Strategic Location
Situated at the heart of Europe, Hungary provides businesses with a launchpad to major European markets. Its central location enables easy trade and business activities and offers a vast market of opportunities within the European Union and beyond.
The country’s excellent infrastructure and well-connected transportation system also strengthen business ties with other countries, ensuring a good balance between domestic and international business opportunities.
Infrastructure and Logistics
Hungary’s well-developed infrastructure, including railways, highways, and airports, fosters efficient business logistics. The country’s highways connect Budapest to several European countries, while its railway network connects most cities, ensuring smooth domestic travel. These robust transportation networks facilitate the movement of goods and services and make Hungary an attractive destination for businesses looking to establish or expand their operations.
Access to EU Funds
Another advantage of doing business in Hungary is access to various EU funding programs. These funds, such as the REPowerEU funds and start-up funding for young entrepreneurs, promote economic growth and development.
They provide substantial financial support to big and small businesses looking to invest or expand in the Hungarian market.
Government Support and Incentives
The Hungarian government is proactive in supporting businesses. It offers a variety of incentives, including cash subsidies and tax allowances, to attract and retain investments. These incentives and the country’s competitive labor costs and skilled workforce make Hungary a beautiful business destination.
Cash Subsidies and Tax Allowances
The Hungarian government provides substantial financial support through cash subsidies and tax allowances. These incentives are available for investments, job creation, and research and development activities. For instance, businesses can benefit from tax exemption on holding structures, tax allowance on royalty incomes, and tax allowance for subcontracted R&D activities.
This means that businesses can save significantly on costs while also contributing to the country’s economic growth.
Streamlining Business Processes
The Hungarian government is also committed to easing business operations. It has implemented various measures to simplify and streamline business processes. For instance, it offers state aid for reduced working time employment during a state of emergency.
It has also simplified the company registration process, easing the setup of business operations in the country.
Science Parks and Ready-Made Industrial Sites
Hungary also offers:
Ready-made industrial sites and science parks
Modern, cost-effective facilities
Convenient road connections
Essential infrastructure for business operations
These sites can significantly facilitate the establishment and growth of large enterprises and other businesses.
They also foster an environment encouraging innovation and growth, making them ideal for businesses establishing themselves in Hungary.
Workforce and Labour Costs
The Hungarian workforce is an asset to any business in the country. The country boasts a well-educated and skilled workforce that can meet the needs of various sectors.
Skilled Workforce
Hungary’s workforce is highly skilled and educated. A significant percentage of the population holds a higher education degree, and the employment rate among those with an upper secondary education is impressive. Businesses can easily find qualified personnel in the country to meet their specific needs.
Labor Costs
In addition to a skilled workforce, Hungary also offers competitive labor costs. Hungary’s average hourly labor cost is significantly lower than many Western European countries, offering a cost advantage to businesses operating there.
Setting Up a Business in Hungary
Setting up a business in Hungary is straightforward, thanks to the government’s commitment to streamline business operations. The process involves:
Working with local experts
Navigating the company registration process
Understanding the fees and taxes associated with operating a business in the country.
Local Experts and Support
Working with local experts is advisable when setting up a business in Hungary. These experts can provide invaluable guidance and support throughout the company registration process, ensuring all legal requirements are met and all necessary documents are compiled correctly. They can also advise on selecting a suitable legal structure for the company and assist with the required paperwork and filings.
Company Registration Process
The company registration process in Hungary, which involves validating the company’s existence with a certificate of incorporation and registering the company with the Hungarian Court of Registration, is pretty straightforward.
The process can usually be completed within a week, making it quick and convenient for businesses.
Fees and Taxes
Businesses operating in Hungary must be aware of the fees and taxes involved, including the local business tax. While there is no government fee for company registration, businesses are subject to corporate income tax and value-added tax (VAT). Therefore, companies must understand and factor these costs into their financial planning.
Key Industries and Sectors
Hungary’s economy is diverse, with several key industries and sectors contributing to its growth. These include manufacturing, automotive, energy, and green technologies, all of which present lucrative business opportunities.
Manufacturing
The manufacturing sector plays a significant role in Hungary’s economy. It contributes to output, employment, and exports and has been bolstered by foreign direct investment.
Essential products in the sector include computer and electronic products, consumer electronics, and pharmaceutical electronics.
Automotive
The automotive industry is a significant player in Hungary. Several global car manufacturers and suppliers have operations in the country, and research and development of autonomous driving and e-mobility are key areas of focus for the industry.
Energy and Green Technologies
Hungary is increasingly focusing on energy and green technologies. The country has seen significant investments in the electricity sector, including constructing a new nuclear power plant.
It has also implemented reforms and dedicated investments in renewable energy, amounting to €4.6 billion, primarily focusing on photovoltaic power plants.
Navigating Local Business Culture and Practices
Business in Hungary involves more than just understanding the market and regulatory environment. It also involves navigating the local business culture and practices, including understanding business customs, language, business hours, and holidays.
Business Customs
In Hungarian business culture, personal relationships, formal introductions, and respect for hierarchy are highly valued. When attending business meetings, it is important to greet your partner with direct eye contact, a firm handshake, and a clear statement of your name.
Language for Business
Although English is widely used in multinational companies in Hungary, smaller firms may necessitate interpreters. German is also frequently spoken, making it another widely used business language in the country.
Business Hours and Holidays
In Hungary, the standard operating hours are typically from 8 a.m. to 4 p.m. or 9 a.m. to 5 p.m., Monday through Friday. The country also observes several national holidays throughout the year, during which businesses may close or have reduced hours.
Summary
Hungary offers a strategic location, robust infrastructure, and a supportive government for businesses looking to establish or expand their operations there. With a skilled workforce, competitive labor costs, and a streamlined business setup process, Hungary presents a compelling case for businesses. Whether it’s manufacturing, automotive, or energy and green technologies, there are abundant opportunities for businesses in various sectors. Navigating the local business culture and practices is also an essential aspect of business in Hungary. As with any overseas venture, understanding the local market, regulatory environment, and business practices is critical to success.
