Below, we compare the characteristics of a subsidiary or branch in tabular form for simplicity and transparency, so that economic actors can make their decision on establishment more quickly by weighing the pros and cons.
| Attribute | Subsidiary | Branch |
| 1. Has independent legal personality | Yes | Yes |
| 2. Establishment required | Founding members’ articles of association | Founding member(s) establishment resolution |
| 3. Registration requirement in the Hungarian company register | Yes | Yes |
| 4. Can legally conduct economic activities in the pre-incorporation phase | Yes | Yes |
| 5. Is representation possible? | Yes | No |
| 6. Title of representative | Managing director, company director, senior employee | Branch manager |
| 7. Form of representative employment | Employment relationship (work contract) or a mandate agreement with the Hungarian Ltd. | Employment relationship (work contract), long-term mandate agreement, secondment |
| 8. Conflict of interest with a position held in a foreign company | None | None |
| 9. Company signature method | Independently or jointly | Independently or jointly |
| 10. Minimum capital | At least 3,000,000 HUF (Ltd.) | No legal minimum, but the foreign founder must provide continuous assets to ensure smooth operation |
| 11. Liability of the foreign company | In principle, the foreign parent company is not liable for the subsidiary’s debts. Exceptionally, secondary liability may be established under the conditions set forth in the law (e.g., inadequate bookkeeping, abuse of majority control, etc.) | The foreign parent company is unlimitedly and jointly liable for the branch. |
| 12. Employer rights | In the case of an Ltd., these are exercised by the managing director or an employee specifically authorized for this purpose | The parent company exercises these through the branch |
| 13. Requirement for double-entry bookkeeping | Yes | Yes |
| 14. Requirement for annual financial report | Independently, to be published within 150 days after the balance sheet date | Independently, to be published within 150 days after the balance sheet date |
| 15. Requirement for an auditor | If double-entry bookkeeping is applied, more than 50 employees are employed, and net revenue exceeds 100 million HUF | If double-entry bookkeeping is applied, more than 50 employees are employed, and net revenue exceeds 100 million HUF |
| 16. Due date for audit | If the average number of employees is 200 per year | If the average number of employees is 200 per year |
| 17. Can the fiscal year differ from the calendar year? | Yes | Yes |
| 18. Can it change its legal form through transformation? | Yes, into another business form | Generally not allowed |
| 19. Has independent tax liability | Yes | Yes |
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Dr. Katona Géza, LL.M. ügyvéd (Rechtsanwalt / attorney at law)
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Katona és Társai Ügyvédi Társulás
(Katona & Partner Rechtsanwaltssozietät / Attorneys’ Association)
H-106 Budapest, Tündérfürt utca 4.
Tel.: +36 1 225 25 30
Mobil: + 36 70 344 0388
Fax: +36 1 700 27 57