Company formation in Central Europe: Hungary's 9% is the wrong reason

Every few months someone with a freshly sold company and a non-EU passport asks the same question. Czechia, Slovakia, Hungary or Poland? The agent's answer is always Hungary, because 9% fits on a landing page. My answer is usually Czechia, because a company is not a tax rate. It is also a bank account, a VAT number, a residence permit and a reputation, and the four Visegrád countries score very differently on those.

Here is the short version. Hungary has the lowest headline corporate rate in the EU and a residence route that leads nowhere permanent. Czechia has an unremarkable rate and the most usable path for a founder who wants to live there. Poland has the biggest market and a clever deferred-tax option with strings attached. Slovakia looks cheap and spent 2025 making itself hard to enter.

The four vehicles side by side

Each is a limited liability company: the s.r.o. in Czechia and Slovakia, the Kft. in Hungary, the sp. z o.o. in Poland. All four can be wholly owned by a non-resident foreigner. The differences begin immediately after that.

Hungary: the 9% is real, so read the rest of the page

Hungary's corporate tax has been 9% since 2017, the lowest headline rate in the European Union. No withholding tax applies to dividends paid to another company, resident or foreign, and a 10% small-business tax (KIVA) exists for companies that qualify.

The 9% is not the whole tax. Municipalities levy a local business tax of up to 2%, charged on a turnover-based figure rather than on profit. A profit-minimum rule taxes 2% of adjusted revenue when declared profit falls below that line. And VAT is 27%, the highest standard rate in the EU.

The residence route is a cul-de-sac. Under the immigration law in force since 2024, the chief executive of a Hungarian company can apply for a residence permit for guest self-employment. It is issued for up to a year and extendable, but only to three years in total. The official factsheet says holders may not be granted a national residence card, the permanent status, and cannot switch to an employment permit or the Hungarian Card while holding it. The founder who moves to Budapest for the 9% is, three years later, exactly where he started. The route for people who intend to stay is the guest investor programme, priced accordingly.

One more for the Americans. The US–Hungary tax treaty ceased to apply to withholding from the start of 2024; if anyone on the cap table files a US return, settle that before the notary, not after.

My view: Hungary is a good place to put a company and a poor place to put yourself. The full picture is in our Hungary tax profile.

Czechia: dull, pricier, and the one that works

Czechia charges 21%, up from 19% under the 2024 consolidation package. Dividends to non-residents carry 15% withholding, rising to 35% for recipients in jurisdictions with neither a treaty nor an information-exchange agreement. VAT is 21%.

What Czechia gets right is everything around the rate. The s.r.o. can be formed with a nominal share capital, a notary can register it directly in the commercial register, and the residence route is boringly reliable. A third-country national who will sit as the statutory body of a Czech company applies first for a long-term visa for the purpose of business, valid for up to a year, then for a long-term residence permit for doing business, issued for up to two years at a time and renewable. The Interior Ministry's page states a 60-day processing period from a complete file, and time on the long-term residence permit counts towards the five years needed for permanent residence. Nothing here is fast; everything is predictable.

Where Czechia bites is VAT registration: a new, foreign-owned company with no Czech customers yet attracts real scrutiny. Banks behave the same way. A resident director with a lease opens an account; a non-resident owner with a mailbox does not.

Details in Czech business residence and Czech taxes.

Slovakia: cheap on paper, and 2025 was the year it closed the door

On paper, Slovakia is the value pick. The corporate rate is tiered by revenue: 10% for the smallest companies, 21% for most, 24% for the largest. Dividends to individuals are taxed at 7%, a rate that went from 7% to 10% and back to 7% inside three years.

Then read the fine print. A minimum corporate tax, the "tax licence", returned in 2024: you pay it in a loss year too. In April 2025 a financial transaction tax landed on companies: 0.4% on outgoing bank transfers, capped per transaction, and 0.8% on cash withdrawals. Sole traders were released from it in 2026, and the government has said it wants it abolished from 2027; companies are still paying. Standard VAT rose to 23% in 2025.

The bigger problem is the door. Since 1 July 2025, applications for temporary residence for the purpose of business are accepted only at Slovak embassies abroad, with a mandatory business plan reviewed by the Ministry of Economy and an annual quota that the government sets by regulation. A quota is not a queue; it is a coin toss.

My view: form a Slovak s.r.o. if your customers are Slovak. Do not form one as a relocation strategy. See Slovak business residence and Slovak taxes.

Poland: the grown-up market with one genuinely clever option

Poland is the largest economy of the four by a wide margin, with the paperwork to match. Corporate tax is 19%, or 9% for small taxpayers and first-year start-ups, though not on capital gains. Dividends carry 19% withholding, treaty and EU exemptions aside. VAT is 23%, and the tax office verifies you exist before issuing the number.

The interesting instrument is the "Estonian CIT", a lump-sum regime under which the company pays nothing until it distributes profit, then 10% for small taxpayers or 20% for everyone else, with a matching credit against the shareholder's dividend tax. The government's own guidance puts the combined burden at roughly 20% and 25% respectively. The strings: shareholders must be natural persons only; no shareholdings in other entities; a minimum-employment condition, softened for start-ups; passive income below half of revenue. It is a reinvestment regime for operating businesses, not a holding-company toy.

Residence follows the same logic. A board member or shareholder of a sp. z o.o. can obtain a temporary residence permit for business activity for up to three years, but the company must pass an income test pegged to twelve months of the average regional wage, or employ two full-time workers who are Polish citizens or privileged foreigners. Poland wants businesses, not brass plates. The Poland Business Harbour fast track has been suspended since January 2024 and the programme page still shows it as suspended, with no new visas being issued. Anyone still advertising it is advertising history.

See Polish business residence and Polish taxes.

Verdict: who should incorporate where

Pick Czechia if you are a non-EU founder who intends to live in the company's country. You pay a mid-table 21% for the only route of the four that is both open and leads somewhere permanent.

Pick Hungary if the company is the point and you are not. A 9% company with a real office and corporate shareholders is efficient and legal. Just accept 27% VAT, a turnover-based local tax, no US treaty, and a residence permit that expires on you after three years.

Pick Poland if the business is Poland-sized and you will reinvest rather than distribute. Estonian CIT rewards exactly that, and the residence permit rewards real hiring.

Skip Slovakia in 2026 unless your customers live there. A transaction tax on payments, a reinstated minimum tax and a quota-capped, embassy-only residence process are three reasons too many.

The general rule is the one agents hate: the cheapest headline rate in Central Europe belongs to the country that makes it hardest to move in, and the most usable residence route belongs to the country with the least exciting rate. Choose the company for the life you intend to live, not for the number on the landing page.