In Hungary, foreign and Hungarian natural and legal persons, and companies without a legal entity, may set up a company, become a partner in an existing company or obtain shares in a company. However, international agreements may lay down rules for the participation of foreigners in companies other than those specified in the Hungarian legal provisions.
The investments by foreigners in Hungary and their settlement for economic purposes are regulated by Decree on Investments by foreigners in Hungary, based on which a company with foreign interests may found an enterprise, may take part in the foundation of another economic organisation, and may acquire a share in an operating company.
Under the Act on the cross-border mergers of limited liability companies, any limited liability company, joint stock company or cooperative defined in law that has been established in a Member State of the European Union may merge if its registered office, central administration or the main location of its business activities is in the EU.
Types of cooperation
The joint venture is a contracted partnership in which two or more members display economic activities under a shared control. The Joint Venture Association is the Association of Hungarian and Foreign Investors, which developed to represent the interests of companies registered in Hungary with foreign participation, and to promote their operation and their integration into the economy.
In a franchise, the administrator, i.e. the seller of the franchise, transfers the rights and knowledge necessary for running the business successfully to the franchise buyer for a set period, and promotes and monitors operation by the buyer in accordance with the system requirements, throughout the relationship. For all of its members, the Hungarian Franchise Association examines whether the franchise agreement complies with Hungarian law and the European Code of Ethics for Franchising.
Some types of vertical agreement - including franchise agreements - may in certain circumstances be exempted from the prohibition on restricting competition.
The supplier contract is a vague legal category to which essentially the provisions of the Civil Code relating to delivery contracts and provisions on contracts of work apply.
The cooperation contract is a permanent contracted partnership based on mutual interests which is intended to manufacture products specified betwee certain sectors or production units bilaterally or multilaterally or to solve topics or problems in which they are mutually interested.
Technology transfer may take place on the basis of a separate licence agreement. Based on the licence agreement, the licensor agrees to give a licence to the licensee against a specific fee to product, use or utilise the subject of the licence in another way, and occasionally personally cooperates in ensuring optimal terms for the utilisation, e.g. by transfer of experiences or training of specialists. The subject of this agreement is a patent relating to a product or procedure, a utility model, industrial design and trademark or usable technical knowledge know-how). Certain types of technology transfer are exempted from the prohibition on restricting competition, by Government Decree.
The aim of the Act on Research and Development and on Technological Innovation is to promote an increase in companies' competitive ability based on technological innovation and to make the most effective use possible of opportunities for research and development and for innovation in the regions, as well as joint research projects.
A cluster is a group of companies in the same or related industries that are geographically concentrated, and which collaborate and compete with one another. Each company benefits from the collaboration, for example through a reduction in transaction and transportation costs, faster and more accurate information flows, recognition of technological and organisational experience, or a permanent exchange of knowledge. The innovation clusters: groups of independent enterprises operating in a specific sector or region and their purpose is to incite the innovation activity via promotion of intensive cooperation, share of assets, exchange of knowledge and skills, efficiently contributing to technology transfer, networking and information dissemination between the enterprises belonging to the cluster.
New types of European business structure
The European Union supports cross-border cooperation in the internal market, which enables companies to act as a single player throughout the territory of the European Union, and thus avoid a multitude of complicated and expensive registration and termination procedures.
European Joint Stock Company
A European Joint Stock Company can be established on the area of the member states, with the involvement of at least two economic organisations registered on the area of the member states. Council Regulation 2157/2001/EC and the Act on European Joint Stock Companies apply to SEs that have their registered office in Hungary.
European Economic Interest Grouping
The European Economic Interest Grouping mainly guarantees a framework for small and medium-sized enterprises to appear at Community level. It is an important feature of the Grouping that it does not seek to make a profit. Its activities must be linked to the economic activities of its members, and must not extend beyond supplementing and promoting the success of these activities.
The basic aim of the European Cooperative is to satisfy the demands of its members and to develop the economic and social activities of its members, especially by means of agreements concluded with members, the aim of which might be for example to provide goods, services or a commission.
Other options for expanding your business are taking over an existing one, merging with another company or opening a branch in another EU country.
All companies must register at the competent registry court - depending on where the company has its registered office. Applications for the registration of a company/transformation must be submitted electronically through a legal representative, and the necessary stamp duty for the proceedings and the costs of publication must be paid electronically before the application for the registration of a company/transformation is submitted, or at the same time as it is submitted. The court of registration electronically records all documentation on companies and provides the company's legal representative with an electronic certificate on registration as well as confirmation of any changes made.
In Hungary, the Hungarian Trade Licensing Office acts as the authorisation, registration, monitoring and supervisory authority administration for certain commercial businesses when they enter the market.
Double tax relief
The Hungarian government has concluded agreements with the governments of a number of countries concerning the avoidance of double taxation.
It may be a legal requirement for setting up a company to have a permit from the authorities. Unless there is an exemption in law, activities subject to qualifications may only be pursued by a company if at least one of its members fulfils the qualification requirements laid down by law.
The issues of the Hungarian Investment and Trade Agency in Hungarian and foreign languages give information on the current business and investment possibilities in Hungary, and offer help to the enterprises in searching potential partners.
The purpose of the New Széchenyi Plan Enterprise Development Programme is to promote partnership and cooperation between the enterprises, and to strengthen the economy organisation role of Hungary by establishing an economic network in the Carpathian basin and Europe, seated in Hungary.
The aim of the Hungarian Chamber of Commerce and Industry is to lobby within the EU, help companies integrate into the EU and enhance their competitiveness. It develops programmes − such as the Széchenyi Card − which provide access to funding for businesses and help them improve their liquidity. It also implements economic development programmes for SMEs to help them develop and integrate into the EU.
- The Wekerle Plan is a strategic economic development programme of the Hungarian Government affecting the region of the Carpathian basin.
- It is intended to set macro-regional objectives for the Hungarian economy and to designated partnership, institutional and financing basic terms for the achievement of these objectives. The regional cooperation will contribute to the strengthening of the vertical integration of the local enterprises in the Carpathian basin from the basic material manufactuers via the processing and marketing units to the consumers.