Hungary Market Entry

Hungary Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

Like the Czech Republic, Hungary is a member of the European Union, or No tariff or non-tariff barriers apply to the European single market and mutual trade. However, the Hungarian government retains certain powers in the case of foreign investment in strategic sectors.

According to cheeroutdoor.com, the distribution and sale of consumer goods in Hungary takes place in a similar way as in the Czech Republic. Hungary has an extensive network of retail stores, supermarkets and hypermarkets. Shopping and entertainment centers have a longer tradition here than in the Czech Republic. Compared to the Czech Republic, classic sales at markets are more widespread in Hungary, especially in the context of the sale of food and agricultural products. Deliveries to retail stores take place either through a network of wholesalers or some retail chains have their own distribution and buy goods for their stores directly from manufacturers and importers (e.g. CBA, Reál and Coop).

Deliveries to supermarkets and hypermarkets before Hungary’s entry into the EU were made centrally directly from manufacturers. Goods from abroad were purchased centrally, but through a company (wholesale or representative) based in HU. After HU’s entry into the EU, there is cooperation between chains in neighboring countries, e.g. the same chains in the Czech Republic and HU mutually exchange goods produced in both countries.

Deliveries to shopping entertainment centers are more like deliveries to retail stores. However, shops with branded goods prevail here. These stores receive goods either directly from the manufacturer or from a distributor authorized to carry the brand.

Deliveries of consumer goods from the Czech Republic can be made directly to the Hungarian partner (seller) or through a sales representative. Another option is to establish a subsidiary in Hungary. When searching for a Hungarian partner, you can also use the services of the Embassy of the Czech Republic in Budapest, PaulTrade’s foreign office in Budapest.

Another possibility for applying Czech goods on the market is to entrust their distribution to an existing company that already distributes other goods from the Czech Republic on the local market and has the capacity to expand the offer (the advantage is that in this case it is possible to request references). You can also look for a potential partner among the members of the Czech-Hungarian Business Club, which operates in Hungary.

As a result of the pandemic in Hungary, the demand for online sales of goods has grown considerably. Hungarian e-shops with the largest turnover include EMAG, EXTREM DIGITAL, MEDIAMARKT, ALZA, 220 Volt, IPON, TELEKOM, TESCO, AQUA and LIBRI BOOKLINE.

Czech goods also reach Hungary thanks to the pro-export actions of the Ministry of Foreign Affairs of the Czech Republic, the Ministry of Foreign Affairs of the Czech Republic, the PaulTrade agency, etc. The Czech Embassy in Budapest organizes meetings of Hungarian entities with Czech entities as part of economic diplomacy projects, organizes business missions and webinars for Czech entrepreneurs, establishes regional business relations etc.

There is also a PaulTrade foreign office in Budapest, which provides export consultancy, helps with the presentation of Czech products, etc.

The Client Center for Export provides services to Czech entrepreneurs regarding export and investment plans. The catalog of services is available here.

Regarding the limitation of foreign business activities in Hungary, the European Union legislation has been in force since 1.5.2004, and the country’s legislation must also comply with it.

After the accession of both countries to the EU, Czech-Hungarian trade became internal trade in the EU, and goods originating from the Czech Republic are freely traded in HU. In the case of commercial “imports” from the Czech Republic to HU, the movement of goods must be captured by documents for internal trade in the EU. Of course, this also applies to “exports” from HU to the Czech Republic. For internal EU trade statistics, it is necessary to fill in the so-called Intrastat document for CR-HU trade. Details of the Intrastat statistical system can be found on the websiteCentral Statistical Office.

After Hungary’s accession to the EU, quotas are valid for Hungary only for specific commodities such as agricultural products.

Availability of Hungarian decrees, laws and regulations (including translations): The HU Prime Minister’s Office compiles Magyar Közlöny (similar to our Gazette), in which all HU laws, regulations and measures are published. Another option for obtaining information about Hungarian laws is the service of Wolters Kluwer Kft., which offers the wording of applicable Hungarian legislation and government decisions. Some laws can be purchased in both German and English translations. (more information at https://shop.wolterskluwer.hu/ ).

Forms and conditions of operation on the market

There are two basic options for establishing a sales agency in Hungary:

  1. The foreign company will entrust the domestic economic organization of foreign trade, which will carry out these activities on the basis of the agency contract. No other approval is necessary to conclude this contract, provided that the conditions of Government Regulation 112/1990 (23.10.1990) are met by the Hungarian partner. Another condition is the registration of the Hungarian partner’s foreign business activity with the Hungarian National Bank (MNB).
  2. Direct representation, i.e. the establishment of an information and service office – HU Registry Court (Cégbíroság).

The mandatory participation of a lawyer is required when registering the mentioned forms of business entity. The usual form of commercial representation is an s.r.o. The prescribed minimum value of the basic capital of the new s.r.o. in this case is HUF 3 million. In the case of a closed joint-stock company (“részvénytársaság” or “rt.”) the share capital is HUF 5 million and in the case of a public joint-stock company, i.e. it is listed on the stock exchange (“közkereseti sársany” or “kkt.”) HUF 20 million.

A widespread form of business in Hungary are also limited partnerships (“betéti ságány” or “bt.”). Foreign companies like to set up their branches or representative offices here (prohibition of commercial activities) for the purpose of marketing, promotion and preparation of their investments in the Hungarian economy.

At present, HU is dominated by the form of direct commercial representation of Czech companies, which enables trading.

The contact institutions for establishing a business entity are:

  • Nemzeti Adó-és Vámhivatal/Tax and Financial Audit Office (DIČ)
  • Központi Statisztikai Hivatal/Central Statistical Office (statistical number)
  • Társadalombiztosítasi Igazgatóság/Social Security Directorate (reg. number)
  • Cégbíroság/Court of Registration (IČO)
  • Bank for entrepreneurs (bank account)
  • Chamber (of commerce and industry, agrarian economy) (reg. number)

Authorities (they are represented in all counties):

  • Központi Statisztikai Hivatal (Central Statistical Office) – www.ksh.hu
  • Nemzeti Egészségbiztosítasi Alapkezelő (National Health Insurance Fund Administrator) – www.neak.gov.hu
  • Nemzeti Adó-és Vámhivatal – (Tax and Finance Office) – www.nav.gov.hu
  • Budapesti Cégbíroság (Register Court for Budapest) – https://fovarositorvenyszek.birosag.hu/jarasbirosagok/fovarosi-torvenyszek-cegbirosaga

The Embassy of the Czech Republic in Budapest and the PaulTrade agency are connected with legal offices whose services can be used when setting up a company (see below – chapter 5.6).

Marketing and communication

Targeted promotion is inevitable on the Hungarian market. In the area of ​​full-screen TV and radio advertising, multinational companies are mainly represented, which lead a tough and costly battle for customers. This is typical especially in the case of consumer goods, where the situation is similar to that in the Czech Republic (advertisements for washing powders, hygiene products, yogurts, cat and dog food, etc.).

Companies engaged in market research in Hungary include, for example, Ipsos Média-, Reklám-, Piac-és Véleménykutató Zrt. and GFK Hungária Kft.

In addition to dailies with national coverage, producers from the Czech Republic should also focus on advertising in professional periodicals and at the same time on advertising on regional radio and TV stations. From the exhibitions, the importance of participating in specialized exhibitions with a special professional focus comes to the fore. The preparation of advertising materials and brochures in Hungarian is of fundamental importance, especially for consumer goods. Internet advertising is becoming more and more important.

Marketing in Hungary also works very well through social networks – mainly Facebook and Instagram.

Job placement websites – e.g. Prohuman, Profession, Trenkwalder, Adecco, Job.

The Association of Hungarian Communication Agencies – MAKSZ, the Hungarian Marketing Association – Magyar Marketing Szövetség, and the Hungarian Advertising Association – Magyar Reklámszövetség operate in Hungary.

Issues of intellectual property protection

The Embassy of the Czech Republic in Budapest is not aware of any cases of infringement of intellectual property rights in relation to Czech entities operating in Hungary. The state of intellectual property protection corresponds to the level in the EU and the Central European region.

On September 29, 2002, the Copyright Treaty created and signed in Geneva in December 1996 by the WIPO (World Intellectual Property Organization), promulgated in Hungary by Act XLIX, entered into force in Hungary. from 2004.

According to EU regulations, since May 2004, the Department for the Protection of Intellectual Property Rights has been operating at the Regional Headquarters of the Customs and Financial Administration for Central Hungary, which is also authorized to initiate proceedings in case of infringement of trademark rights.

In September 2013, the government adopted the so-called “National HU Strategy”, which focuses on the protection of intellectual property. There is a National Office of Intellectual Property ( Szellemi Tulajdon Nemzeti Hivatal ) (the website also has an English version).

Public procurement market

Public procurement is handled by the Public Procurement Office. The website is also available in English and German versions. The task of the office is to contribute to the development of public procurement policy, the development and dissemination of legitimate public procurement procedures taking into account the public interest, the interests of contracting authorities and bidders, and to facilitate the spending of public funds in a public and transparent manner.

Public procurement in Hungary is governed by the Public Procurement Act and Public Procurement Regulations No. CLXIII. from 2015. The current version of the Public Procurement Act is on the website of the National Legislature – https://njt.hu/jogszabaly/2015-143-00-00. The English version of the 2015 Act is in this document.

The full text of the contract tender is published in the online gazette Közbezerzzeci Értesítő (Public Procurement Bulletin). The text of the contract (in Hungarian) can be sent by the Embassy of the Czech Republic in Budapest to interested parties upon request. Public contracts are usually advertised in Hungarian. EU-level contracts are available in Czech on the following websites (in a very abbreviated version). This is the “Supplement to the Official Journal of the EU reserved for public procurement”.

Another website dealing with public procurement is Palyazat.gov.hu ​​(including an English version).

Payment terms, payment ethics and resolution of commercial disputes

Payment conditions are similar to those in the Czech Republic. Due to fluctuations in the bank exchange rate, it is common for companies to conclude contracts in EUR. The due date of invoices is usually extended to 60-90 days. We recommend checking the partner’s creditworthiness, for example, via the Opten database or via PaulTrade.

When concluding commercial agreements, the Hungarian side tries to enforce the principle of resolving potential disputes in the Hungarian court in the agreement.

The law, similarly to other EU countries, also allows the use of an instrument for out-of-court settlement of consumer disputes. The basic condition for its use is the existence of the possibility of using an out-of-court settlement in the contract between the two parties.

For example, the following legal or accounting offices deal with the topic of establishing a company, offices in HU:

  • Peterka& Partners Iroda (name of law firm, speaks Hungarian, English, German)
  • Visegrad Legal (name of legal office, they have ties to Czech lawyers – they speak Hungarian, English)
  • Dr. Finta Gábor (speaks Slovak and Hungarian)
  • Dr. Varga Bernadett (speaks Slovak)
  • Balázs & Kovátsists Ügyvédi Társulás (law firm name), (speaks Hungarian, English, German, Italian, French, Russian and Spanish)
  • Földes-Kővári-Zilai (name of law office), (speaks English, French and Russian)
  • Gordia (company provides tax and accounting consultancy – speaks Czech, Hungarian, English)
  • Freya Corporation (the company offers help with setting up a branch in Hungary – they speak, among other things, Czech and Hungarian)

Visas, fees, specific conditions for traveling to the territory

Citizens of the Czech Republic can travel to Hungary on the basis of a valid identity card or passport for a maximum of 3 months without any personal conditions or other formal requirements.

When traveling in a company car, it is recommended to carry a certified power of attorney confirming that the driver is authorized to travel abroad with this car.

The use of bank cards is similar to that in the Czech Republic.

For more information, see also the website of the Embassy of the Czech Republic in Budapest – in the Consular information section . During the pandemic, the rules for entering passenger transport are listed on the website of the Ministry of Foreign Affairs of the Czech Republic.

More information:

  • Hotels can be ordered, for example, via www.booking.com or via the Hungarian website www.szallas.hu.
  • Car rental companies can be found, for example, on www.avis.com or www.hertz.hu.
  • Interactive timetables of Hungarian railways – www.mav-start.hu
  • Budapest public transport website – www.bkv.hu
  • Website of intercity bus transport – www.volan.hu
  • Information about air connections: www.csa.cz, www.bud.hu/en

The crime rate is similar to that in the Czech Republic.

Employment of citizens from the Czech Republic

A Czech citizen who wants to work in Hungary does not need a work permit and the same conditions apply to him as when employing a Hungarian citizen. Upon arrival in Hungary, citizens of the Czech Republic do not have to register. He can stay on the territory of Hungary without additional permission for 3 months. After this deadline, he must apply for a “registration confirmation” (Regisztrációs Igazolás) according to the place of residence – more pages of the National Directorate of Foreigners Police, section “Residence in Hungary”. Registration of EU citizens is described in detail here.

Regarding the employment of Czech citizens in Hungary, there is detailed information under “Residence Permit for the Purpose of Employment”.

National Directorate of Foreign Police:
Budafoki út 60.,1117 Budapest XI.
Tel.: 00 36 1/463 9100, Call Center: +36 1 463 9292
Email: [email protected]
​​Web: www. bmbah.hu

At the relevant labor office according to the company’s headquarters, you must fill in a notification form with information about the Hungarian employer, employee, etc. and attach a photocopy of the identity card with an official translation into Hungarian.

When a Hungarian citizen is employed in a trade representation of a foreign entity in HU, the same regulations apply to the trade representation as to purely Hungarian employer organizations. The employer’s obligation, similar to the one in the Czech Republic, is to report the hiring of a new employee to the social and health insurance company.

The posted worker must apply for a tax identification number (adóidentifík jel) at the local tax office (NAV, tel. +36 1 250 9500) before starting work. The worker must then be registered with this office if his expected duration of posting exceeds 183 days.

Practical information related to living and working conditions in Hungary can be found on the website of the Labor Office.

Obligation to archive: In the field of social insurance in Hungary, the employer is obliged to save documents related to the payment of social insurance contributions and the granting of contributions for a period of five years.

The Labor Code adopted in 2012 applies, but it has been updated in the meantime. Current version of the Labor Codeis available in Hungarian.

You can find a guide to labor law and employment in HU on the Accace website.

Minimum wage:
The amount of the minimum wage as of 1/1/2022 is HUF 200,000 (approx. EUR 539 – calculated at the exchange rate as of 4/22/2022). and in 2021 it amounted to HUF 167,400 (approx. EUR 451 – calculated at the Vudeviz exchange rate). The amount of the guaranteed minimum wage in 2022 is HUF 260,000 (approx. EUR 700 – calculated at the exchange rate) and in 2021 it was HUF 219,000 (approx. EUR 590 – calculated at the exchange rate). The calculation of gross and net wages in English is available, for example, on the website of the Accace company.

There is Act No. XCIII of 1996, which deals with the promulgation of the Agreement on the Prevention of Double Taxation in the Area of ​​Income and Property Taxes between the Czech Republic and the Republic of Hungary dated January 14, 1993, in Prague.

Social and health care:
Citizens of the Czech Republic, i.e. tourists, visitors and the like, must present a European health insurance card when seeking emergency medical treatment in a medical facility. It is necessary to take into account that patients in Hungary pay for medicines, dental care and optical services. For long-term, e.g. work stays in Hungary, it is recommended to obtain a local health insurance card directly in Hungary ((TAJ card/number = social security number) issued on the basis of a confirmation issued by the relevant Czech authority.

National Health Insurance Fund in HU (NEAK), Department of International Relations and Legal Relations, tel.: +36-1-298-2568, web : www.neak.gov.hu.

More information on the website of the Labor Office.

Other important information:
A Czech citizen does not need a permit to work in Hungary, there is only a reporting obligation. The employer is obliged to make the notification at the Work Center (Munkaügyi Központ), which is competent according to the place of work. Content of the announcement: number of employees, their age, their schooling, nationality, FEOR number of the work area, form of legal employment relationship, in the case of a family member, indication of his legal status, information on whether the legal employment relationship was created or ended. The work center confirms the notification and records the notified data. Failure to report is subject to penalties.

Fairs and events

The most important fairs are mainly concentrated in Budapest. In addition, there are also some other fairs in other cities, of a more regional nature. The events are continuously updated, so you should always find the most up-to-date status of the website. Due to the pandemic, there may be a change in the program.

Presentation at foreign trade fairs under the banner of PaulTrade is a possible form of personal or catalog presentation of Czech companies at foreign trade fairs within the common stand of the PaulTrade agency, including assistance services (organization of networking events, creation of joint promotional material, etc.) and overall provision of exposure.

List of major trade fair companies and fairs and exhibitions organized by them in 2022:

HUNGEXPO Vásár és Reklám Zrt. (the largest trade fair company). The current program in English can be downloaded here.

  • AGROMASHEXPO –, international exhibition of agriculture and agricultural machinery, 26-29. 1. 2022
  • FEHOVA – international exhibition of weapons, fishing and hunting, 17-20. 2. 2022
  • BUDAPEST BOAT SHOW – international boat exhibition, 3-6. 3. 2022
  • UTAZÁS – international tourism exhibition, 3-6. 3. 2022
  • SIRHA BUDAPEST – international food exhibition, 22-24. 5. 20022
  • CONSTRUMA – international professional exhibition of the construction industry and technical equipment, 6-10. 4. 2022
  • OTTHONDESIGN – international exhibition of apartment equipment, 6-10. 4. 2022
  • MACH-TECH – international fair of engineering and welding technology, 10-13. 5. 2022
  • IPAR NAPJAI – Days of industry, 10-13. 5. 2022
  • AUTOMOTIVE HUNGARY – international professional exhibition of automotive industry suppliers, 10-13. 5. 2022
  • OTTHONDESIGN ŐSZ – autumn international exhibition of apartment furnishings, 7-9. 10. 2022

Some exhibitions and fairs planned for 2023:

  • AGROMASHEXPO – international exhibition of agriculture and agricultural machinery, 25-28. 1. 2023
  • FEHOVA – international exhibition of weapons, fishing and hunting, 9-12. 2. 2023
  • BUDAPEST BOAT SHOW – international boat exhibition, 23-26. 2. 2023
  • KARAVÁN SZALON – international exhibition of motorhomes, 23-26. 2. 2022
  • UTAZÁS – international tourism exhibition, 23-26. 2. 2023
  • HUNGAROTHERM – international trade fair for heating, ventilation, air conditioning and sanitation, 29 March – 2 April 2023

In addition to the above-mentioned fairs, a number of other regional and local exhibitions are held in Hungary, focused, for example, on the field of tourism, agriculture, etc. These are, for example, the website of V-Trade Kistállík Kft. (city of Debrecen, eastern Hungary).

Hungary Market Entry