Szia! If you’re a Hungarian business owner operating in the USA, you may already be familiar with the strict compliance and legal requirements that come with running a business in Hungary. However, navigating the reporting requirements for beneficial ownership in a foreign country like the USA can be a whole new challenge. From understanding the differences in tax laws to ensuring your business is in compliance with both Hungarian and American regulations, it’s important to stay informed and up-to-date on the latest requirements to avoid any potential legal issues. In this blog, we’ll explore the key compliance and reporting requirements you need to know as a Hungarian business owner operating in the USA, helping you navigate the complex world of international business with confidence. Hajrá!

Registration Requirements

The United States consists of 50 states and 5 territories, each with its own set of business regulations. To operate legally, businesses must adhere to both state-specific rules and federal laws.

State-Level Registration:

When establishing a business presence in the United States, businesses from Hungary must complete state-level registration in any state where significant business activities occur. This requirement typically applies if your company:

• Has a physical presence in the state
• Frequently meets with clients in the state
• Derives a significant portion of revenue from the state
• Has employees working in the state

Incorporating your Hungarian Company in the US

Even if none of the specific criteria apply, a Hungarian company must still choose a home state for registration when conducting business in the US. This involves forming a U.S. entity, such as a corporation, LLC, or other business structure, in that state. This registration ensures that the company is officially recognized and compliant with US regulations, regardless of its level of business activity in any individual state.

The newly formed U.S. entity will operate as a subsidiary of the foreign company. This means that while the U.S. entity is legally independent, it remains under the ownership and control of the parent company based in Hungary. This structure allows the company to conduct business in the US while maintaining its international headquarters.

We recommend using Northwest Registered Agent if your foreign company needs to incorporate. They offer expert guidance and can serve as a reliable registered agent for your business, ensuring compliance and smooth operations.

Federal Requirements

In addition to state requirements, Hungarian companies must also comply with federal regulations:

• Federal Tax ID: Obtain an Employer Identification Number (EIN) from the IRS. This number is essential for tax reporting and opening U.S. bank accounts.
• Industry Regulations: Companies may need to follow specific federal regulations depending on the industry. For example:
• Import/Export Laws: If the company is involved in importing or exporting goods, it must meet U.S. customs regulations. This includes adhering to rules for tariffs, duties, and necessary documentation.

Beneficial Ownership Information Reporting Requirements

For Hungarian businesses conducting operations in the U.S., adhering to Beneficial Ownership Information Reporting (BOIR) requirements is crucial. The Corporate Transparency Act mandates that companies disclose the individuals who own or control them. This applies to most entities, including those that are incorporated or registered in any U.S. state. The goal is to enhance transparency and combat illicit activities such as money laundering and terrorism financing.

A beneficial owner is an individual who controls the company or owns 25% or more of its shares, either directly or indirectly. For compliance with BOIR requirements, businesses must report information about these individuals, including their names, addresses, and identification details. Failure to file this report can result in significant penalties and legal consequences. Therefore, companies from Hungary need to ensure they meet these reporting obligations promptly and accurately.

For your convenience, you can file your Beneficial Ownership Information Report directly on our website. Click here to complete the process in just a few minutes and ensure your business complies with U.S. regulations.

Additional Considerations for Hungarian Businesses:

Tax Treaties

As a Hungarian business operating in the United States, it’s crucial to understand that there is no tax treaty between Hungary and the USA. This lack of agreement means that your company may face double taxation on income earned in the United States. You’ll likely be required to pay taxes on your US-sourced income to both the US government and the Hungarian authorities. Without a tax treaty in place, there are no provisions for tax credits or exemptions to alleviate this burden, potentially impacting your company’s profitability and international competitiveness.

Trade Considerations

When conducting business with the USA, Hungarian companies should be aware of the Trade and Investment Framework Agreement (TIFA) between the two countries, which aims to strengthen economic ties and promote trade. However, there are no specific bilateral trade agreements in place. As a member of the European Union, Hungary benefits from the EU-US trade relationship. It’s crucial for Hungarian businesses to familiarize themselves with US import regulations, customs procedures, and any industry-specific requirements that may apply to their products or services. Additionally, they should stay informed about potential changes in trade policies, tariffs, and sanctions that could affect their operations. Consulting with trade experts or legal professionals specializing in international business can help ensure compliance with all relevant regulations and maximize opportunities in the US market.

Your Path to Compliance: Key Takeaways for Hungarian Businesses in the U.S.

Operating a Hungarian business within the USA requires careful attention to legal obligations, from establishing your home state to incorporating and filing a beneficial ownership report. Meeting these requirements is essential for ensuring compliance and securing your business’s success in the American market. By understanding and adhering to these steps, you can confidently navigate the complexities of doing business in the U.S. and focus on growing your enterprise.

Ready to get started? Click here to file your BOIR in just a few short minutes. We make the process easy, fast, and secure so you can focus on what matters—your business.