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Investing in Central Europe 2011

Investing in Central Europe 2011

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The key drivers for investors making cross-border direct investments are usually either to gain access to new and growing
markets, or to reduce costs. The countries of Central Europe score highly on both. The countries of the CE region
comprised in this publication include Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia.
The key drivers for investors making cross-border direct investments are usually either to gain access to new and growing
markets, or to reduce costs. The countries of Central Europe score highly on both. The countries of the CE region
comprised in this publication include Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia.

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Published by: Deloitte Central Europe on Feb 02, 2011
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01/11/2013

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Since January 1st 2000 all foreign companies functioning

in Hungary must have established either a locally registered

company or a branch offce (foktelep) under Act CXXXII of 1997

on Branch Establishments.

Foreign frms have been able to establish a branch offce in any

sector since January 1st 1998, under Act CXXXII. A branch offce

in Hungary qualifes as an entity without legal personality; there-

fore the foreign frm bears responsibility under Hungarian law.

(Kkts and Bts are also without legal personality under Hungarian

law.)

The fnancial-sector modifcations to Act CXII of 1996 on Credit

Institutions and to Act CXI of 1996 on Securities permit branches.

Under the amendments, capital requirements for branches in

the fnancial sector are identical to those for domestically regis-

tered companies: Ft 2bn for a bank, Ft 1bn for an investment

company and Ft 100m for a securities-trading company. A branch

may engage only in activities that comply with the laws of both

Hungary and the country of the parent company.

Legislation in all areas (for instance, tax law) has been drafted

with the expressed intent to create a level playing feld for branch

offces - that is, neither giving them advantages over domestically

registered companies nor subjecting them to disadvantages.

The procedure for registering a branch offce is very similar to

that of a Kft, with some differences. A branch offce may be

founded only if an agreement has been concluded between

Hungary and the country where the seat of the foreign frm is

located. Reporting to the Court of Registration is the responsi-

bility of the person(s) authorised to sign on behalf of the branch

offce.

4. Labour and Wages

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