The regulation of the Branch Offices and Commercial Representative Offices Act CXXII of 1997 must be respected during the commercial activities carried by the branches of the foreign companies.
The main difference between a branch and a legal entity is that for all its actions the foreign company is responsible and only certain actions can be performed by branches without the approval of the parent company. Actions like buying assets or shares from another company or branch must first receive the approval of the foreign company’s representative.
Parent companies must provide the necessary assets to the branches in order to perform any activities. When branches are requested to provide lists with assets, the properties of the foreign company are also included.
Every year, financial accounts of the branches established in Hungary must be deposited along with the balance sheets of the parent companies.
A major advantage of opening a branch in Hungary is that is not necessary to subscribe a minimum share capital.
If the company is located outside EEA member states or no special treaties are signed, a permit must be received before registering a branch.
If the parent company enters in liquidation and its assets must be seized, the assets of the branch are also subject to enforcement. The procedure is the same if the branch is subject to enforcement: the parent company’s assets may be seized in order to cover the branch’s debts.
Before starting to operate Hungary, the company must register at the Court of Registration. Unlike the local companies, the foreign companies must present much more documents at registration.
A dossier must be prepared and must contain the following documents:
The Court of Registration will issue a certificate of registration, necessary to register the branch for the taxes and VAT. Also if the branch has any employees, the social services must be announced regarding the incorporation of the branch.
The process of opening a branch in Hungary doesn’t take longer than five working days if all the documents are in good order and are deposited on time.
For more on how to open a branch in Hungary, please watch the video below: