When a foreign company wants to expand into Central or Eastern Europe, branch incorporation in Hungary can be a strategic and cost-efficient option. Whether you’re considering branch incorporation in Europe generally or targeting Hungary specifically, understanding the legal and operational framework is crucial.
This article provides a detailed overview of how to set up a branch in Hungary, the process compared to other European jurisdictions, and key legal, tax, and practical considerations.
What Is a Branch Office?
A branch office is a non-independent business unit of a foreign company that operates in another country. It is not a separate legal entity but acts on behalf of the parent company. Within the EU, branch incorporation allows foreign businesses to operate without creating a new company, reducing complexity while still maintaining an official local presence.
Why Choose Hungary for Branch Incorporation?
Hungary is an increasingly attractive destination for branch setup in Europe, thanks to its central location, low taxes, and fast business registration process. Key advantages include:
- EU membership: Full access to the European single market.
- Corporate tax: 9%, the lowest in the EU.
- Efficient and transparent company registration.
- Skilled workforce and modern infrastructure.
These factors make Hungary an ideal choice for branch incorporation in Europe, particularly for companies looking for low entry barriers and a strategic business base.
Legal Background of Branch Incorporation in Hungary
Hungarian law permits foreign companies to establish either a branch office (fióktelep) or a commercial representative office (kereskedelmi képviselet). A branch is suitable for companies wishing to conduct active business in Hungary, such as selling goods or services, signing contracts, or hiring employees.
Key Features of a Hungarian Branch:
- No separate legal personality – operates under the parent company.
- Registered in Hungary – with a local address and tax number.
- Subject to Hungarian accounting and tax laws.
- May sign contracts and employ staff.
Steps to Register a Branch in Hungary
The branch incorporation process in Hungary involves the following steps:
- Prepare corporate documents – translated and notarized articles of association, company registry excerpt, etc.
- Appoint a representative – a branch manager must be designated.
- Local registered office – a Hungarian address is required (we provide virtual office service).
- Court registration – application submitted to the Hungarian Court of Registration.
- Tax registration – obtain a Hungarian and EU VAT number.
- Bank account opening – a Hungarian bank account is mandatory for the branch’s operation.
With the help of Company Formation Hungary, this process can be completed smoothly in 5–10 business days.
Branch vs. Subsidiary: Key Differences
Foreign companies often ask whether it’s better to set up a branch or a subsidiary (e.g., a Kft, Hungarian LLC). Here’s a side-by-side comparison:
| Feature | Branch Office | Subsidiary (Kft) |
| Legal status | Not a separate legal entity | Separate legal entity |
| Liability | Parent company is fully liable | Limited liability |
| Registration time | Quick (5-10 days) | Quick (3-5 days) |
| Tax ID & Bank Account | Yes | Yes |
For quick market entry and lower maintenance, a branch is often the optimal structure. For long-term operations with greater legal separation, a subsidiary may be better suited.
Taxation of a Branch in Hungary
A Hungarian branch is considered a permanent establishment for tax purposes. It must pay Hungarian corporate income tax on its local income. Key tax aspects include:
- Corporate tax: 9% (lowest in the EU)
- VAT: Standard rate is 27%
- Local business tax: Typically 1–2%
- Employer contributions: If hiring staff
The branch must maintain Hungarian books and file annual financial statements.
Branch Incorporation in Europe – Why Hungary Is Competitive
If you’re considering branch incorporation in Europe, here’s how Hungary compares with other jurisdictions:
| Country | Corporate Tax | Registration Time | EU VAT Number | Compliance Cost |
| Hungary | 9% | 5–10 days | Yes | Low |
| Germany | 15% + local tax | 2–3 weeks | Yes | Medium |
| France | 25% | 3–4 weeks | Yes | High |
| Netherlands | 19–25.8% | 1–2 weeks | Yes | Medium |
Hungary offers one of the most favorable business environments in Europe in terms of taxation, speed, and overall costs.
Our Services – Full Branch Registration in Hungary
At Company Formation Hungary, we provide end-to-end support for branch incorporation, including:
- Legal branch registration in Hungary
- Translation and notarization of company documents
- Virtual office and registered address
- Accounting and tax representation
- VAT and EU tax number application
- Employment and labor law advisory
We support foreign companies from start to finish in opening a Hungarian branch office – with speed, precision, and local expertise.
FAQ – Hungarian and European Branch Incorporation
Q: Can non-EU companies register a branch in Hungary?
A: Yes, both EU and non-EU companies are eligible to register a branch in Hungary.
Q: How long does the process take?
A: Typically 5–10 business days from submission.
Q: Is the branch taxed in Hungary?
A: Yes, Hungarian corporate tax applies at 9%.
Q: Can a branch issue invoices and sign contracts?
A: Yes, the branch may conduct full business activities locally.
If your company is planning branch incorporation in Europe, Hungary offers one of the most efficient and tax-friendly options. With fast processing, low administrative costs, and access to the EU market, a Hungarian branch office can be your gateway to European expansion.
Contact us and let us handle the paperwork, legal steps, and full registration.
We take care of the bureaucracy so you can focus on growing your business in Europe.
