Setting up a Hungarian Kft for property investment

The Kft: form, capital and governance

The korlátolt felelősségű társaság (Kft, limited liability company) is the company form most used in Hungary to hold property. Members are liable only up to their contributions, and a single person, individual or company, resident or not, can form one ^[1].

Capital: at least HUF 3 million of share capital (törzstőke), and at least HUF 100,000 per member (törzsbetét) ^[1]. For comparison, a private company limited by shares (Zrt) requires HUF 5 million and a public company (Nyrt) HUF 20 million ^[1].

Bodies: the members' meeting is the supreme body; management is entrusted to one or more managing directors (ügyvezető). A three-member supervisory board is optional in small companies ^[1]. The annual accounts are approved by the members' meeting and filed with the company registry ^[2].

Set-up steps

Registration is done electronically with the court of registration (cégbíróság), and must go through a lawyer or a notary. The usual steps:

1. Choose the company name and the scope of activity (for example letting and buying and selling own property).
2. Set a registered office in Hungary: own address or a registered-office service.
3. Have the lawyer draft and countersign the founding document (alapító okirat for a single member, társasági szerződés for several).
4. Appoint the managing director; a non-resident director generally has to give a Hungarian address for service.
5. File the registration application; the tax number is issued during the procedure.
6. Open a bank account and pay in the capital as set out in the founding document.
7. Appoint an accountant and, where relevant, register for VAT and local business tax.

Costs: legal fees, registration fees, registered-office service and monthly bookkeeping. These amounts could not be confirmed in an up-to-date official source for 2026; ask a lawyer and an accountant for a quote before starting.

Taxes paid by the company

Corporate income tax (társasági adó): 9% of taxable profit ^[3]. Business expenses, including depreciation of property and loan interest, are generally deductible within certain limits ^[3]. If profit is below 2% of adjusted revenue, the company either pays tax on that minimum base or files a statement that may lead to an audit; the first tax year is excluded ^[3]. The return is due on 31 May for a calendar year, with quarterly advance payments ^[8].

Local business tax (helyi iparűzési adó): at most 2% of a base equal to net revenue less, among other items, the cost of goods sold, subcontractors and materials ^[3][9]. For a company that buys and resells flats, the purchase price of the flat sold falls within this deduction. In Budapest only the capital's municipality may levy this tax ^[9]. Small businesses with annual income up to HUF 25 million can opt for a simplified regime based on income brackets, with a minimum of HUF 50,000 a year ^[3].

Building tax: the exemption for homes covers only those of private individuals not used for business. In District II, a flat owned by a company is therefore taxed at HUF 2,900 per m² per year in 2026 ^[12].

Transfer duty on purchase: 4% as a rule ^[7]. A company that earned at least 50% of the previous year's revenue from property sales pays 3% or 2% if it undertakes to resell within 2 years; a new company can declare that it will meet this condition in its first year ^[11].

Paying out profits: dividends for residents and non-residents

Member who is an individual resident in Hungary: the dividend bears 15% personal income tax ^[5] and 13% social contribution tax (szociális hozzájárulási adó). The contribution applies only up to a base of 24 times the minimum wage, which is HUF 7,747,200 in 2026 (monthly minimum wage HUF 322,800), reduced by other income already subject to it ^[4].

Illustration with these rates: on 100 of profit, the company pays 9 in tax; on the 91 distributed, 15% income tax and, below the cap, 13% contribution leave about 65.5 to the member, a total burden of about 34.5%. Above the cap, the burden falls to about 22.7%.

Member who is a non-resident individual: a Hungarian-source dividend remains subject to Hungarian tax at 15% ^[5]. Under the France–Hungary treaty, Hungary may not exceed 15% (5% for a company holding at least 25%), and France grants a credit capped at the French tax due on the dividend ^[10]. The Germany–Hungary treaty provides 15%, or 5% for a holding of at least 10% ^[15]. Whether a non-resident owes the 13% social contribution tax depends on their social security coverage; check with an adviser.

Member that is a foreign company: Hungary levies no withholding tax on dividends paid to companies ^[6].

Points to watch: transactions between the company and its members (selling a flat to a member, free use of a flat) must be at market price; otherwise the tax authority can treat the difference as a hidden distribution ^[14].

VAT, accounting and audit

VAT: the standard rate is 27% ^[7]. The sale of an existing building and the letting of real estate are generally exempt, with an option to tax ^[7]. A property whose use or number of units changes is treated as new, and its sale is taxable if it takes place within two years of the official certificate ^[7]. A 5% rate applies to new homes: under current law it covers projects whose building permit becomes final by 31 December 2026, and the price can be paid at 5% until 31 December 2030 ^[16]. On 20 October 2026 the finance minister announced that the 5% rate would be kept indefinitely; as this had not yet been enacted, check the rules at the time of the transaction ^[17]. Where the resale is exempt, VAT paid on renovation work is generally not recoverable and becomes a cost. A small-business VAT exemption (alanyi adómentesség) is available up to HUF 20 million of revenue in 2026 ^[13].

Accounting: a Kft keeps double-entry books, prepares annual accounts approved by the members' meeting and files them with the company registry ^[2]. In practice this requires an accountant from the first year.

Audit: an auditor is required above certain thresholds, which the Chambers 2026 guide puts at average net sales of HUF 600 million and an average of 50 employees over the two preceding years ^[2]. The exact conditions should be confirmed with the accountant.

Kft or personal ownership

The choice depends mainly on the strategy: frequent buying and reselling, long-term letting, or holding a single property.

A Kft can make sense:

• for repeated buy, renovate and resell activity, where an individual would be taxed on short-term gains without reduction ^[2];
• when profits are reinvested in new properties: only the 9% tax applies as long as nothing is distributed ^[3];
• to access the reduced 3% or 2% transfer duty reserved for property-trading companies ^[11];
• to deduct actual costs, depreciation and interest ^[3].

Personal ownership is often simpler:

• for a property held for at least 5 years, whose resale is then exempt ^[2];
• for long-term letting, taxed at 15% on 90% of the rent with the flat-rate deduction and without social contribution ^[6].

Limits and costs of a Kft: mandatory bookkeeping and filings every year, local business tax ^[9], building tax at the full rate on flats it owns ^[12], the minimum tax rule ^[3], dividend taxation when funds are taken out ^[4][5], and the obligation to deal with members at market price ^[14]. A non-resident also needs a registered office in Hungary and must fit the structure with the tax rules of their country of residence ^[10].

Frequently asked questions