Or even better: How to start a business in Hungary?

Starting a business, setting up a company, or opening a site are all huge challenges. The thought of a new start can be overwhelming, especially when one has no idea where to start. Motivational quotes and “guides” circle around the internet, promising to “achieve everything only by dreaming big” and that “the sky is the limit”. Though motivation is an important factor, it might just make you frustrated if you’re all ready to win a race, but you still can’t find the starting line.

Doing the whole process in a different country can make things even more complicated. Why should you bother at all, you might ask. The reasons can vary: you might want to spread into foreign markets, employ more skilled workers or cheaper workforce, or just look at new opportunities elsewhere. As IseeQ is based in Budapest, we have extensive knowledge of the European market and have helped dozens of firms to open their sites here, not only by building successful teams for them but also by consulting and supporting them every step of the way. We wanted to make our knowledge more accessible to everyone, and create a guide with all the necessary information about starting a business abroad, without the clichés and unnecessary talk. This article will take you through everything from the beginning to the end, using the Hungarian market as an example. We are providing you with a realistic and down-to-earth overview of the current situation in the country, however, you can use this as a universal guide and research the same parameters for any other location Let’s jump right in!

1. Choose the best location

Deciding where you want your new site or business to operate, you will have to look at several factors in different countries (and even cities). Governmental regulations determine the costs of registration and maintenance, and office prices and salaries can also vary in each region. It’s also important to get to know the local business sphere because your expected revenue might drop in a more saturated market. Naturally, our heart draws us to mention Hungary as a possible location. We have the most experience in the area, and can safely say that it’s definitely a great decision. But for those who like to be convinced by numbers, here’s a little summary of why we like it here:

The first question that might come to your mind is why would you even look at Hungary, a country with barely 10 million inhabitants, as a great place to have your company at. Well, aside from the amazing scenery and great food, it is well worth it financially. Considering solely your expenses, Hungary is your Nr. 1 option. This score is based on multiple important indicators that can help you predict your exact cost. Salaries, as one, tend to be low compared to other countries. Hungarian people usually have great work ethic, but as their living expenses are lower than average, they need less money from their employers to get by. Senior level professionals and highly-skilled employees naturally have their prices, but you get great talent way below their market price in different countries.

As the Hungarian market is heavily centralized around the capital city (Budapest), you will most probably have to rent an office somewhere close (if you want to have one, of course). The cost heavily depends on the exact location, but 37-40 Euros/square feet/month is a reasonable average here. Utilities and a stable internet connection are also cheap. The prices can range based on your location, provider, and the size of your office, but generally 37-40 Euros should cover the majority of your bills. Tax rates are among the lowest compared to other countries. The corporate tax rate is 9%, but depending on the type of business you wish to run it can go even lower.

All in all, it is safe to say that you will get good value for your money. If your capital quarters are located abroad, it is very likely that your branch in Hungary will cost you less than others. Hundreds of fresh graduates enter the market every year, finishing high-quality university programs, hungry for work. Several multinational companies already have Hungarian offices, so the great majority of talent is instantly drawn to big players of the market. This provides the workforce with valuable work experience in a multinational environment, using English daily during their work.

The fact is that eventually you will make your choice on objective and subjective factors combined. As we have mentioned, this is an extremely complicated process that can differ in each country, so we will use the Hungarian procedure as an example throughout the article. However you may decide on your spot, these tips will help you to wrap your mind around moving forward.

2. Contact a lawyer and take the first legal steps

First of all, get a lawyer that is certified to practice in Hungary (or your chosen country). You can choose from hundreds of firms online, we recommend picking someone who specializes in corporate or business law. The next step will be creating a bank account. It’s important that you have a Hungarian one, so you’ll be able to get more benefits in taxes, and it’s also necessary to be able to register your business, which approximately takes 4-5 business days to complete. You should also register your company to a local address, so that you can immediately register for an international VAT number (there is no waiting period or extra requirements). The client gate (Ügyfélkapu) and company gate (Cégkapu) will both make your life and registration processes easier. These are online platforms that allow you to conduct official conversations, book appointments to public record offices and do your paperwork from home. To register an already existing business that is based abroad, we recommend you contact an agency that is able to do incorporation, accountancy and registered office services for you. This will save you countless hours of research and also ensures accuracy. The last step is the data provision of your employees to tax authorities. Hungary welcomes foreigners to work here with different types of visa, however the acquiring process can be lengthy based on our experience. However, non-residents can open a company in Hungary anytime, they receive the same treatment as local investors.

After all these legal steps you should be ready to operate. We recommend finding a lawyer you trust, and following all the steps they recommend, so that nothing important will be missed. Someone who has both international and local experience may be a good choice, as if your business has its capital elsewhere they will be familiar with binding the branches together. We also have various company forms present on the market, such as limited and unlimited partnerships, limited liability companies and private or public companies limited by shares. Limited liability companies (KFTs) are the most common, but a knowledgeable legal counsel will be able to advise you on the most appropriate form for you. One thing you should keep in mind is that it’s best to start legal processes as early as possible, so occasional delays in administration don’t hinder

3. Find the perfect office

After you obtained all the necessary documents and licenses, you might want to start to look for an office space. In most cases, it is obligatory to have a Hungarian address assigned to your business, regardless of your team being fully remote or not. Although we encourage everyone to offer work from home opportunities to employees, it’s also beneficial to have a nice office with adequate equipment, for people who prefer to work there. Depending on the size of your team, it’s possible to rent a room only or a storey in an office building. The capital city offers amazing opportunities for great prices, even in the city center. Even though you will find that the rent in the countryside is a fraction of the price, we recommend Budapest and its surroundings because of the highly centralized market. A great percentage of university graduates want to work here, as it is easier to find fitting positions here- it’s a self generating loop that has been present for years. There are countless websites that enable you to browse through available offices, as well as co-working spaces, in which you can rent desks or entire rooms for your team. There are a couple of days you should keep in mind while choosing: office policies can provide huge benefits for your employees. If you decide to allow dogs to work, for example, make sure to check the regulations of the building you’re looking at. Many times, office buildings and co-working spaces have their own set of rules which apply to tenants as well. It’s important to lay down your own rules first, and look for your new place based on those.

4. Find the perfect people

If you followed all the steps above, your finishing step will be building your team. Make no mistake, this is the most difficult (and possibly the longest) part of the whole process. Your company culture almost entirely depends on the personality, values and drives of the people you hire. It’s crucial that you think about the number of people you will need, and what exact skillset is required for the tasks you wish to do or delegate. (We have already written about how one can find the best candidates for a position on our blog.) Delegating this exhausting task is also possible, recruitment agencies like us are available on command. Depending on the types of positions you are looking for and the way you’d like to receive candidates (timeframe, number of people, level of precision), a lot of recruiters are eager to be of your assistance. Fees highly depend on the factors mentioned above, and also the salaries of the future positions. We always recommend hiring rather for character and providing training for the necessary skills and knowledge. In the long run, “perfect people” will be those that authentically represent your core values and things you stand for, rather than those who seem the most knowledgeable.

Of course, a guide is never complete, and there are many unexpected tasks you will face during the process. However, we hope this guide answered most of your questions, and that the picture just got a little bit clearer. For further information and consultancy contact us, we are always open for a chat.