HOW CAN YOU USE REAL ESTATE AS COMPANY SEAT IN HUNGARY

22 March 2024

In Hungary the companies must have a company seat. There are several ways to use real estate as a company seat, however it is important to note that the authority regularly checks the legal basis of the use of the company’s seat. In this article, we present 3 ways to use real estate as company seat.

According to the Hungarian Companies Act[i], a company's seat, business premises and branch office may be real estate owned by the company or a real estate which the company is entitled to use, including the use of a seat provided by a seat service provider.

1. Ownership

If you own property, the simplest and safest solution is to use it as the company’s seat.

There are two technical solutions for having an own real estate as the company’s seat:

a. The company is the owner

The company may purchase a real estate right after the shareholders create the company by signing the documents. If the company purchases the real estate, all the papers of the real estate transaction have to be signed by the managing director.

b. One or more shareholders are the owners

Buying real estate by the shareholders can also be a good solution for some companies, if the shareholders have the financial background for that. Doing so the company will need a legal ground for using the real estate. This can be either courtesy use or lease.

In case of courtesy use, there is no fee in exchange of the use, so the company uses the real estate for “free” or in exchange for the payment of public utility costs.

Leasing the real estate to your own company may be useful, because you will be entitled to a regular amount of money even if the company is not able to pay dividends.

2. Lease

However, it may not always possible to buy a real estate. It is also possible to lease the place that company wish to use. You have two options here, too:

 - The company is the lessee

The same can be done as in the case of the real estate purchase. The managing director can sign the lease contract right after signing the company establishing documents.

However, it may be a little bit difficult at the beginning to rent a real estate from a stranger, since until the company is not officially registered, lessors are sceptic when it comes to conclude a contract with a company being under registration process. Signing a lease contract may be more successful if the lessor is one of the shareholders or an acquaintance you can trust.

 - The shareholder is the lessee

If it is really important for you to ensure a place for your company, and you can’t wait until the company registration procedure ends, it is a good idea that the shareholder(s) sign a lease contract, and by putting a “transfer clause” into the lease, they agree with the lessor to transfer the lease agreement to the company after it is established.

During this temporary solution the company may use the place in the frame of courtesy use with the permission of the shareholder and the lessor, and once the company registration is made, the lease can be transferred by a declaration of the managing director.

3. Seat Service

Seat service may also be a good solution. There are lots of companies providing seat services for start-up businesses in Hungary.

In the meantime, lawyers are banned from this kind of activity, so even tough law firms can be the service agent of the foreign company, and foreign shareholders and managing directors, the law firm’s office cannot serve as the seat of the company.