The Breaking Point
Marco (fictional name) is a digital marketing consultant from Milan. In 2023, his LLC generated €420,000 in revenue with net profits of approximately €200,000. At the end of the year, after paying corporate income tax (IRES), regional production tax (IRAP), and dividend tax, he was left with less than €120,000 in his pocket. Over €80,000 had gone to the tax authorities.
“I worked 60 hours a week to give 40% of what I earned to the state,” he recounts. “It’s not that I didn’t want to pay taxes. I wanted to pay my fair share. And I wanted to understand if there was a legal way to do it.”
The Discovery: Hungary Is Not a Tax Haven
Marco had heard about offshore structures, companies in Dubai or the Channel Islands. He wasn’t interested: he wanted something transparent, within the EU, that wouldn't put him in conflict with the Italian tax agency.
A colleague told him about the Hungarian KFT. His initial reaction was skepticism: “I thought it was one of those things that look good on paper but then cause problems.” Nevertheless, he decided to investigate further and contacted the Start Ungheria team for a free consultation.
The Analysis: The Numbers in His Case
The Start Ungheria team analyzed Marco's situation and prepared a comparative simulation:
| Item | Italian SRL (2023) | Hungarian KFT (projection) |
|---|---|---|
| Revenue | €420,000 | €420,000 |
| Deductible costs | €220,000 | €220,000 |
| Net profit | €200,000 | €200,000 |
| Corporate tax | €55,800 (IRES 24% + IRAP 3.9%) | €18,000 (flat tax 9%) |
| Profit after tax | €144,200 | €182,000 |
| Dividend taxation | €37,492 (26%) | €27,300 (15%) |
| Total taxes | €93,292 | €45,300 |
| Net in pocket | €106,708 | €154,700 |
Estimated annual savings: €47,992
The Decision and the Process
The numbers were clear. Marco decided to proceed. Here's how it went:
- Week 1: Signed mandate with Start Ungheria, gathered documentation (passport, tax code, Italian SRL articles of association)
- Week 2: KFT established in Budapest. Marco didn't leave Milan: everything happened remotely via notarized power of attorney.
- Week 3: Hungarian corporate bank account opened (OTP Bank). Hungarian VAT number obtained.
- Month 2: Gradual transfer of client contracts from the Italian SRL to the Hungarian KFT. Clients simply received new bank details and a new invoice header from the KFT.
- Month 3: The KFT was fully operational. The Italian SRL was kept dormant to manage any remaining contracts.
The Results: First Year with the KFT
At the end of the first year of operations with the Hungarian KFT, Marco’s numbers were as follows:
- KFT Revenue: €440,000 (growth compared to the previous year)
- Net profit: €215,000
- Flat tax 9%: €19,350
- Dividends taxed at 15%: €29,348
- Total taxes: €48,698
- Savings compared to the previous year: €44,594
“In the first year, I saved almost €45,000. I used that money to hire two employees and launch a new service. The KFT didn't just save me taxes: it gave me the capital to grow.”
Initial Concerns: How They Were Resolved
Marco had some concerns before proceeding. Here they are and how they were addressed:
- “Will my Italian clients accept Hungarian invoices?” — Yes, without problems. An EU invoice is an EU invoice. No client raised objections.
- “Will the Italian tax agency audit me?” — The structure was built with real economic substance: operational headquarters in Budapest, contracts in the KFT’s name, Hungarian bank account. No tax problems in the subsequent 2 years.
- “Do I have to move to Hungary?” — No. Marco still lives in Milan. The KFT is his operating company; he is the partner and director. There’s no need to transfer personal residency.
- “How much does it cost to manage it?” — Approximately €6,000/year for domiciliation, accounting, and compliance. Ample compensated by the tax savings.
Marco's Message
“If you're reading this and paying more than €30,000 a year in taxes, do the math. I'm not saying the KFT is right for everyone. But for me, it changed everything. I have more money, more freedom, and I sleep better at night knowing my structure is compliant.”
Your Free Simulation
Every situation is different. Marco's savings are not necessarily your savings. But if you generate more than €80,000 annually and pay more than €20,000 in taxes, it’s worth finding out the numbers for your specific case.
Contact the Start Ungheria team for a free and personalized simulation. In 30 minutes, we’ll show you how much you could save, legally, with a Hungarian KFT.
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