to three months.

Detailed rules govern the termination of employment, notice periods and employers’ obligations. Establishing compliant employment practices from the outset is therefore an important part of successful business operations.

The employment of foreign workers is becoming increasingly common for businesses operating in Hungary. Citizens of the European Union may generally be employed under simplified conditions, while the employment of third-country nationals typically involves additional work permit and administrative requirements.

International mobility, employee assignments and expatriate arrangements may also give rise to employment law, tax and social security considerations. Careful planning is therefore essential to ensure compliance and support efficient workforce mobility.

Competitive remuneration plays a key role in attracting and retaining talent. In addition to base salary, companies often offer performance-based incentives, bonuses and a range of employee benefits.

When designing a remuneration structure, businesses should take into account legal requirements, market conditions and the total cost of employment. Transparent pay structures are also becoming increasingly important in strengthening employee trust and supporting compliance with emerging pay transparency requirements.

Employers must ensure compliance with employment, tax and social security legislation. This includes maintaining the required documentation, ensuring compliant payroll processes, and fulfilling statutory reporting obligations to the relevant authorities.

For growing businesses, it is becoming increasingly important to establish auditable HR and payroll processes and to prepare for future regulatory requirements, including those related to pay transparency.

Sustainability considerations are playing an increasingly important role in business operations, regardless of whether a company is directly subject to sustainability reporting requirements. Investors, lenders, business partners and large corporate customers increasingly expect ESG-related information and transparent business practices.

Businesses should therefore consider identifying sustainability-related risks and opportunities, establishing an appropriate governance framework, and gradually integrating ESG considerations into their operations.

As the regulatory landscape continues to evolve, an increasing number of companies are facing sustainability-related reporting, disclosure and business partner due diligence requirements. Establishing appropriate data collection, reporting and control processes helps reduce compliance risks and ensures audit readiness.

In addition to preparing mandatory or voluntary ESG reports, businesses are increasingly expected to address requirements relating to:

• supply chains,
• ESG ratings, and
• sustainability due diligence.

Ethical business conduct and the implementation of a whistleblowing system are key elements of modern corporate governance. A whistleblowing system enables employees and other stakeholders to report suspected misconduct, legal violations or ethical concerns through secure and confidential channels.

A well-designed reporting system not only supports regulatory compliance but also:

• strengthens organisational culture,
• enables the early identification of risks, and
• helps protect the company’s reputation.

With the advancement of digitalisation, cybersecurity has become a fundamental aspect of business operations. Protecting IT systems, ensuring business continuity and strengthening resilience against cyber threats are now not only technology issues but also matters of business governance and regulatory compliance.

A well-designed cybersecurity and compliance framework not only supports compliance with legal and regulatory requirements but also:

• helps reduce business risks,
• strengthens customer trust, and
• contributes to the company’s long-term operational resilience.

Successful business operations in Hungary require more than just establishing a company. A well-defined business and operational strategy is essential, as decisions relating to market entry, growth, sales models, organisational structure and corporate governance have a lasting impact on a company’s competitiveness.

Strategic advisory services can be particularly valuable when a business is:

• entering a new market,
• preparing for a growth decision,
• developing a business plan,
• seeking financing or engaging with financial institutions, or
• looking to improve operational efficiency.

Business growth is often achieved through acquisitions, mergers, investor involvement or other corporate transactions. While these transactions can create significant business opportunities, they may also involve financial, tax, legal and operational risks.

Transaction advisory services support businesses throughout the entire transaction process, from initial planning to successful completion. This may include:

• financial due diligence,
• business valuation,
• financial modelling,
• financing support, and
• buy-side and sell-side M&A advisory.

Growing businesses increasingly rely on up-to-date and transparent financial and operational information. An effective controlling system supports:

• management decision-making,
• performance measurement,
• cost monitoring, and
• financial planning.

The implementation of a controlling and management reporting system may include:

• reviewing financial processes,
• developing reporting logic and KPI frameworks, and
• supporting the implementation of BI- or ERP-based solutions.

The objective is to establish a management information system that is tailored to the company’s size, operations and decision-making needs.

Grant Thornton Hungary has been providing audit, tax and business advisory services to domestic and international businesses since 1991. With offices in Budapest and Győr, our team of more than 140 professionals delivers practical, business-focused solutions tailored to our clients’ needs.

Our service offering includes audit, tax advisory, accounting, payroll, transaction advisory, valuation, ESG, NIS2 and business advisory services. Grant Thornton Hungary is recognised as one of the leading audit and advisory firms in the Hungarian market.

Grant Thornton is one of the world’s leading independent audit, tax and advisory networks, with approximately 80,000 professionals in more than 150 countries.

We combine the global resources and expertise of our international network with in-depth local market knowledge, enabling us to support our clients both in Hungary and on cross-border projects.

We work closely with Grant Thornton member firms across the region, as well as with specialist teams in countries around the world.

We believe that successful business decisions require more than technical expertise—they also require a genuine understanding of how a business operates. Our professionals focus not only on regulatory compliance but also on practical implementation and long-term value creation.

Through a single trusted partner, our clients gain access to expertise in tax, accounting, HR, ESG, transaction advisory, controlling and strategic advisory. Backed by our international network, we also provide seamless support on cross-border matters. Our goal is to be a long-term partner, helping our clients grow, develop and achieve their business objectives.

Establishing and operating a business in Hungary offers a wide range of opportunities for international investors and companies. Successful market entry, however, requires more than an understanding of the local regulatory framework. It also depends on navigating the country’s business environment, tax and accounting requirements, as well as employment and compliance obligations.

Grant Thornton Hungary supports clients from the very first steps of establishing a business and throughout the entire business lifecycle from tax, accounting and HR matters to sustainability compliance, transaction advisory, strategic decision-making and growth initiatives.

If you are planning to establish or grow your business in Hungary, our specialists would be pleased to discuss your plans and help you identify the right solutions for your business.

Contact our team to find out how Grant Thornton Hungary can support you at every stage of your business journey.