Why Hungary Is Showing Promising Potential For Tech Startup Founders

Over the last 10 years, Hungary has become a tech hub that is still on the rise, with more and more startups trying their luck. Several factors make it an ideal location for a tech startup, including the experienced talent pool, excellent infrastructure, and the low corporate tax. Even foreign citizens can easily take advantage of all this thanks to the easy immigration regulations. With this in mind, let’s learn more about starting your tech venture in Hungary!

The Rise Of Entrepreneurs

The idea of tech startups started to gain popularity around 2009 when the first Venture Acceleration Course (VAC) was held in Budapest. The mastermind behind it was Péter Záboji, an internationally well-versed entrepreneur and an angel investor himself. He tried to encourage attendees to begin to think bigger, which is an essential ingredient of success.

Education in Hungary traditionally focuses on life sciences, maths, physics, and technology. Recently, more and more courses are available on entrepreneurship, and many universities team up with large corporations that provide internships and employment opportunities to career entrants. As a result, the local talent pool offers professionals in all fields, and there is a vast number of skilled developers and engineers.

Hungary offers an excellent infrastructure with regard to transportation, but also access to electricity and broadband internet coverage, even in the countryside. While living standards match those in Western Europe, costs are much lower, which makes company operation a lot more cost-effective, both because of company and living costs.

The Startup Environment In Budapest

The local business environment is startup-friendly especially because of startups’ great potential for job creation. The Budapest Enterprise Agency, for example, is a public foundation operating in Budapest and supporting the development of small and middle-sized companies, partly by providing non-profit micro-financing (below EUR 32,000) to innovative SMEs, especially those run by women or young entrepreneurs. They also organize various programs, workshops, and competitions with international presentation opportunities for the winners, working on the creation of an SME friendlier business environment in general.

Many startups benefit from international investment, like that provided by the JEREMIE Program of the European Investment Fund. The most prominent events and conferences in Hungary include the Startup Sauna, CEE global Impact Competition, CEE Women Startup Competition, the Skill Goulash, and the Budapest Hackathons.

Hungarian entrepreneurs are most often middle-aged men from Budapest, who have their expertise from working at multinational companies but want to realize their own innovative potential. The members of the startup ecosystem also include venture capital investors, incubators, accelerators, corporations, and co-working spaces. The strongest characteristic of that ecosystem is the great number of social events, such as meetups, and other opportunities for networking.

Starting A Business In Hungary

Hungary has the lowest corporate tax rate in Europe, at only 9% (although VAT is 27%). Company setup and registration in Hungary are simple and quick: it is available to anyone regardless of their nationality, and it takes only 4-5 business days. The company also immediately gets an EU VAT number, which makes trading VAT-free within the EU possible right after the incorporation (while in some countries you must wait long months for VAT registration).

A popular option among new company owners is the use of a virtual office. This means that the seat of the company is registered with a service provider who guarantees that there is always somebody at the registered seat who can receive important official letters on behalf of the company.

This spares the company the cost of maintaining an office while the managing director can spend their time in a more productive way, attending meetings with investors or providers, or just work on their ideas at home or at a co-working space. This latter is also a fashionable solution for startups until they grow big enough to need an office space of their own and start looking for staffing solutions.

Hungarian Residency For Entrepreneurs

Anyone operating a business in Hungary is eligible for Hungarian residency, which is very attractive especially for third-country investors as it gives visa-free access to the Schengen countries. It is advisable to ask for tax and social security consulting before you apply, to avoid double taxation and to make sure you are compliant with all regulations.

Residency is first given for one or two years, but it can be renewed as long as the business is operational and generates a steady income, although the application must be supported with a feasible business plan for the company. If you want to gain some insight into Hungarian citizenship procedures, you just need to understand that citizenship is available only after 8 years of residency, unless you have Hungarian parents or other ancestors.

If you want to take advantage of a startup-friendly, bustling business environment, a professional talent pool, excellent infrastructure, and lots of networking opportunities, the answer is a definite YES! Here you will find all the essential ingredients for success – you just need to come up with the most original business idea.

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