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Hungarian legislation allows for small and medium-sized enterprises (SMEs) and micro-enterprises (with less than 10 employees) to submit a simplified financial report. Details are specified in . The main aim of that Act is to transpose EU accounting rules into Hungarian law.
Any entity covered by the Accounting Act must prepare a financial report on its operation, assets, financial position and profits and losses, reliably and accurately reflecting its assets and liabilities, financial position and the results of its economic activity.
The financial report may take the form of:
(a) an annual financial report;
(b) a simplified annual financial report;
(c) a consolidated annual financial report; or
(d) a simplified financial report.
Any business covered by the Accounting Act must prepare an annual financial report. A business may also opt to produce a simplified annual financial report if it has met at least two of the following conditions in two consecutive years:
(a) its balance sheet total was no more than HUF 1.2 billion;
(b) its annual net turnover was no more than HUF 2.4 billion;
(c) it had no more than 50 employees.
A business may prepare a simplified financial report if it is entitled to practise single-entry bookkeeping under the Accounting Act or any Government decree issued under that Act.
Some entities (government agencies, credit institutions, financial institutions, insurance undertakings and others) must prepare their financial reports not only in line with the Accounting Act, but also in line with specific Government decrees. The format of the financial report depends on the entity's activity, the revenue generated by its main and business activity, and its bookkeeping method.
Rules for micro-enterprises
A business covered by the Accounting Act is regarded as a micro-enterprise if it has met at least two of the following conditions in two consecutive years:
- it had no more than 10 employees;
- Its balance sheet total was below HUF 100 million;
- its net turnover was below HUF 200 million.
Simpler rules for SMEs
Simpler bookkeeping and recording rules for entities not covered by the Accounting Act are laid down in the Act on simplified company tax and the Act on itemised lump sum tax for small taxpayers and .
International accounting standards
Since 2005, EU legislation has required all listed EU companies to prepare their consolidated annual financial reports in line with the International Financial Reporting Standards (IFRS).
Hungary is currently in the process of requiring companies preparing stand-alone financial statements to comply with IFRS standards. Those standards will be phased in between 2016 and 2018. The scope and the timing of their introduction will depend on the type of entity; the standards will be mandatory only for some businesses (listed companies, credit institutions and financial undertakings covered by equivalent legislation), while they will be optional for most.
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