Parliament passes law easing rules on sole proprietorship

Parliament passed an act on Monday according to which it will be possible to start a business as a self-employed individual electronically and to register such businesses with the option of whether the resulting individual company should have limited or unlimited liability.

MP’s passed the act with 198 yes-votes, 160 no-votes and one abstention.

Currently, a licence is needed to start a sole proprietorship, but from next year it will only be necessary to announce the foundation of such a business entity to start one, which will have to be done electronically.

Self-employed individuals have unlimited liability.

From next year, it will be possible for self-employed individuals to apply for registration with the company court, and to convert their business into a so-called individual company. This will require a deed of foundation to be endorsed by a solicitor or notary public. Individual companies will not be legal entities, but their founders may choose to have limited or unlimited liability.

Individual companies will be registered by the court within 30 days. Under HUF 200,000, the registered capital may only be cash, which must be paid in advance. Above HUF 200,000, the registered capital may include in-kind contributions as well.

Individual companies may be converted into companies.