Introduction
In the next part of our series of articles, we will look at the residence of third-country nationals in Hungary as managing directors from several perspectives.
The issue may also be of particular importance because it is not at all unusual nowadays to appoint foreigners, often third-country nationals, to certain management positions in companies. In many cases, the appointment of such persons may not even include among the preliminary considerations the need to have a document proving their residence and the right to perform the activity.
In this article, we try to provide our readers with some food for thought information that can help in similar and not necessarily simple situations.
Before and after the Btátv.
There are also significant differences between the former (the Harmtv.) and the new legislation (i.e. the Btátv.) in this area.
Under the Harmtv., it was still possible to apply for a residence permit for the purpose of pursuit of gainful activity, which may sound familiar to many, if you wanted to work in Hungary as a managing director of a company, cooperative or other legal entity established for profit. However, in cases where the person appointed as a managing director did not wish to carry out their duties related to such a position or would have carried out not only such duties but (also) duties as a worker in the classical sense, they had to apply for a residence permit for the purpose of employment instead of for the purpose of pursuit of gainful activity.
The Btátv. provides for a much more colourful palette than this binary system when it comes to one or the other of the activities of executive officers in Hungary, which we will deal with below.
Executive officer or classic employee
Although the dual system for the performance of representative and employee functions, which existed under the Harmtv., was basically maintained under the Btátv., the current code allows for a choice between several types of licences within these two main categories, depending on the circumstances. The following shows how each type of licence builds on the others and the main subdivisions under which they may be used.
| Name of the residence permit | Performing the duties of an executive officer[1] | Actual work outside the scope of the executive function |
| Guest self-employment | Available from | Not applicable |
| Guest investor[2] | Available from | Not applicable |
| Hungarian Card | Not applicable | Available from |
| Company Card | Available from | Available from |
| National Card | Not applicable | Available from |
Guest self-employment
As in all cases, in order to be approved by the authorities, the applicant must provide evidence of the circumstances relating to the residence permit and duly substantiating the application.
For this type of residence permit, the applicant must prove that:
- the company has been legally employing at least five Hungarian nationals or persons with the right of free movement and residence on a full-time basis for at least six consecutive months, or
- their presence in Hungary is essential for the operation of the company and their detailed declaration of economic activity attached to the application shows that they are likely to generate income for the company that will ensure its subsistence. In particular, they can substantiate their declaration by one of the following: a contract of engagement, a contract of commission, an agreement, a contract of sale or a contract of purchase.
It is important to note that in addition to the above, the immigration authorities may also ask for additional documents.
It may be a consideration that a person holding a residence permit for guest self-employment is subject to a regular registration obligation but may do so electronically through the immigration authority’s platform.
Hungarian Card
In contrast to the previous type, the Hungarian Card cannot be applied for the performance of managerial duties in Hungary, but only for actual work outside the scope of the executive function. For the latter only if the applicant has an appropriate higher professional qualification recognised by the authority, i.e. this type is subject to regulated qualifications.
In addition to proof of the applicant’s qualifications, the immigration authority may also request additional documentation to support the operation of the affected company, as detailed in the guest self-employment residence permit.
Company Card
This type is new to the residence rules. The purpose of its introduction – as its name suggests – is to make investment in Hungary as attractive as possible. Therefore, not only the applicant, but also the company applying for the residence permit must meet certain prerequisites. For example, the legal person may be an employer as defined in the Government Decree or an entity who has concluded a settlement contract with it.
National Card
You can apply for the National Card not only for general employment, but also for employment that goes beyond the duties of an executive officer, as we have examined. However, it is important to note that it is only available to executive officers of a specific nationality.
Summary
It can be seen, therefore, that the scope of residence permits that can be applied for the two purposes outlined overlap or are mutually exclusive, but in principle provide full coverage for the different cases. This also means, however, that, unlike in the past, which was more familiar and simpler, greater care must be taken in choosing the right type of residence permit, so that it serves the real interests of the applicant, taking into account all the other circumstances not yet discussed in this article as well.
Author: dr. Eszter Bohati, lawyer – CLVPartners
[1] Acting as a director of a company, cooperative or other legal person – for profit
[2] We will not go into this category in detail, we will just mention it.
