Accounts - Hungary
Rules relating to the reporting and bookkeeping obligations of the company manager
In Hungary, accounting provisions and auditor activities are regulated at statutory level by the Accounting Act.
The Accounting Act defines the reporting and bookkeeping obligations that come under its scope, the principles to be followed when compiling reports and keeping accounting records, the related regulations, as well as the requirements connected to publishing and disclosing reports, and auditing.
Provisions relating to sole traders and others who come under simplified enterprise tax
The accounting and reporting obligations of sole traders are governed by the Personal Income Tax Act. However, a separate law applies to entrepreneurs and businesses that are registered for payment of simplified enterprise tax.
Provisions relating to accounting and bookkeeping services
Accounting and bookkeeping services may only be provided by a person entitled to perform accounting and bookkeeping services and who is listed in the register held by the Ministry for National Economy.
Rules relating to mandatory audits
Mandatory audits are governed by the Act on the Hungarian Chamber of Auditors, the Activities of Auditors and the Public Supervision of Auditors.
Basically, companies must support their reports with double-entry accounting records. In a small number of cases (e.g. foundations, associations, sole traders, etc.), single-entry - turnover approach - accounting records may also be kept.
Sole traders may apply the rules for single-entry accounting records. The scope of the records they must keep is governed by Annex V to the Personal Income Act.
Enterprises and companies that are registered for payment of simplified enterprise tax (SET) can basically be categorised in two large groups:
- those who come under the Accounting Act ;
- and those who do not.
Companies without legal personality (general (bt.) and limited (kkt.) partnerships) may keep simplified records (for revenue only).
Statements and document storage
Companies are obliged to keep the report for the fiscal year, as well as the supporting inventory, assessment, ledger extract, journal ledger or other records in legible form for at least 10 years.
The statement of accounts that supports the accounts directly and indirectly must be kept for at least 8 years in legible form and in such a manner that it can be retrieved using the accounting record's reference. Statements must be stored securely at the company's headquarters/premises, or at another place reported to the tax authority.
Documents not originally prepared in electronic format may also be stored in electronic format, while documents originally prepared in electronic format must be stored in electronic format.
In order to close the accounts for the fiscal year, prepare the report and support the items in the balance sheet, an inventory must be compiled that contains, in an itemised, verifiable way, the funds and resources that the company has on the balance sheet day.
The Hungarian Accounting Act distinguishes four types of reports regarding the company:
- Annual report
- A simplified annual report, which the company may prepare using double-entry accounting records if, in two consecutive fiscal years, any two of the following three volume indicators do not exceed the minimum values on the balance sheet day:
- the grand total of the balance sheet is 500 million forints;
- annual net sales revenue is 1000 million forints;
- the average number of employees over the fiscal year was 50 people.
- Consolidated annual report
- A simplified report, which may be prepared using single-entry accounting records;
A sole trader is obliged to fulfil his record-keeping obligations in accordance with the provisions of the Personal Income Act.
SET companies that come under the Accounting Act must also prepare annual reports in accordance with the provisions of the Accounting Act. Limited and general partnerships that pay SET and keep simplified records for revenue only need not prepare a report.
Publishing annual reports
All companies keeping double-entry accounting records must publish their annual reports. Companies that are listed in the Companies Register are also subject to a filing obligation. Hungarian branch offices of foreign companies having their registered office in the European Union must file and publish the foreign company’s report in Hungarian. The published annual report must present a reliable and true picture of the company's financial and income position as well as any changes thereto. The data in annual reports are public and can be viewed using the Company Information Service.
Companies may only fulfil their filing and publishing obligations electronically. In order to do this, it is necessary for the person submitting the report to register for the Client Gateway.
For annual or simplified annual reports, within 150 days of the balance sheet day for the given year. For annual consolidated reports, within 180 days of the balance sheet day for the given year.
Companies do not need to undergo a mandatory audit if their average annual net sales revenue in the two fiscal years prior to the current fiscal year did not exceed one hundred million forints, and the average number of employees over the two fiscal years prior to the current fiscal year did not exceed fifty people.
The "In tune with business " programme is aimed at visibly cutting back the bureaucratic burden faced by companies. Accordingly, as of 1 January 2008, the criteria for a mandatory audit were extended. No audit is needed if a company's average annual net sales in the two previous fiscal years did not exceed one hundred million forints and it employs fewer than fifty staff.
Check also the legislation on this topic in: