For Israeli founders · 100% remote
Open a Hungarian company from Israel — your EU gateway
Israeli tech and e-commerce founders use a Hungarian Kft as their EU operating company: an EU VAT number, single-market access and a flat 9% corporate tax — the lowest in the EU. Set up entirely from Israel, with no need to travel.
- A real EU/EEA company with an EU VAT number
- 9% corporate tax — the lowest in the EU
- Israeli (non-EU) owner & director allowed
- Sign remotely by power of attorney — lawyer coordinated for you
What's included
- Done-for-you Kft incorporation, fully remote (PoA)
- Coordination of the mandatory Hungarian lawyer
- Registered seat (székhely) address in Hungary
- EU VAT registration for EU sales
- Bank account introduction
- Monthly accounting in English
● The Israeli angle
Why Israeli founders pick Hungary as their EU base
An EU operating company
Run EU sales through a true EU entity with an EU VAT number — ideal for tech, SaaS and e-commerce serving European customers and marketplaces.
9% corporate tax
Hungary's flat 9% corporate tax is the lowest in the EU. Note Hungary uses the forint (HUF), not the euro, and VAT (ÁFA) is 27%.
Fully remote from Israel
Sign by power of attorney; we coordinate the mandatory Hungarian lawyer and handle filing, banking and accounting in English — no flight to Budapest.
How it works from Israel
From Tel Aviv (or anywhere in Israel) to a registered Kft
Hungary has no DIY incorporation route — a lawyer (ügyvéd) must countersign and electronically file the documents. We coordinate that lawyer and guide any notarisation/apostille of your PoA in Israel.
1. Consultation
We agree on name, activity, managing director and capital, and confirm the Kft is right for your EU plans.
2. Sign by power of attorney
We prepare the articles; a Hungarian lawyer countersigns. You sign remotely by PoA (notarised/apostilled in Israel where required).
3. Filing & EU VAT
The lawyer files electronically (registration usually 1–5 business days). We arrange EU VAT, bank and accounting in English.
The IL–HU double-tax treaty
How the Israel–Hungary tax treaty applies
Israel and Hungary have had a double-taxation treaty since 1991 (in force from the end of 1992). It caps the source-state tax on cross-border income, and for Hungary those caps sit on top of a domestic rule that already exempts payments to a foreign company from withholding:
| Payment out of Hungary | Treaty cap (IL↔HU) | Hungarian domestic rate |
|---|---|---|
| Dividends | 5% (qualifying holding) · 15% other | 0% to a company · 15% to an individual |
| Interest | 0% | 0% to a company · 15% to an individual |
| Royalties | 0% | 0% to a company · 15% to an individual |
So an Israeli holding company can receive dividends from its Hungarian Kft with 0% Hungarian withholding; interest and royalties are also treaty-free. The treaty's real value for Israelis is on the Israeli side — it gives credit for Hungarian tax and a residency tie-breaker — but it does not switch off Israel's own anti-deferral rules.
The Israeli-resident reality
Israeli CFC rules and banking — plan for both
CFC (חברה נשלטת זרה). Under s.75B of the Income Tax Ordinance, a foreign company that is majority-controlled by Israeli residents, earns mainly passive income (dividends, interest, royalties, capital gains) and is taxed abroad at a low effective rate, can have that passive income treated as a deemed dividend to its Israeli shareholders — taxed in Israel even if nothing is distributed. Hungary's 9% corporate rate is low enough to bring a passive-income Kft into scope. A related rule, the Foreign Professional Company regime, can reclassify a personal-services company's profits. The practical answer is the same one good structuring always gives: run a genuine active business in Hungary — real customers, staff or operations — so the income is active trading profit, not passive yield. See the full 9% tax breakdown.
Banking. Israeli founders are well used to enhanced KYC. Hungarian banks and EU EMIs will onboard an Israeli-owned Kft remotely, but expect questions on source of funds, group structure and the nature of the business; a clean, documented file moves it along. We prepare that pack and make the introduction.
- Favour active trade over passive income to stay outside s.75B CFC
- Keep the treaty credit and tie-breaker in mind — confirm with an Israeli adviser
- Prepare a documented KYC/source-of-funds file for smooth bank onboarding
An Israeli use case
An Israeli SaaS company that sells into Europe
An Israeli software company wins more and more EU customers who want an EU-VAT invoice and an EU counterparty. It sets up a Hungarian Kft as its EU operating entity, with a small local team handling EU sales and support.
On €350,000 of EU trading profit, the Kft pays corporate tax at 9% — about €31,500 — plus local business tax (HIPA) up to 2%. Because the activity is genuine active trade, it is the Kft's own profit, not passive income deemed back to Israel under CFC. When profit is distributed to an Israeli corporate parent, it leaves Hungary at 0% withholding; Israel then taxes under its own rules with credit for Hungarian tax. The EU-insider status — an EU VAT number and an EU-resident supplier — is often the decisive commercial gain.
Next steps: larger Israeli groups sometimes add a Hungarian holding company above their subsidiaries. Ready to start? See how we form the company.
Opening a Hungarian company from Israel — FAQ
Can I set up the Hungarian company from Israel without travelling?
Yes. The whole process is remote — you do not need to fly to Hungary. Hungarian law requires a lawyer (ügyvéd) to countersign and electronically file the incorporation, and we coordinate that lawyer for you. You sign by power of attorney (PoA), with documents typically notarised/apostilled in Israel where the lawyer requires it. Registration usually takes 1–5 business days.
Can an Israeli individual or company own the Hungarian Kft?
Yes. An Israeli individual or company (non-EU) can be the 100% owner and managing director of a Hungarian Kft. There is no requirement to be an EU citizen or resident. Many Israeli tech, e-commerce and digital founders use a Hungarian entity purely as their EU operating company.
How does EU VAT work for an Israeli-owned Hungarian company?
Your Hungarian Kft is a real EU company and receives a Hungarian VAT number (ÁFA, standard rate 27%); it can also obtain an EU VAT ID for intra-Community trade. That lets you invoice EU customers as an EU supplier, use EU B2B reverse-charge rules and sell on EU marketplaces without third-country VAT friction. We register and run your VAT reporting from day one.
Why Hungary specifically as an EU gateway?
Hungary's flat 9% corporate tax (TAO) is the lowest in the EU, it is centrally located with strong logistics, and the Kft is a simple, well-understood limited-liability vehicle. The minimum share capital is 3 000 000 Ft (approx. €7,595), payable over time or in kind. This is general information, not tax advice — confirm your cross-border position with an Israeli adviser.
What are the Israel–Hungary treaty withholding rates, and do Israeli CFC rules apply?
Under the Israel–Hungary treaty (signed 1991, in force since the end of 1992), dividends are capped at 5% for a qualifying corporate holding and 15% otherwise, while interest and royalties are 0%. Hungary also charges no domestic withholding on payments to a foreign company. Separately, Israel's Controlled Foreign Company (CFC) rules (Income Tax Ordinance s.75B) can attribute a Hungarian company's passive income to its Israeli shareholders where it is majority Israeli-owned and lightly taxed — genuine active business is the way to stay outside that. Sources: Israel–Hungary treaty summary; UN Treaty Series No. 29610.
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