Doing Business in Hungary – Part four – Let’s found a Commercial Representation Office
A commercial representation office (CR office) is a corporate form without legal entity founded by a foreign enterprise, which does not engage in business activities, including any activity whose purpose or effect is an income or capital gain.
CR office’s capital
There is no minimum required capital; however, based on the practice of the company court HUF 400-600,000 is the minimum expected amount.
CR office’s official authorization
Prior to commencing its activities, the commercial representation must obtain a license for any activities or products subject to official authorization, like all other corporate forms.
Main objective of the CR office
A commercial representative office can, on behalf of the foreign parent company
(i) mediate contracts in the name of the foreign parent company;
(ii) participate in the preparation of contracts;
(iii) enter into contracts in the name and on behalf of the foreign parent company in connection with the operation of the representation;
(iv) perform information, advertising and promotional activities.
Representation of the CR office
The CR office can only be represented by employees and persons seconded to the CR office or persons who have a Hungarian domicile and a permanent service agreement to work at the commercial representative office (this rule does not apply to commercial representative offices established by foreign companies registered in the European Economic Area).
Dissolution of the CR office
A commercial representation office is considered dissolved upon removal from the company court registry. Since the commercial representation office entered into contracts in the name and on behalf of the foreign parent company, the dissolution has no influence on these contracts.