Many actual and prospective investors around the world find it surprising that the banking sector of Cyprus is experiencing a drastic downfall. Although there are several economies that have faced severe recessionary phases, the economic crisis of Cyprus comes as a surprise because of it prosperous history among foreign entrepreneurs. While Cyprus was known to be an attractive location for company formation, the nearly collapsed economy of the country has resulted in a pessimistic environment for company formation by foreign investors. This is due to several causes, such as:
v Inability to recover the Greek debt-swap losses
v Local banking sector’s exposure of the Greek debt crisis
v Incapacity to repay debt
The rising investment risks and complicated alternatives for banking transactions are the difficulties faced by Cypriot companies. This economic crisis has diverted the attention of several investors to other beneficial business locations for their company formation. However, most entrepreneurs do not believe in focusing on countries which have become better alternatives only after the Cypriot crisis. In this respect, foreign investors consider those business locations which have been long known for their attractive legal and tax system for company formation. For example, Hungary offers promising opportunities for offshore company formation.
Tax Rates in Hungary
The tax structure of a country is one of the major concerns for offshore investors. This makes Hungary a favorable option because of its low tax rates. Generally, different types of taxes fall under the category of corporate taxes. In Hungary, corporate taxes range between 10% and 19% only. To be precise, an income up to $2.5 million approximately is subject to a tax of 10%. Exceeding amounts are taxed at 19%. Furthermore, foreign businesses are also exempt from taxation on dividends.
Types of Companies available
Different investors and entrepreneurs seek to form offshore companies with different objectives. These objectives also specify the type of company they wish to form. For foreign investors, Hungary offers easy formation the same types of companies as the locals. These include:
- Limited Liability Company
- General Partnership Company
- Joint Stock Company
- Limited Partnership Company
Geographic Benefits of Hungary Company Formation
Hungary is highly preferable for offshore company formation, mainly for entrepreneurs with the goal to establishing a name for their business in Europe. This benefit becomes more attractive with Hungary’s membership in the European Union. At the same time, offshore companies favor the availability of Hungarian raw material in terms of its quality and value for money.
Businesses in Hungary are free from the difficulties generally caused by a country’s insufficient, basic development. From transportation to technology, the core infrastructure of Hungary is sound, extensive, and has the potential to develop further.
Hungary is a more favorable alternative for company formation than Cyprus. Apart from the several benefits mentioned above, Hungary is an open economy with a Customs Union membership. It allows offshore companies to conveniently trade with several European Union members. In short, Hungary has high business potential for foreign entrepreneurs with varying concerns and interests.
For more information on how to register a company in Hungary, please don’t hesitate to contact us.