A few years ago Hungary and its capital Budapest wouldn’t exactly have tripped off the tongue of any global entrepreneurs looking to make their mark on the international startup scene. But the business world is a rapid and fickle thing, and where previously it had revered such cities as Berlin and London, it’s Budapest that is now gunning for the title of the top European startup destination.
Over the last year, there’s been a massive leap in the number of startups launched in the city, so much so that nearly a third of all the business in Hungary is now carried out in Budapest. So why is that? Could it be the cheap standard of living? Or the sheer architectural beauty of the city?
Both good reasons enough, but it’s more likely to be the fact that Budapest now has a growing number of startup accelerators and a wide range of funding sources. There are now over 170 startups located in Budapest, supported by over 4,000 Budapest angel investors, creating a hub for entrepreneurs with new and exciting ideas, especially in the tech scene.
Manufacturing startups are also attracted to Budapest due to its geographical location and great transport links with Europe with potential customers totalling 500 million with the surrounding EU market.
The Hungarian government has also been keen to help out foreign startups as well as their own home-grown businesses by keeping corporate income tax at the incredibly low rate of 10% (making it one of the lowest in Europe). The government has also promised to lower the banking tax over the next few years in a bid to encourage lending to SMEs, and will be increasing the budget to help fund SMEs by around five times compared to last year.
The government will also be using 60% of EU funds to support investments by private businesses and in addition, the company formation process has been streamlined to such an extent that new businesses can be up and running with a VAT number in just 72 hours.
On the employee front, it’s also relatively simple to obtain a working permit and what with the country’s highly educated workforce, the task of forming an efficient team to launch a startup is an easy one.
So with all those advantages, it seems that Budapest with its vibrant startup scene and flourishing tech community is beginning to nudge aside its European counterparts and climb the ranks for the title of top European startup city.
Download our free guide on opening a business in Ireland
Learn the ins and outs of company formation in one of the world's premier business destinations