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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
FREQUENTLY ASKED QUESTIONS
Why is the annual report of a Hungarian company mandatory?
Annual reporting is a mandatory element of corporate activity for companies incorporated in Hungary. This requirement is enshrined in the country's legislation and emphasises transparency and responsibility in business practices.
- Legislative requirements
Hungarian corporate law requires all incorporated companies to file an annual report with the relevant regulatory authorities, such as the Commercial Register. These requirements ensure that the company's activities are fully transparent to both government authorities and all stakeholders. The annual accounts include financial statements, profit and loss account and other material data on the company's activities.
- Financial transparency
The annual report plays a key role in ensuring financial transparency. It provides a comprehensive view of a company's financial condition, including revenues, expenses, assets and liabilities. This information is critical for investors, creditors and other stakeholders who need to make informed economic decisions about their investments or credit risks.
- Compliance with tax obligations
The annual report serves as the basis for calculating a company's tax liabilities. Providing accurate and complete financial information helps both companies and tax authorities to determine the correct amount of taxes payable. This contributes to the fairness and efficiency of the country's tax system.
- Corporate governance and accounting
For companies, especially public companies, the annual report is a tool for demonstrating compliance with corporate governance and accounting standards. Reporting confirms that the company operates within the legal framework and follows best management practices, which, in turn, builds trust in the company on the part of shareholders and consumers.
- Public trust and responsibility
Mandatory annual reporting maintains a high level of public trust in the activities of corporations. Transparent reporting allows the public, including consumers, observers and the media, to monitor the activities of companies, which promotes corporate responsibility and public scrutiny.
When is the deadline for filing a company's annual report in Hungary?
Filing an annual report is an important aspect of corporate governance for any company incorporated in Hungary. Compliance with the deadlines for filing the annual report is critical not only to comply with legal requirements, but also to maintain the confidence of investors and other stakeholders.
- Legislative basis
Hungarian law requires all incorporated companies to file their annual report with the relevant state authorities. The annual report includes financial statements consisting of a balance sheet, income statement and other related financial documents.
- Submission deadlines
According to Hungarian corporate law, the annual report must be filed within five months after the end of the company's financial year. For most companies, the financial year coincides with the calendar year, which means that the report must be filed no later than 31 May of the following year. If the company has chosen a different financial year, the deadline for filing the report is also shifted accordingly.
- Importance of meeting deadlines
Accurately meeting the deadline for filing the annual report is critical. Late filing can lead to administrative fines and additional financial penalties, as well as negatively affect the company's reputation among investors, creditors and other business partners.
- Best practices for meeting deadlines
To ensure timely filing of the annual report, companies should take the following steps:
- Planning ahead: Start preparing for the filing of the report well in advance, allowing enough time to collect and verify all necessary financial data.
- Use of automated accounting systems: This helps minimise errors and speeds up the reporting process.
- Regular liaison with accountants and auditors: Ensures that all financial transactions are recorded correctly and all audit requirements are met.
- Checking regulations and requirements: Regularly updating knowledge of current legal requirements helps to avoid documentation errors.
- electronic filing of reports
In order to simplify the process, in Hungary the filing of annual reports is done through an electronic system, which requires companies to have a digital signature and access to the relevant government platforms. This also requires the preparation of relevant electronic documents in the right format.
Which companies must file annual reports in Hungary?
In Hungary, all registered companies are required to file annual reports to ensure compliance with legislation, maintain corporate transparency and promote a healthy economic environment. Depending on the type and size of the company, the annual report filing requirements may vary.
- Categories of companies
In Hungary, the filing requirements for annual reports apply to the following main categories of companies:
- Joint Stock Companies (Zrt. and Nyrt.): All joint stock companies are required to file annual reports without exception. This includes both closed (Zrt.) and open (Nyrt.) joint stock companies.
- Limited Liability Companies (Kft.): As the most common form of business in Hungary, all LLCs must also file annual reports reflecting their financial status and business operations.
- Limited companies (Bt.) and general partnerships (Kkt.): Although less common, these forms of companies are also subject to annual report filing requirements under Hungarian corporate and tax laws.
- Special cases
- Branches of foreign companies: Branches that foreign companies have established in Hungary must file separate annual reports in accordance with local law reflecting their operations in Hungary.
- Non-profit organisations: Including foundations and associations that conduct economic activities are also required to file annual reports if their operations exceed the minimum financial thresholds established by law.
- grounds for filing
The annual report provides:
- Compliance with legal requirements: Filing an annual report is a legal obligation, non-compliance with which may result in fines and other negative consequences.
- Transparency for stakeholders: Annual reports provide shareholders, investors, creditors and other stakeholders with important information about the company's financial condition and operational performance.
- Financial Accounting and Auditing: For many companies, the annual report serves as the basis for financial auditing and tax accounting.
Does a company have to file an annual report in Hungary if there is no activity?
In Hungary, corporate law obliges all registered companies to file an annual report, regardless of their level of economic activity. This requirement applies to all legal entities, including those that did not have active commercial or financial activities during the reporting period.
- legal requirements
All companies incorporated in Hungary are required to file an annual report annually with the relevant regulatory authorities, such as the Commercial Register. This requirement is designed to ensure compliance with the principles of corporate transparency and responsibility, and allows the government authorities to maintain up-to-date information on all registered legal entities.
- Annual report of companies without activity
For companies that were not active during the accounting year, they are still required to file an annual report, which usually includes:
- Zero balance,
- Confirmation of no activity,
- Confirmation of compliance with all regulatory obligations that do not require active operations (e.g., paying annual registration fees or keeping registration data current).
- Importance of filing a report even in the absence of activity
Filing an annual report, even if there is no activity, has several important purposes:
- Compliance: Avoiding fines and other penalties for non-compliance with corporate requirements.
- Maintaining the status of the company: Maintaining the company in an active status in state registries, which is important for resuming operations in the future or for the possibility of liquidation of the company.
- Transparency: Maintaining transparency of corporate structure and governance to regulators, potential investors and other stakeholders.
- Procedure for filing the annual report
To file an annual report for a company with no activity in Hungary, it is necessary:
- Draw up and sign the report, usually with the help of an authorised accountant or auditor.
- Use forms and electronic filing systems provided by state agencies.
- Ensure all necessary documents and confirmations are in place, including electronic signatures from responsible parties.
- Best Practices
For companies with no activity, it is recommended:
- Regularly review corporate status and readiness to file reports.
- Plan ahead for drafting and filing documents to avoid rushing and potential mistakes.
- Liaise with the accountant or legal advisor to ensure compliance with all current legal requirements.
What data does the annual report in Hungary include?
The annual report of a company in Hungary is the main financial and operational reporting tool that ensures transparency of the company's activities to regulators, shareholders, investors and other stakeholders. It contains all necessary data that reflects the financial position, performance and changes in the company's assets during the reporting period.
- Financial statements
The financial statements are the main part of the annual report and include the following elements:
- Balance Sheet: Provides a snapshot of the company's financial position as of the last day of the reporting period. It includes the company's assets, liabilities and equity, itemised by category.
- Profit and Loss Statement: Reflects the company's revenues, expenses and financial results for the entire reporting year. This report helps stakeholders assess operational efficiency, profitability and other key financial indicators.
- Statement of Cash Flows: Analyses cash flows during the reporting year, classifying them into operating, investing and financing activities. This report provides information about a company's ability to generate cash and finance its operations.
- Statement of Changes in Equity: Shows the changes in the company's equity during the year, including dividend payments, share issues and revaluation of assets.
- Explanatory notes
Explanatory notes supplement the numerical data in the financial statements by providing a detailed description of the accounting policies used to prepare the financial statements and an explanation of significant transactions and events that affected the company's financial performance. These notes may include information on tax liabilities, loans, contracts entered into, liabilities not recognised in the balance sheet and other material aspects.
- auditor's report
Joint stock companies and large enterprises in Hungary are required to include in the annual report an auditor's report prepared by an independent auditor. The auditor's report certifies that the financial statements have been prepared in accordance with applicable accounting standards and provides reasonable assurance that the report is free from material misstatement.
- Management declaration
A management declaration is a statement from senior management personnel (such as a director or finance director) confirming that they are responsible for the preparation and accuracy of the annual report.
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