Accounting Services in Hungary

Hungary attracts foreign investors due to its strategic location in the centre of Europe, stable economy and relatively low corporate tax. However, for a company to succeed, it is important not only to choose the right business strategy, but also to clearly comply with local accounting standards and tax requirements.

1. Accounting standards and policies

Hungary follows International Financial Reporting Standards (IFRS) for the consolidated accounts of public companies and applies Hungarian Generally Accepted Accounting Principles (HGAAP) for other legal entities. Foreign companies operating through a local entity must prepare their financial statements in accordance with HGAAP unless they are subject to reporting obligations under IFRS.

2. Tax planning and reporting

Hungary has one of the lowest corporate tax rates in Europe at 9 per cent. This creates a favourable business environment, but requires careful tax planning and compliance with all tax obligations, including VAT, personal income tax and social contributions. Accounting services can help not only with tax accounting, but also with optimising tax payments.

3. Comprehensive accounting services

Accounting firms in Hungary offer a wide range of services, from basic accounting to full outsourcing of the finance function, which includes management accounting, reporting, auditing and tax and legal advice. An integrated approach to accounting services enables foreign companies to effectively manage finances, reduce risks and improve overall business performance.

4. Importance of legal compliance

At the legislative level, Hungary has established strict accounting and reporting requirements. Failure to comply with these regulations can result in serious penalties and tax consequences. It is important that foreign entrepreneurs cooperate with reliable accounting firms that are familiar with local laws and regulations.

 Calculation of wages in Hungary

Payroll calculation in Hungary has its own peculiarities that both local and foreign employers should take into account. Effective payroll management not only improves a company’s financial stability, but also ensures compliance with local laws and regulations.

Main components of wages and salaries

In Hungary, salaries usually consist of a basic salary, additional payments (e.g. for overtime, night shifts and weekend work), as well as various types of allowances and bonuses. In addition, employers have to take into account other elements such as bonuses, which may be linked to the employee’s personal achievements or the overall performance of the company.

Taxation and social contributions

Wages in Hungary are subject to income tax, which is 15%. In addition, the employer is obliged to pay social contributions, which include pension, health insurance and unemployment insurance contributions. In total, social contributions amount to about 18.5 per cent of the employee’s gross salary.

minimum wage and guaranteed benefits

Hungary has established minimum wage standards, which are regularly reviewed. For 2023, the minimum monthly wage is HUF 200,000 for unskilled workers and HUF 260,000 for skilled workers. Employers are obliged to comply with these standards when calculating the wages of their employees.

Timekeeping and labour remuneration

Hungarian law requires employers to keep accurate records of each employee’s working hours. This includes not only standard working hours, but also periods of overtime, which must be paid at an increased rate. It is important that timekeeping systems are reliable and comply with all labour law requirements.

Automation and accounting system

To optimise the payroll process, many companies in Hungary resort to automation. The use of specialised software solutions can simplify payroll, minimise errors and ensure full compliance with legislation. Choosing the right accounting system is a critical aspect of effective HR management.

Accounting Services in Hungary

Internal audit plays a key role in maintaining the corporate governance, risk management and operational efficiency of companies in Hungary. It provides the necessary verification for compliance with local and international standards, helps identify weaknesses in processes and offers recommendations for improvement.

1. Internal audit framework

In Hungary, internal audit is regulated by both national legislation and European Union standards. Companies must follow the standards of the International Institute of Internal Auditors (IIA) and local professional standards. Internal audit covers financial performance, legal compliance, operational efficiency and corporate risk management.

2. Aims and objectives of internal audit

The primary purpose of internal audit is to assist management in protecting assets, improving the efficiency of operations and strengthening financial and operational reporting. Auditors assess the adequacy and effectiveness of internal controls and evaluate the quality of implementation of established procedures and policies.

3. Internal audit process

The internal audit process includes planning, conducting audits, reporting and monitoring the implementation of recommendations. Auditors develop audit programmes based on risk analysis and previous audits. Each audit includes data collection and analysis, interviews with employees and management, and testing of management procedures.

4. ethics and confidentiality

Ethical standards and confidentiality are of particular importance in the internal audit process. Hungarian companies should ensure that auditors observe high standards of professionalism and confidentiality as prescribed by local and international regulations.

5. The role of internal audit in corporate governance

Internal audit helps the board of directors and the management team to monitor the company’s complex operations. It provides an independent assessment of risks and proposes measures to minimise them, thus ensuring transparency and accountability in the company’s operations.

 Bookkeeping services in Hungary

Accounting services in Hungary play a key role in maintaining financial sustainability and compliance for companies of all sizes. Effective accounting organisation not only determines the accuracy of financial reporting, but also the ability to make informed management decisions.

Regulatory environment

Accounting in Hungary is governed by both national and international standards. Public companies are required to apply International Financial Reporting Standards (IFRS), while private companies may keep their accounting records in accordance with Hungarian Generally Accepted Accounting Principles (HGAAP). These standards ensure transparency and comparability of financial information, which is critical for investors and other stakeholders.

Important components of accounting

The main elements of accounting are maintaining journals and general ledger, calculating taxes, preparing financial statements, managing accounts receivable and payable, and controlling cash flow. Qualified accountants ensure data accuracy and compliance with all tax and accounting requirements.

Specifics of taxation and reporting

In Hungary, businesses are required to submit quarterly and annual tax reports. Particular attention is paid to value added tax (VAT), which constitutes one of the main items of government revenue. Accounting services help to ensure timely and accurate VAT declaration as well as optimisation of tax liabilities.

technology in accounting

Modern accounting is impossible without the use of specialised software products. This not only speeds up data processing, but also reduces the risk of errors. In Hungary, many companies use systems such as SAP and Oracle, as well as local software solutions, which allows them to ensure a high level of automation and integration of accounting.

Choosing an accounting service provider

Choosing a reliable accounting service provider in Hungary is a key moment for any business. The qualifications of the staff, experience with similar projects, and the firm’s ability to adapt to changes in legislation and accounting standards should be taken into account.

 Additional accounting services in Hungary

Value-added accounting services in Hungary offer companies the opportunity not only to comply with tax and accounting regulations, but also to optimise their operations, improve financial planning and enhance overall management efficiency. These services can range from specialised tax advice to management accounting and financial analysis.

Management accounting

Management accounting is an important tool for internal planning and control. It helps company management make informed decisions based on detailed analyses of financial data. Management accounting includes budgeting, monitoring deviations from plans and providing regular financial forecasts, which enables managers to respond to changes in the business environment in a timely manner.

Financial analysis and planning

These services are aimed at analysing the financial condition of a company and developing strategic plans for its development. Financial analysts can assess liquidity, profitability and capital structure, as well as conduct comparative analyses with competitors. Effective financial planning helps to anticipate future resource requirements and optimise tax liabilities.

Tax counselling and planning

Tax advisory services include assistance in optimising tax liabilities taking into account current legislation. This may include analysing tax incentives, advising on cross-border tax issues, supporting tax audits and assisting in negotiations with tax authorities. Tax advisors help clients develop strategies that minimise tax risks and promote compliance with tax obligations.

Preparation and analysis of financial statements

Additional services to prepare and analyse financial statements ensure that data is accurate and compliant with international and local accounting standards. This includes preparation of annual reports, consolidation of accounts for groups of companies, and audits in accordance with local and international requirements.

Consultations on business optimisation

Accountants can provide advice aimed at improving a company’s operational performance. This may include analysing the efficiency of business processes, implementing cost control systems and optimising business operations. Such services help companies to reduce costs and improve overall productivity.

Accounting consultations in Hungary

Accounting consultancy services in Hungary play an important role in maintaining the efficiency and compliance of companies operating in the country. These services provide the necessary support in areas related to tax, financial accounting, auditing and strategic planning. They become particularly important in the context of ever-changing tax laws and accounting standards.

Areas of accounting consultancy

Accounting consultancy in Hungary covers a wide range of services including tax planning, financial statement management, compliance and international financial transactions. Consultants help companies adapt to local financial conditions by offering solutions that improve the efficiency of accounting operations and reduce the tax burden.

Tax planning and optimisation

Tax planning is one of the key aspects of advisory services. Consultants analyse a company’s tax burden and develop strategies that help minimise liabilities within the current legal framework. This includes advice on VAT, corporate taxation and international tax planning.

Financial reporting management

Effective financial reporting management is essential for transparency and compliance with international accounting standards such as IFRS or GAAP. Consultants assist in the preparation of regular financial reporting, which is important not only for internal management needs, but also for external investors and regulators.

Compliance and regulatory requirements

Compliance and regulatory compliance are essential to avoid legal and financial risks. Our consultants provide up-to-date information on changes in legislation and help establish accounting processes that are compliant with the new requirements.

Personalised approach to clients

A key aspect of the effectiveness of accounting advisory services is an individual approach to each client. This includes an in-depth analysis of the specifics of the company’s activities, its goals and needs. Personalisation of services allows achieving more accurate and efficient results in financial management.

 How to archive documents for a Hungarian company

Document archiving plays a critical role in information management for any company in Hungary. Proper document storage ensures that documents are available when needed, facilitates compliance with legal and tax requirements, and protects important corporate information.

Legislative basis for archiving documents

Hungarian law requires business records to be kept for a certain period of time, usually between 5 and 8 years, depending on the type of document. This includes all financial statements, tax returns, employment contracts, documentation of corporate transactions and any other legally relevant documents. Changes in legislation should be checked regularly to ensure that all requirements are met.

Document storage formats

Modern technology provides companies in Hungary with two main ways of storing documents: paper archives and electronic archiving. Many organisations opt for a hybrid approach that combines both methods. It is important that electronic copies of documents are legally recognised as authentic, which requires the use of certified electronic document management systems and adherence to electronic signature standards.

Archiving process

The archiving process begins with the classification of documents by type and importance. Retention periods are set for each category of documents. It is important to regularly audit archives and destroy expired documents to free up space and simplify archive management.

Security and confidentiality

Secure storage of documents is a key aspect of archiving. Both physical and electronic archives need to be protected from unauthorised access, fire, flood and other threats. For electronic documents, it is important to use strong encryption tools and regularly update anti-virus software.

Selecting an archiving service provider

For companies that do not want to handle archiving themselves, there are outsourcing services that offer comprehensive archiving and document management solutions. When selecting such a provider, it is important to consider their experience, technology and ability to meet all necessary security standards.

Financial year of the Hungarian company

The financial year is the basis for planning and reporting of any company in Hungary. It defines the period for which a company prepares its financial statements and tax returns. Understanding the Hungarian financial year is critical to ensure compliance with corporate and tax obligations, as well as effective financial planning.

Definition of the financial year

In Hungary, the standard financial year coincides with the calendar year, starting on 1 January and ending on 31 December. However, companies have the right to choose an alternative financial year if it suits their business needs. This choice must be justified and applied consistently from year to year to avoid tax and accounting inconsistencies.

Significance of the financial year for tax accounting

The financial year defines the period for which companies must file tax returns and fulfil tax obligations, such as payment of corporation tax and VAT. The filing of tax returns and final tax settlement usually takes place within four months after the end of the financial year, which requires careful financial planning and tax risk management.

Preparation of financial reports

The end of the financial year requires companies to prepare annual financial statements, which include a balance sheet, income statement, statement of cash flows and statement of changes in equity. These documents must be prepared in accordance with local accounting standards or International Financial Reporting Standards (IFRS), depending on the legal form and size of the company.

Financial planning and budgeting

The fiscal year also serves as a framework for financial planning and budgeting. Companies use this period to assess their performance, plan future investments and calculate funding requirements. Effective budgeting and financial forecasting help companies optimise their operations and ensure sustainable development.

Impact on external reporting and audit

Companies subject to mandatory audit must submit their annual financial statements to an independent auditor for review. The exact date of the end of the financial year determines the timing of the audit and the submission of reports to the relevant state authorities, such as the Tax Service or the Companies Registration Agency.

Filing an annual report for Hungarian company

Filing an annual report is a key element of corporate governance for every company incorporated in Hungary. This process not only ensures corporate and tax compliance, but also maintains the transparency of the business to shareholders, investors and regulators.

Legal requirements

In Hungary, companies are required to file an annual report with a registration authority such as the Commercial Register. The annual report must contain financial statements, including a balance sheet, income statement and cash flow statement. The report must be prepared in accordance with Hungarian Financial Reporting Standards or International Financial Reporting Standards (IFRS) if the company fulfils certain size or type of activity criteria.

Submission deadlines

The annual report must be filed within five months after the end of the financial year. For example, if a company’s financial year ends on 31 December, the report must be filed no later than 31 May of the following year. A delay in filing may result in fines and other administrative sanctions.

Preparation of documents

To prepare the annual report, the company must ensure that all financial records are accurate and complete. This includes checking all accounting entries, reconciling receivables and payables, and analysing fixed assets and depreciation. It is important that the financial statements are reviewed and approved by an auditor if an audit is required by law or corporate policy.

Electronic filing

In Hungary, the annual report is filed electronically through specialised state information systems. This requires the use of an electronic signature of the responsible person of the company. Preparation for electronic filing includes the technical preparation of documents and their formatting according to the requirements of the registration authority.

Best Practices

To ensure timely and error-free filing of the company’s annual report, it is recommended that:

• Regularly update accounting records and conduct internal audits.
• Consult with accountants and auditors in a timely manner to clarify complex accounting and taxation issues.
• Use automated accounting systems to minimise errors and simplify the reporting process.
• Provide training and development to staff responsible for financial reporting.