Recent years have produced various challenges to business all over the world. Challenging times, however, force entrepreneurs to take risks and test innovative business models, which creates an excellent ground for startups. Where there is a startup ecosystem supportive enough for growth, new ventures have even more chance for success, and Hungary is just like that.
Startups in Hungary
Hungary, with its culture for scientific innovation, competent talent, and proximity to large European markets is already a welcoming environment for startups, with potential for improvement. Currently there are more than 1,500 startups in operation, giving jobs to 18,000 people, taking advantage of the region’s largest share of IT and communication specialists (which is 3.6% of the local work force, compared to the 2.8% in the CEE).
Factors in Favor of Startups
Hungary already shares several features with successful startup ecosystems. If you want to decide whether an environment is in fact favorable for your new venture, consider the following aspects.
Setting up an LLC in Hungary takes just 4-5 business days. It comes with an immediate EU VAT number that lets you start operation on the international level right away. You will need a lawyer to do the paperwork, but you can easily outsource the procedure to a business assistance agency specialized in company formation in Hungary, which can take care of everything while you focus on starting your business.
While Hungary does not offer special tax benefits to startups, it does sport the lowest corporate tax in the EU at just 9%. The corporate tax may be reduced by various items, such as R&D activities, providing apprenticeship, or realizing energy efficiency investments.
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Attracting international talent
While the Hungarian work force is typically well-qualified, you can easily bring in international talent too. EEA citizens can enter employment in Hungary almost immediately, after they receive a registration card. Third-country citizens need a work permit in Hungary, which can be obtained within 70 days after application. While this might seem a long deadline, it is in fact better than the EU average, best proven by how last year’s directive urges for a standard application deadline under 4 months.
Perks of local residency
Since Hungary is a member of the EU, the Hungarian residency that comes with working for a local startup also doubles as a Schengen visa that lets you stay in any other EU country for 90 days without extra requirements. This might come in handy not only during business trips to neighboring countries, but also when applying for a visa to other countries such as the US or Canada. Spend enough time in Hungary, and you will also qualify for citizenship, which lets you travel to 185 countries around the without a visa. Hungarian citizenship by ancestry is also an option for those whose parents, grandparents, or other ancestors were Hungarian.
Digitalization and administration
Digitalization is Hungary is making advances each year, and you can take care of most kinds of administration online. A single registration gets you access to all kinds of governmental facilities, such as the Tax Authority or the Chamber of Commerce. Online banking is also pretty standard, and you can manage your finances wherever you are.
Education and access to information
A large segment of Hungarian higher education is free of charge, while university lectures are traditionally open to the public. This in itself lets those with an ambition get closer to realizing their dreams. At the same time, 2020 brought about the Hungarian Startup University Program (HSUP) that offers specialized education to aspiring entrepreneurs, focusing on practical skills needed to make innovation happen. The program of two terms had more than 2,000 participating students in the first year, and the number already doubled in the second year. At the same time, startup related statistics and updates are also published regularly to give businesspeople an insight into the Hungarian startup scene and its current potential.
There is still room for improvement
The above features of the Hungarian startup ecosystem make for a stable base to build on. The tradition for scientific innovation and the quality education are invaluable assets in this sense. Naturally, there is still room for improvement, especially in the area of incentives for encouraging entrepreneurship culture and realizing potential.
The beginnings are promising, and a strong cooperation of stakeholders could easily make Hungary an even more attractive environment for startups, fueling broader economic growth.