Quick answer — Hungarian Kft at a glance. A Hungarian Kft (limited liability company) needs HUF 3 million of share capital and must be registered through a Hungarian lawyer, often within one to several working days. Profits are taxed at 9%, the EU's lowest corporate tax rate, plus a municipal local business tax of up to 2% of adjusted turnover. Small companies can opt instead for the 10% KIVA small business tax. Non-resident managers need a Hungarian service-of-process agent.
Hungary has the lowest headline corporate tax rate in the European Union at 9%. For a location-independent founder looking for an EU company with a low rate, that number alone puts the Kft on the shortlist. The full picture is more complex: local business tax, Europe's highest standard VAT rate at 27%, and a formation process that runs through a lawyer.
Used well, a Kft can still be very efficient — especially for founders who reinvest, who employ people in Hungary, or who can use the KIVA regime, which replaces corporate tax and part of payroll taxes with a single 10% tax.
A Kft managed entirely from a high-tax EU country is exposed to place-of-management and permanent-establishment claims there. Very small one-person companies may also find the HUF 3 million capital and legal fees heavy compared with Estonia or Bulgaria. It is not designed for local employees or settled expats.
Comparing EU options? See the best EU country to start a company.
KIVA eligibility depends on headcount and revenue limits, and you must elect into it.
If you prefer a simpler flat-tax company in the EU, compare the Bulgarian EOOD at 10%. If you reinvest most profits and want a fully remote setup, see the Estonian e-Residency company.
A Kft has its registered seat in Hungary and is a Hungarian tax resident. Its weak point for a location-independent founder is the same as for any low-tax EU company: the country where the founder actually lives and decides.
If you manage the Kft from your home in another EU country, that country can claim the company is effectively managed there, or that your home office is a permanent establishment. Under the relevant tax treaty, the company's residence would then be decided by where its effective management really sits. A Hungarian managing director, real office space and locally taken decisions all strengthen the company's Hungarian position.
A non-resident can be the Kft's managing director (ügyvezető). Foreign managing directors and owners without a Hungarian address must appoint a service-of-process agent in Hungary, usually a lawyer, to receive official documents. If you are paid as managing director, Hungarian payroll taxes and social contributions may apply, depending on where you work and on EU social security coordination rules.
Hungary taxes residents at a flat 15% personal income tax rate, with social contributions on top. If you move to Hungary, you can combine a low company rate with a moderate flat personal rate. If you stay resident elsewhere, your country of residence taxes your dividends, often with credit for any Hungarian withholding tax.
At 9%, a Kft can fall below the threshold some countries use to define a low-taxed foreign company. If you control a Kft from another EU country, check whether its CFC rules would apply, especially to passive income.
A Kft typically costs €1,500–3,000 to set up and €2,000–5,000 a year to run, excluding the share capital.
Amounts are indicative; confirm current fees with your Hungarian lawyer.
The company-level burden is therefore about 12% in this example. Dividend taxes then depend on your residence: Hungarian residents pay personal income tax and social contribution tax on dividends, while non-residents are taxed in Hungary at rates usually reduced by treaty and then in their country of residence.
Plan for one to three weeks to register a Kft once your documents are ready, and a few more weeks for banking.
Hungarian banks open accounts for foreign-owned Kfts but usually want to meet the managing director in person or by video, and to understand the business model and source of funds. Many founders also use an EU payment institution for international payments.
The Hungary Business Bank Comparison Guide compares the main options for Kfts owned by non-residents — get it when you start your Hungarian setup with Heavnn.
Hungary's corporate income tax rate is 9%, the lowest in the EU. Companies also pay a municipal local business tax of up to 2% of adjusted net turnover.
A Kft needs share capital of at least HUF 3 million (about €7,500 at recent exchange rates).
Yes. Foreign individuals and companies can own 100% of a Kft and act as managing director. Registration must go through a Hungarian lawyer, and non-resident managers need a Hungarian service-of-process agent.
KIVA is a small business tax of 10% that eligible companies can elect instead of corporate income tax. Its base is mainly personnel costs and distributed profits, and it also replaces the employer's social contribution tax.
Using model articles under the simplified procedure, the Company Court can register a Kft within one working day of a complete filing. With custom articles, allow up to 15 working days.
A 9% rate is a strong start, but local business tax, payroll and your own residency decide the final number. Heavnn runs the full calculation before you register.
Start your Hungarian Kft with Heavnn →
This guide is general information, not tax or legal advice. Rates and fees are indicative as of October 2026.
