In an insightful interview, Dr. Robert Fazekas, the Country Director of 360 Business Law for Hungary, discusses the multifaceted advantages of business opportunities in Central and Eastern Europe (CEE) region, Hungary, and particularly in Budapest.
Q: Dr. Fazekas, how significant is the CEE region’s strategic location for businesses?
A: The CEE region’s location is a key asset. It acts as a bridge between East and West, providing business opportunities with access to a diverse range of markets across Western Europe, the Balkans, the CIS countries, and even Asia. This strategic position is ideal for businesses aiming to broaden their market reach.
Q: What about the economic growth and stability in the CEE region?
A: The region has seen robust economic growth and stability, driven by continual reforms, EU integration for many countries, and a rise in foreign investments. This environment of growth and stability is very attractive for businesses looking for secure investment opportunities.
Q: Can you comment on the labor force in the CEE region?
A: Certainly. The CEE boasts a skilled yet cost-effective labor force. The labor costs here are generally lower than in Western Europe, but the workforce maintains a high level of education and skills, making the region particularly appealing for industries like manufacturing, IT, and services.
Q: How does the region’s infrastructure support business operations?
A: There’s been significant investment in upgrading the CEE’s infrastructure, including transportation networks, telecommunications, and energy systems. This developing infrastructure is crucial for efficient and seamless business operations.
Q: What benefits do businesses enjoy from EU membership in the CEE region?
A: EU membership brings numerous benefits, including access to the single market, EU funding and development programs, and a harmonized legal and regulatory framework. These advantages are especially valuable for businesses operating in EU member countries within the CEE.
Q: Are there any specific incentives for investors in the CEE?
A: Yes, many CEE governments offer attractive incentives to foreign investors, such as tax breaks, grants, and subsidies. These are particularly prominent in sectors like technology, renewable energy, and research and development.
Q: Dr. Fazekas, could you elaborate on the strategic significance of Hungary’s location, particularly that of its capital, Budapest, for business enterprises?
A: Budapest is quite literally at the heart of Europe, serving as a crucial hub for regional operations. Its position allows for convenient access to both Western and Eastern European markets, making it ideal for trade and logistics.
Q: How does Budapest’s economic performance influence business decisions?
A: The city has demonstrated remarkable economic growth and stability, a beacon within the CEE region. This stable economic environment is highly attractive to investors and businesses seeking a reliable foundation for their operations.
Q: Can you comment on the workforce in Budapest?
A: Certainly. Budapest is renowned for its highly qualified workforce, particularly in sectors like engineering, IT, and finance. The city’s commitment to higher education and vocational training ensures a continuous supply of skilled professionals, which is a significant asset for any business.
Q: How do the operational costs in Budapest compare with other European cities?
A: Despite its growth and development, Budapest offers competitive operational costs, including lower labor costs and real estate prices. This cost-effectiveness is a major draw for businesses looking to maximize their investment.
Q: What incentives does the Hungarian government offer to businesses in Budapest?
A: The government provides a variety of incentives, especially in key areas like technology, manufacturing, and services. These range from tax incentives to grants and subsidies, all designed to foster investment and support business growth.
Q: What makes Budapest’s business environment unique?
A: The city is vibrant and dynamic, hosting a mix of multinational companies and startups. This cosmopolitan atmosphere is conducive to innovation and collaboration, making it an exciting place for business opportunities to thrive.
Q: Dr. Fazekas, how quickly can one set up a business in Hungary?
A: In Hungary, the process is quite efficient. You can have your business opportunities up and running within 7 to 14 working days.
Q: What about the minimum investment needed?
A: The investment varies based on the scale and type of your project. Depending on the entity, the capital requirement is between 3 to 20 million HUF (ca. EUR 7,500 to EUR 50,000).
Q: How can entrepreneurs raise finance for their ventures in Hungary?
A: The investor must contribute the entire capital, which can be in kind or in cash.
Q: Could you outline the legal requirements for setting up a business?
A: Sure. Firstly, the articles of association must be executed by a Hungarian attorney-at-law. Then, companies must register at the Court of Registration. The process and management structures vary depending on the type of business entity, such as a Limited Liability Company, Company Limited by Shares, Partnership, or Branch Offices of foreign companies.
Q: Moving to payroll and taxation, what advice can you offer?
A: Hungary’s tax system is quite straightforward. Personal Income Tax is at a general rate of 15%. Social security contributions vary for employees and employers. Corporate Income Tax is a flat 9%, and local taxes are levied by municipalities. Additionally, Value Added Tax has a general rate of 27%, with preferential rates at 18% and 5%.
Q: Are there any other important aspects potential investors should be aware of?
A: Yes, there are several. For example, audit requirements mandate that companies with an annual turnover over 300 million HUF (ca. EUR 750,000) and more than 50 employees must appoint an auditor. We also have specific allowances in corporate tax for investment incentives and a range of double taxation treaties with various countries.
Q: Finally, what is your perspective on Hungary’s overall business climate?
A: Hungary offers a unique combination of a strategic location in Central Europe, a skilled workforce, and a competitive economic environment. The government’s pro-business attitude, coupled with a stable legal and tax framework, makes Hungary an ideal destination for businesses looking to establish or expand their presence in Europe.
For more information on how to build and grow businesses in Hungary visit the Hungarian British Business Alliance website.