Hungary: Business Brief

SETTING UP A BUSINESS
Hungary:
Business Brief
April 2010
FOCUS
Hungary is usually associated throughout the world with brilliant minds, creativity, loyal
and talented workforce, hospitality, miracle-working thermal waters and spas, a lively
cultural life and, of course, culinary delights. It’s no wonder!
Hungary offers countless benefits for short term and long term visitors as well as
those who wish to settle down in the country permanently. Perhaps one of the most
important benefits offered by Hungary is its location in the heart of Europe – both
physically and in historical, geographical, cultural and economic terms. North, South,
East and West are all within easy reach. Hungary can serve as a basis for further expansion to investors who are looking further afield and are planning large-scale business
development, including those coming from distant countries and wish to seize European
markets. Following Hungary’s accession to the European Union, businesses settling here
become part of the overall EU market comprising over 500 million people.
Hungary’s Motorway Network
Hungary’s excellent geographical location is a natural gift which matters a lot but
would not be enough for long-term success without human contributions. Throughout
the centuries Hungary’s inhabitants have learnt to make the best of the country’s rich
lands, few but valuable natural resources, strategically located roads and waterways.
Hungarians have proved great survivors through the many calamities of their country’s
history partly due to their legendary resourcefulness and creativity.
The quality of life that Hungary offers to foreign investors and employees in Budapest
and throughout the country is an important factor when businesses consider locating
here. Expats working in Hungary for extended periods have not been disappointed: they
have found living in Hungary pleasant and Budapest exciting and less expensive than
other major European capitals. Moreover, the country boasts a rich and internationally
recognised culture, distinctive cuisine, superb wines, a spa tradition stretching back
centuries, excellent international schools (Chinese, American, British, and Japanese for
example) and countless leisure activities, such as golf courses, and rich cultural life.
2
HUNGARY
SerbIA
3
Location: East-Central Europe
Official name: Republic of Hungary
Head of State: László Sólyom
Area: 93,030 km2
Capital: Budapest
Largest towns: Debrecen, Miskolc, Szeged, Pécs, Gyõr
Time zone: GMT + 1 hour
Population: 10 031 000 (January 2009)
Ethnic groups: Hungarian 92.3%, Roma 1.9%, other or unknown 5.8% (2001 census)
Religions: Roman Catholic 51.9%, Calvinist 15.9%, Lutheran 3%, Greek Catholic
2.6%, other Christian 1%, other or unspecified 11.1%, unaffiliated 14.5%
Climate: temperate; cold, humid winters; warm summers
Geography: landlocked; strategic location astride main land routes between Western
Europe and Balkan Peninsula as well as between Ukraine and Mediterranean basin; the northsouth flowing Duna (Danube) and Tisza Rivers divide the country into three large regions
Terrain: mostly flat to rolling plains; hills and low mountains on the Slovakian
border. Highest point: Kékes (1,014 meters). Lowest point: Tisza River 78 m
Main rivers and lakes: Danube, Tisza, Lake Balaton, Lake Velence
Natural resources: bauxite, coal, natural gas, fertile soils, arable land
Land use: arable land: 49.58%, permanent crops: 2.06%, other: 48.36% (2005)
Irrigated land: 2,300 sq km
Environment: large ongoing investments to upgrade Hungary’s standards in waste
management, energy efficiency, and air, soil, and water pollution to meet EU requirements
Economy: Hungary has made the transition from a centrally planned to a market economy,
with a per capita income nearly two-thirds that of the EU-25 average. Hungary acceded to
the EU in May 2004. The private sector accounts for over 80% of GDP. Foreign ownership of
and investment in Hungarian firms are wide-spread, with cumulative foreign direct investment
totaling about EUR 60 billion since 1989. The current government has announced and begun
to implement an EU-supported convergency programme designed to address Hungary’s fiscal
and current account deficits, and leading to the eventual adoption of the euro. Due to the global
credit crunch in late 2008 Budapest sought and received an IMF-arranged financial assistance
package worth over $20 billion. The government’s IMF-mandated austerity programme has
reduced Hungary’s projected budget deficit. The government has introduced measures to support
companies committed to retaining and creating jobs and is determined to implement policy
reforms to improve business conditions in Hungary.
GDP (purchasing power parity): €158 billion (2008)
GDP (official exchange rate): €105.6 billion (2008)
GDP - real growth rate: -6.3% (2009)
GDP - per capita (PPP basis): €15,742 (2008)
GDP - composition by sector: agriculture: 4.3%, industry: 29.5%,
services: 66.2% (2008)
Labour force: 4.2 million (2008)
Labour force - by occupation: agriculture: 3.18%, industry: 30.02%,
services: 66.8%
Unemployment rate: 10.5 (Sep-Nov 2009)
Inflation rate (consumer prices): 4.2% (2009)
Investment (gross fixed): 20.9% of GDP (2008)
Budget revenues: €48.35 billion, expenditures: €51.78 billion (2009)
Gross foreign debt: 78.4% of GDP (Nov 2009)
Agriculture - products: wheat, corn, sunflower seed, potatoes, sugar beets; pigs,
cattle, poultry, dairy products
Industries: metallurgy, construction materials, processed foods, textiles, chemicals
(especially pharmaceuticals), motor vehicles, IT, electronics, software
80 000
70 000
50 000
40 000
Other capital
30 000
Equity and reinvested earnings
20 000
10 000
2009 Q3
2009 Q2
2008
2009 Q1
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
Hungary’s cummulated FDI stock
1996
0
1995
EUR million
60 000
4
Hungary’s foreign trade
Industrial production growth rate: 3.4% (2008), -9.3% (Nov 2009)
Stock of direct foreign investment - at home: €59 billion (2008), 60.8 billion
(2009 Q3)
Stock of direct foreign investment - abroad: €12 billion (2008), 11.0 billion
(2009)
Current account balance: €697.9 million (2009 Sep)
Exports: €59.5 billion (2009);
commodities: machinery and equipment 60.6%, other manufactures
26.6%, food products 6.7%, raw materials 2.4%, fuels and electricity 3.7.
Partners: Germany 26.6%, Italy 5.3%, Romania 5.3%, Austria 4.9%,
Slovakia 4.8%, France 4.7%, UK 4.6%, Czech Republic 3.8%
Imports: €55.5 billion (2009);
commodities: machinery and equipment 49%, other manufactures
31.6%, fuels and electricity 12.8%, food products 4.7%, raw materials
1.9%.
Partners: Germany 25.5%, Russia 9.3%, Austria 6.2%, China 5.7%,
Netherlands 4.5%, France 4.3%, Italy 4.2%, Poland 4%
Reserves of foreign exchange and gold: €30.6 billion (Nov 2009)
Debt - external: €76.5 billion
Currency (code): forint (HUF)
Exchange rates: forints per US dollar: 184.2, forints per Euro: 267 (2010 Jan)
National days: March 15th, August 20th, October 23rd
Other holidays: New Year’s Day, Easter, May Day, Whit Monday, All Saint’s Day,
Christmas.
160
140
100
80
59.5
EUR billions
120
60
55.5
40
20
0
2003 2004 2005 2006 2007 2008 2009
Source: Central Statistical Office, Hungary
5
Export: EUR 59.5 billion (2009)
Import: EUR 55.5 billion (2009)
ECONOMY
Hungary is a land-locked country located at the heart of Europe. Blessed with
extensive low-lying, fertile plains (the Great Hungarian Plain), the Hungarian economy
prior to World War II was primarily oriented toward agriculture and small-scale manufacturing. Hungary’s strategic position in Europe and its relative high lack of natural
resources also have dictated a traditional reliance on foreign trade.
In 1968 Hungary was the first country in Central and Eastern Europe to start political
and economic reforms by introducing the “New Economic Mechanism”. By the late
1980s and early 1990s the fundamental laws on the banking system, on foreign
investments, on the foundation of companies, on trade, on competition, on labour,
on intellectual property, on bankruptcy were laid down; imports, prices, wages were
liberalised. Hungary was the first country in the region to launch market-based
privatisation (including strategic sectors such as energy and banking) and the reform
of public sectors (health, education). The number of foreign direct investments rapidly
increased.
In 1996 the Hungarian currency became convertible. The same year Hungary became
a member of the OECD. By the end of the nineties, the privatisation process has
practically been completed, with less than 20% of state assets – mainly in strategic
industries – remaining in state ownership. Hungary joined the European Union in May
2004.
Foreign ownership of and investment in Hungarian firms are widespread, with cumulative foreign direct investment totalling approximately €60 billion since 1989. Foreign
capital is attracted by skilled and relatively inexpensive labour, tax incentives, modern
infrastructure, and a good telecommunications system.
By 2006 Hungary’s economic development slowed down and GDP growth remained
below 4%. Fiscal consolidation has become the focus of economic policy. In 2007,
the government’s austerity program has reduced Hungary’s large budget deficit,
but the reforms have dampened domestic consumption, slowing GDP growth to
less than 2% in 2007. The global financial crisis in 2008 hit Hungary’s vulnerable
economy, with its large external debt, reliance on external financing and high level
of foreign currency borrowing by its citizens, extremely hard. In this emergency
situation the country was secured by heavy borrowings from the IMF and other
financial institutions. The loans have helped to balance a large current account
and budget deficit, prop up a partially overvalued currency, support a low stock of
foreign reserve and secure a high level of short-term foreign currency debt.
Hungary’s growth prospects are likely to improve beyond 2009, owing to the loan
offered by the IMF and European Union funds – EU subsidy of 22.4 billion Euro
is available to Hungary until 2013 – and the country’s traditional growth factors
including relatively low wages, high skills, advanced infrastructure and advantegous
geographical position.
FDI stock per capita in EUR, 2009
Czech
Republic
Hungary
Slovakia
Bulgaria
Poland
Romania
0 1000 2000 3000 4000 5000 6000 7000 8000 9000
Source: wiiw Current Analyses and Forecasts, February 2010
6
TRADE
Since Hungary’s accession to the European Union (1 May 2004) trade with other
Member States takes place within the framework of the EU’s internal market, the
main principles of which are the free movement of goods, services capital and
persons. Trade between the EU and third countries is regulated within the framework
of the EU’s common commercial policy. Council Regulation (EC) No 3285/94 of
December 1994 on the common rules for imports (Import Regulation) applies to
products imported to the EU originating in third countries, except for textile products
which are covered by special common rules, and products originating in certain third
countries listed in Council Regulation (EC) No 519/94 of March 1994. EU rates of
import duties from third countries can be retrieved from this interactive website:
http://ec.europa.eu/taxation_customs/dds/cgi-bin/tarchap?Lang=EN
According to the Hungarian Government’s Decree No 110/2004 (IX.28) (Trade
Decree) export or import transactions of certain products require a license from the
Hungarian Trade Licensing Office http://www.mkeh.hu/English/, e.g. transactions with armaments, radioactive materials, recyclable or harmful waste, parts or
derivatives of endangered animal and plant species, devices used in surveillance, and
military engineering defence technology.
Hungary’s top twenty export markets
by share in total (%)
Germany
Italy
Romania
Austria
Slovakia
France
UK
Czech Rep
Poland
Russia
Neatherlands
Spain
USA
Ukraine
Belgium
Croatia
Serbia
Turkey
Switzerland
Slovenia
Central Statistical Office, Hungary
26.6
5.3
5.2
4.9
4.8
4.7
4.5
4.0
4.0
3.6
2.9
2.8
2.3
2.0
1.7
1.6
1.4
1.3
1.2
1.2
As for agricultural legislation, it should be noted that Hungary now falls under the very detailed European agricultural legal system and the Common Agricultural Policy (CAP). Other
important regulations with respect to drugs (including psychotropic drugs), chemicals,
waste, and nuclear products are contained in the decrees of the competent ministers.
Since 1991 freight forwarding and international transportation can be practised
without any special licensing or reporting obligation. The Ministry of Transport,
Communication and Energy regulates the transport of goods by foreigners and
international transportation.
Foreign Exchange
The foreign exchange authority is the National Bank of Hungary (www.mnb.hu).
Former restrictions relating to transactions in foreign exchange and foreign currency
were mostly repealed with the enactment of a series of laws, the latest being the Act
XCIII of 2001 on Foreign Exchange Liberalisation. The Liberalisation Act states that
payment obligations in respect of tax, contributions and other fees to the Hungarian
state must be fulfilled in the Forints. Other laws also continue to contain certain
obligations affecting foreign exchange transactions (regulations on money laundering,
supplying data for statistical purposes to the National Bank of Hungary, etc.)
Companies doing business in Hungary must open a bank account in a Hungarian bank.
Companies engaged in foreign-trading activities may also open foreign-currency
accounts in Hungary. Foreign-currency receipts, such as receipts derived from the
export of goods and loan proceeds, may be deposited in such accounts.
Hungarian legislation allows dividend remittances and, as applicable, capital repatriation to the foreign investor. The Forint is converted at the foreign-exchange rate set
by commercial banks.
7
INVESTMENT
Since the beginning of the transition to democratic market economy at the end of
the 1980s, Hungary has attracted a steady stream of foreign capital, well-balanced
across the various sectors of the economy. Between 1990 and 2008, the cumulative
FDI stock, a figure that includes reinvested earnings, was approximately €60 billion,
resulting in the highest figure of FDI stock per capital in the region. When it comes to
attracting FDI, Hungary has several advantages that cannot be ignored by companies
considering expansion within the Central-Eastern European region.
In the early 1990s, market based privatization was the main incentive for foreign investment. With privatisation virtually complete, Hungary’s main focus in attracting FDI has
increasingly shifted to products and services representing high added value. Investment
in the automotive sector, research and development, ICT, biotechnology, shared services
operations and logistics has become particularly important. Today, not only have a number
of the largest multinational manufacturers and service providers established their facilities
in Hungary, their major international suppliers have also come and brought along their
subcontractors with them. Currently there are more than 30,000 companies operating with
foreign participation in Hungary.
In 2008, due to the global financial crisis, both the inflow and the number of new projects
decreased by about 30%.
By the end of the third quarter of 2009, the FDI stock stood at €60.8 billion, nearly the
same level as at the end of 2008. Experts forecast a recovery in 2011. The new EU-12
region is likely to keep its favourable position as an investment destination and Hungary
may again receive an annual average of USD 5 billion FDI in the medium term.
Why Hungary?
(based on a survey among foreign investors)
European Union membership (in terms of
geography, trade and economy)
Tax system favourable to FDI
Economy based on developed services
Competitive supplies, qualified labour force
Creativity and innovative skill
Presence of other multinational firms
Legal security
Efficient dialogue between the business sphere
and the government
Reliable IT infrastructure
Excellent local delivery network
High-quality education system
Willingness of universities and research
institutes to collaborate
Ability to master language and management skills
Special emphasis on R&D and innovation
Excellent living conditions
8
INVESTMENT ENVIRONMENT
INVESTMENT
Maximum subsidy intensity ratios in 2009
BorsodAbaújZemplén
Nógrád
Heves
Győr-Moson- KomáromEsztergom
Sopron
Vas
Veszprém
Hajdú-Bihar
BUDAPEST
Pest
Fejér
JászNagykunSzolnok
Bács-Kiskun
Zala
Somogy
SzabolcsSzatmárBereg
Békés
Tolna
Csongrád
Baranya
25%
30%
40%
50%
+ 10% for medium-sized enterprises (up to max. 50%)
+ 20% for small enterprises (up to max. 50%)
From 2011 Budapest’s intensity ratio will drop to 10 %.
Investment band
as percentage of the maximum
intensity ratio
Up to EUR 50 million
100 %
For the part between EUR 50 – 100 million
50 %
For the part over EUR 100 million
34 %
9
The Hungarian Government, through ITD Hungary, offers a subsidy package for projects
worth at least EUR 10 million (in less developed regions EUR 5 million), comprising the
following elements:
(1) Non-refundable cash subsidy
– Cash subsidy co-financed by the European Union and/or the Hungarian government,
depending on the size of the project.
– VIP procedure (incentive package offered within 35 days, fast-tracked incentive
agreement).
(2) Development tax allowance
– The investor is exempt from paying 80% of corporate tax in the 10 years following
completion of the investment project (corporate tax is 19% in Hungary).
(3) Job creation subsidy
– Cash subsidy.
– Available in disadvantaged regions based on economic, social and labour market
factors.
– A subsidy of EUR 3,000 to EUR 5,000 may be granted for each new job.
(4) Training subsidy
– Cash subsidy, available only for investments above EUR 10 million.
– Irrespective of maximum subsidy intensity.
– Subsidy intensity ratio may vary between 25% and 92% depending on company
size, location of investment project and type of training offered.
The Hungarian Government, in addition to the above, also provides further tax allowances and regional subsidies.
SETTING UP A
According to the prevailing laws, no special permit is required to establish a business
enterprise in Hungary. Companies can be founded by natural or legal entities, Hungarians and foreign nationals alike. Even a single person can found a joint-stock company
(JSC; either Nyrt. or Zrt. in Hungarian, depending on whether it is public or private,
respectively) or a limited liability company (LLC, or Kft. in Hungarian); the only requirement is that the headquarters of such companies must be located within Hungary.
The registration of business associations is a must in Hungary. The Articles of Association
or the Deed of Foundation, respectively, must be drafted and countersigned by a Hungarian registered attorney. The Company Act determines the minimum basic information
that such founding documents should contain. Limited or unlimited partnerships and
limited liability companies can be established using the model articles of association
annexed to the new Company Procedure Act. This enables the registration process to be
finalised within two working days.
120
100
80
60
40
Poland
Czech Republic
Bulgaria
Slovakia
Romania
Norway
Hungary
USA
China
0
United Kingdom
20
New Zeland
A newly registered company must also register with the local municipality, State Taxation Office, Central Statistical Office and Social Security Authorities. Branch offices and
commercial representation offices should also be registered by the Court of Registration
and may start their activities only after the registration.
140
ranking/position
The registration application must be filed with the competent Hungarian Court of
Registration within 30 days from the conclusion of the Articles of Association. From
July 1 2008, all requests filed with the Court of Registration must be filed digitally by
an attorney-at-law. The electronic submission of registration applications has become
compulsory when opting for the simplified company registration procedure. This allows
registering a company within one business hour and the fee is uniformly HUF 15,000.
Ranking on the ease of setting up a business
(smallest value ranks highest)
Source: World Bank, Doing Business, 2010
10
TAX
As the first step of a major tax reform, personal income tax and VAT were introduced
into the Hungarian tax system in 1988. In 1991 the corporate income tax system
was modernised. 1995 witnessed the introduction of a two-tier corporate tax system,
comprised of a standard rate and a supplementary tax. New legislation, which came
into force in 1997, left the standard rate untouched whilst replacing the supplementary
tax with a withholding tax. With Hungary’s accession into the European Union, several
changes have been implemented in the Hungarian tax legislation during the past few
years to comply with EU tax directives (e.g. parent-subsidiary directive, mergers directive, and further harmonization with the sixth VAT directive).
Tax laws in Hungary are enacted by Parliament. Double taxation treaties override the
local income tax legislation.
Most important taxes in force:
Corporate Income Tax
Bank Tax
Personal Income Tax
Value Added Tax
Customs Duties
Excise Duties
Property Transfer Tax
Local Taxes
Social Security Contributions
Contribution to the Rehabilitation Fund
Contribution to the Vocational Training Fund
Contribution to the Cultural Fund
Death, Gift and Inheritance Taxes
Environmental Protection Charge
Innovation Contribution
Energy Tax
Registration Tax
Environmental Pollution Charge
Company Car Tax
11
Hungarian taxation operates under a self-assessment system. Taxpayers are required
to register, determine their tax obligation, make advance payments, file tax returns
on their own behalf, make corrections to the tax returns as needed, keep records and
supply information as required by law.
Authorities randomly examine tax returns to enforce the self-assessment system. The
Head of the Tax Authority (APEH) determines the target areas to be audited in each
tax year. The tax year is the calendar year for individuals and the calendar year or the
business year for companies.
In general, tax returns must be filed annually. However, for VAT, payroll and withholding
taxes, quarterly or monthly filing may be required. Act XCI of 1990, severally
amended, provides for the order of taxation.
For regular updates on the Hungarian tax system check out ITD Hungary’s website at
www.itdh.com.
HUMAN
Hungary’s labour force of about 4.2 million is highly educated and highly skilled.
About two-thirds of the work force has completed some form of secondary, technical
or vocational education. Hungary has great traditions and high standards in many
areas including engineering, medicine, economics, and sciences. Foreign employers
find Hungarian workers extremely flexible, highly motivated and very efficient. Most of
young Hungarians speak English and/or other Western languages.
Employment within Hungary varies regionally: in the North-West temporary shortages of
skilled workers occur, particularly in the financial and marketing sectors. East of the Danube
unemployment levels are usually higher than the national average, sometimes exceeding
10%.
The basic elements of employment agreements are regulated by the Hungarian
Labour Code (Act XXII of 1992), which is broadly similar to employment law in other
European Union countries. The Law provides a basis for organized labour negotiations
with trade unions or other representatives of employees (e.g., works councils).
The terms of employment are established by a written labour contract, and may be
terminated by mutual consent of the parties. The normal daily working time is eight
hours; weekly working time is maximum 48 hours with 2-day rest period. Employees
cannot be obliged to work on public holidays. Each employee is entitled to a regular
vacation every calendar year. The duration of the vacation is 20 days, but the number
of vacation days is increased according to the age of the employee.
80
GDP in Purchasing Power Standards per person
employed relative to EU-25 (EU-25 = 100)
75
70
65
60
55
50
45
An employment agreement may not contradict the Labour Code or any collective agreement in force. An employment agreement can provide more benefits for the employee 40
than those required by the Labour Code or a collective agreement.
35
Social security contributions are mandatory for Hungarian employees, employees not
otherwise subject to but wishing to benefit from the Hungarian social security system
may still be allowed to contribute. The pension system is now a four-pillar system of
a mandatory public scheme, a private scheme, a voluntary scheme and the pension
pre-saving account scheme.
Current rate of the employer’s contribution:
– 24% pension insurance
– 2% health insurance
– 1% unemployment insurance premium
– 1.5% training contribution
As of January 2010, the minimum gross monthly wage is HUF 73,500 = about 275 euro
or 398 USA dollars.
30
25
2001 2002 2003 2004 2005 2006 2007 2008
Hungary Czech Rep. Slovakia Poland Romania Bulgaria
12
VISAS
Relevant national legal acts
Act IV of 1991 on the promotion of employment and
provision for the unemployed; Social and Family Affairs
Ministry Decree No 8 of 10 November 1999 on authorisation of the employment of foreigners in Hungary;
Act XXXIX, of 2001, on the Entry and Stay of Foreigners.
The Act was replaced by two new Laws in July 2007; Act
II of 2007 on the entry and stay of third country nationals
and by Act I of 2007 on the entry and residence of persons
in possession of the right to free movement and residence.
Government Decree 93/2004. (IV. 27.) on the rules
of labour market reciprocity and protective measures
to be applied by the Republic of Hungary following
EU accession was replaced by Government Decree
355/2007. (XII. 23.) on the transitional regulations
concerning the free movement of labour (implementing
Act I and II of 2007). This Decree also abolished the
previous Government Decree 354/2006. (XII. 23.).
Ministry of Social and Family Affairs (SzCsM)
Regulation 8/1999 on the permitting procedure of the
employment of foreign nationals.
Government Decree No 37/1998 of 1 March 1998 on
the exchange of trainees and Government Decree No
38/1998 of 1 March 1998 on cross-border employment apply to Austria only.
Council of Ministers Decree No 55/1990 of 23 March 1990
on the employment of guest workers applies to Germany.
For further information and updates please
visit the relevant websites:
Ministry of Social Affairs and Labour –
http://www.szmm.gov.hu/
Hungarian Public Employment Service – www.afsz.hu
Ministry of Foreign Affairs – www.mfa.gov.hu
Office of Immigration and Nationality – www.bmbah.hu
13
Visas: From December 21, 2007 Hungary is a member of the Schengen Area, and applies Schengen legislation in full. Significant changes subsequent to Hungary’s Schengen
membership:
• v isas and residence permits issued by one of the Schengen States are also valid for
Hungary,
• v isas issued by Hungarian representations abroad and residence permits issued by
Hungarian national authorities are valid for the entire Schengen Area.
Citizens of EU and EEA member states as well as citizens of some other states may travel
to Hungary without a visa. The list of these countries and other regularly updated Englishlanguage information about entry and stay rules are available at
http://www.mfa.gov.hu/kum/en/bal/consular_services/Entry_of_Foreigners_to_Hungary
Schengen visa and entry regulations are only applicable for stays not exceeding 90 days. Rules
for stays exceeding 90 days are laid down by the national law of each member state concerned.
Foreign nationals requesting entry to Hungary with a purpose of an extended stay (i.e.
employment, education, family medical treatment, etc.) should submit a “visa for obtaining
residence permit” application. Successful applicants will be permitted to enter Hungary on a
special, single-entry, 30-day visa, where they can apply for a residence permit. This visa is issued
by the Hungarian embassy in the home country of the applicant and does not entitle to travel
into/within the Schengen area. To obtain the right to travel within the Schengen borders a
complementary Schengen visa may be requested. Depending on the purpose of entry various
documents are required. For example, foreign individuals who wish to enter Hungary to work
and apply for a stay visa must submit a work permit, a contract of employment and several
other documents unless there is a waiver agreement between Hungary and the relevant country.
Once his “visa for obtaining residence permit” has expired, the foreign individual who intends
to stay in the country as an employee, must register and apply for a residence permit at
the Office of Immigration and Nationality (http://www.bmbah.hu/teruleti_szervek.php).
The registration procedure is subject to a fee.
Work permit: As a general rule foreign persons can usually be employed in Hungary
only if they hold a valid work permit. There are exceptions dependent on the nature of
the employment and the employee’s nationality.
An application (“workforce request”) must be submitted by the employer to the relevant local
Labour Centre prior to applying for a “visa for obtaining residence permit”. Prior to submitting the
application the employer must certify that there is an actual need for the job to be performed by
the foreign employee. Another condition for issuing the permit is that at the time of application,
no citizen of the European Economic Region (EER) is available for the same job. No work permit
is necessary for foreigners recognised as refugees, asylum-seekers, or those in immigrant or settler
status, as well as for EER citizens and their relatives entitled to stay in Hungary. No work permit
is needed for the citizens of Austria, Belgium, Bulgaria, the Czech Republic, Cyprus, Denmark,
Estonia, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Latvia, Lichtenstein, Lithuania,
Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain,
Sweden, Switzerland or the United Kingdom. For these citizens the employer will need to report
the employment to the competent Labour Centre, latest on the day on which the employment
starts. (The termination of the employment is also to be reported).
Employment without permission may bear serious consequences including heavy fines or
expulsion of the foreigner.
ITD Hungary (www.itdh.com) is the Hungarian government’s Investment and Trade
Development Agency, established in 1993 to promote foreign investment and bilateral trade. With representative offices in eight regional centres of Hungary, a foreign
network operating under Hungary’s diplomatic services and special assignments in
more than 50 countries, ITD Hungary is a single point of contact to support decisionmakers looking for new business opportunities in Hungary.
A One-Stop Shop for Investors
ITD Hungary is the information and consultation centre for foreign investments in
Hungary. Its main tasks include:
Providing decision makers with information on Hungarian investment, legal, taxation
and financial conditions;
Identifying available sites and recommended investment locations; identifying
Hungarian suppliers and subcontractors for foreign investors;
Offering advice on government programmes to support investment; liaising with
local governments and authorities;
Organising awareness and business networking events; publishing information
brochures printed or in electronic media
ITD Hungary’s investment programmes currently focus on investments in knowledgebased and high value-added sectors including life science, ICT, automotive supplies,
logistics, business support services and renewable energy utilisation and management.
Trade Promotion
Through a diverse set of marketing tools and support programmes ITD Hungary
offers substantial logistical, financial and professional assistance to both start-up and
established Hungarian exporters.
Placing activities with high added value into the focus of its trade promotion, the
Agency concentrates currently on the following priority sectors: processed food,
pharmaceuticals and medical engineering products, precision engineering, automotive
parts and software.
Enterprise Europe Network
ITD Hungary co-ordinates the Hungarian activities of the European Union’s new
Enterprise Europe Network. The network offers support and advice to businesses across
Europe and helps them make the most of the opportunities in the European Union.
EEN’s Hungarian structure currently consists of nine organisations established at
regional chambers, enterprise development agencies and innovation centres operating
accross the country.
For more information
please contact:
ITD Hungary
Hungarian Investment and Trade Development Agency
Budapest, H-1061 Andrássy út 12.
Tel.: +36 1 472 8100
Fax: +36 1 472 8101
Trade Development: [email protected]
Investment Projects: [email protected]
www.itdh.com
Communication
ITD Hungary develops and distributes business literature, arranges business programmes
for individual visitors and delegations, and organizes various business events.
Its prime communications tool is its website available in English, German, Italian and
Hungarian. ITD Hungary’s latest publications include its weekly business newsletter and
„HINT” a quarterly business magazine published in English and German. To receive a
complimentary copy write to [email protected].
14
USEFUL
Selected Government Offices:
Hungarian Government Portal: www.magyarorszag.hu/english
Prime Minister’s Office: www.meh.hu/english
Min. of Agriculture and Rural Development: www.fvm.hu
Min. of Education and Culture: www.okm.gov.hu
Min. of Finance: www2.pm.gov.hu
Min. of Foreign Affairs: www.kulugyminiszterium.hu
Min. of National Development and Economy: www.nfgm.gov.hu
Min. of Transport, Communication and Energy: www.khem.gov.hu
National Development Agency: www.nfu.hu
National Office for Research and Technology: www.nkth.gov.hu
National Telecommunication Authority: www.ntt.hu
Treasury Property Directorate: www.kvi.gov.hu
Hungarian Energy Office: www.eh.gov.hu
Hungarian Customs Authority: vam.gov.hu
Central Statistical Office: www.ksh.hu
Financial Supervisory Authority: www.pszaf.hu
Hungarian Tourism Zrt.: www.hungary.com
Hungarian National Bank (Central Bank): www.mnb.hu
Selected Chambers, Trade Associations:
Hungarian Chamber of Commerce and Industry: www.mkik.hu
Confederation of Hungarian Employers and Industrialists:
www.mgyosz.hu
American Chamber of Commerce in Hungary (AMCHAM):
www.amcham.hu
British Chamber of Commerce in Hungary: www.bcch.com
Hungarian-Dutch Chamber: www.nlchamber.hu
Canadian Chamber of Commerce in Hungary: www.ccch.hu
German-Hungarian CIC: www.duihk.hu
Hungarian-Italian Chamber of Commerce: www.cciu.com
Hungarian-French CCI: www.ccifh.hu
Swiss-Hungarian Chamber of Commerce: www.swisscham.hu
Hungarian-Russian Chamber: www.russchamhungary.hu
Hungarian-Swedish Trade Corp.: swedishchamber.hu
Association of Advertising Industries: www.mrsz.hu
Association of Hungarian Architects: www.meszorg.hu
Chamber of Chartered Auditors: www.mkvk.hu
Assoc. of Automotive Part Suppliers: www.majosz.hu
Hungarian Banking Association: www.bankszovetseg.hu
Biotechnology Association: www.hungarianbiotech.org
Hungarian Chemical Industries: www.mavesz.hu
Chamber of Hungarian Engineers: www.mmk.hu
Assoc. of Exhibition Organisers: www.mkvsz.hu
Association of Hungarian Machine Building and
Power Engineering Industries: www.mageosz.hu
Association of Food Manufacturers: www.efosz.hu
Association of Foreign Trading Companies: www.kulkerszov.hu
Assoc. of Freight Forwarders: www. szallitmanyozok.hu
Association of IT Companies: www.ivsz.hu
Joint Venture Association: www.jointventure.hu
Association of Logistics: www.mle.hu
Utilities:
Foreign Exchange rates: english.mnb.hu/Engine.aspx
Currency Converter: www.oanda.com
Hotel booking in Hungary: www.hungary.com
Weather report for Hungary: www.weathercity.com/hu
Hungarian-English-Hungarian online dictionary: www.sztaki.hu
Street finder in Hungary: www.utcakereso.hu
Timetables: railway: www.elvira.hu
flights: www.malev.hu
Hungary:
Invest,
Network and
Tr a d e
QUARTERLY BUSINESS MAGAZIN
OF THE HUNGARIAN
ECONOMIC DIPLOMACY
ORDER YOUR FREE COPY NOW!
[email protected]
www.investhungary.com
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