Accounting requirements in Hungary
Most of the available types of businesses in Hungary must comply with the accounting principles in the country and observe the general rules for taxation.
Our accountants in Hungary provide complete accounting services that are developed for the needs of any company type. Businesses operating in all economic sectors can benefit from our basic accounting services.
Accounting and bookkeeping procedures in Hungary are regulated by law and they comply with international and European accounting principles.
The accounting records and financial reports for Hungarian companies must be drawn up in Hungarian and according to the accounting principles.
Our accountants in Hungary can help you submit these mandatory records and reports so that your company may not be liable to any penalties that can arise from failure to submit the necessary statements.
Does Hungary apply the IFRS standards?
IFRS standards are international financial reporting standards that are used at a global level; they are a set of rules and regulations regarding the manner in which companies should maintain and prepare their financial documents.
An accountant in Hungary can use the IFRS standards when completing accounting reports and documents for international companies that have set up their operations in this country.
For instance, those who want to start the process of company registration in Hungary for a local business will not use the IFRS standards in most of the cases.
The accountant in Hungary will be able to use the IFRS for certain categories of companies, according to the latest modifications, implemented in 2016-2017.
Legislation on accounting
The Accounting Act
IFRS applicable in Hungary (yes/no)
Accounting laws for sole traders in Hungary
|The Accounting Act and the Personal Income Tax|
|Types of annual accounts||
Simplified annual accounts and
Conditions for simplified
|In 2022, companies qualify for simplified annual reports if 2 of the following are met: the company's assets are of maximum HUF 1,200 million, the annual revenues are below HUF 2,400 million, the number of employees is below 50 persons.|
|Basic accounting services in Hungary||
In-depth advice on the applicable accounting laws and procedures, bookkeeping services, applying the tax rules imposed to companies based on their size and type, preparing the yearly financial documents, submitting financial documents with the Hungarian institutions, etc.
The calendar year (1 January – 31 December)
|The deadline to submit documents for the previous financial year||20 May for individuals/31 May for corporate taxpayers|
|Basic financial papers submitted by companies||The profit and loss statement, the balance sheet and the additional notes.|
|Financial documents imposed to large companies||Our accounting services in Hungary include the preparation of financial documents that must be submitted by large companies, such as the audit report and the business report.|
|Law on audit in Hungary||
The Accounting Act (on the appointment of an auditor), the Hungarian National Auditing Standards (on audit procedures), the Act LXXV of 2007 on the Chamber of Hungarian Auditors, the Activities of Auditors, and on the
Public Oversight of Auditors, etc.
Companies that use
|Large foreign companies, listed foreign companies, local public companies.|
|When are consolidated annual reports required||When a company is part of a large grouping – the parent company has the obligation to prepare the consolidated annual accounts, but exemptions are granted from this when the parent company has had, for the last 2 financial year, 2 of the 3 following criteria: maximum HUF 6 million in total assets, maximum annual revenues of HUF 12 million, not more than 250 employees.|
|Bookkeeping principles||Single entry and double-entry|
|Accounting services in Hungary for individuals (yes/no)||Yes|
What is the law on accounting in Hungary?
If you want to open a company in Hungary, you will definitely need the services of an accountant or of a team of accountants, based on the size and the activities of your company.
Accounting procedures must be completed by an accountant in Hungary, who has obtained the necessary qualifications in the field. Regarding the rules and laws accountants have to apply, the following are available:
- • matters related to accounting and bookkeeping are prescribed by the Act C of 2000 on Accounting – the Accounting Act, issued by the Ministry of National Economy;
- • companies can complete simplified annual reports if they meet 2 of the 3 conditions stipulated below;
- • the company has a balance sheet of maximum HUF 500,000;
- • the company’s net revenue is limited to HUF 1,000,000;
- • the company employs a maximum of 50 employees in a financial year.
What are the accounting obligations for small companies in Hungary?
Companies have certain accounting obligations depending on their type and size. Please mind that businesses that operate as sole traders have different accounting obligations (much simpler compared to the ones of corporate structures).
If you want to find out what are the main accounting obligations of a Hungarian sole trader and what are the reporting obligations pertaining for this entity, our accountant in Budapest can provide in-depth information.
Once the process for company formation in Hungary is completed, companies must enforce the necessary accounting policy and procedures that they have to follow in a period of 90 days.
For instance, a sole trader needs to comply with bookkeeping procedures, and this implies that the business must maintain evidence on the bills and other documents that attest the income and the expenditures.
However, this has to be done in accordance with the regulations of the Personal Income Tax Act. Companies that qualify as micro-enterprises must submit only by 2 main financial statements: 1) the balance sheet and 2) the profit and loss statement.
Such companies usually qualify under the regulations of the Simplified Enterprise Act; our accountant in Budapest can offer further information on its main stipulations.
Professional accounting services for Hungarian companies
After a company is registered in Hungary, entrepreneurs need to consider hiring an accountant that will keep any necessary records and will follow through the business activity of the company.
Investing in professional accounting services, as well as business consulting services, can prove to be of great importance to companies and a professional consultant will always be able to find the best solutions for any problem the company might incur.
Our Hungarian company formation experts are professionals with experience in accounting, bookkeeping and legal requirements for companies in Hungary.
Not only can we provide complete services in the accounting field, but we can also offer you payroll services, financial and tax consulting services and even human resources services.
Please mind that the Accounting Act is also applied to entities that are registered as organizations. These can refer to a variety of entities, such as associations, foundations (public and private), public sector entities, housing cooperatives, notary offices and law offices, to name a few.
For all these, specific accounting procedures must be completed and our accountants in Hungary can provide tailored services. Below, we invite you to watch a short video on our accounting services in Hungary:
What are the main financial documents required in Hungary?
A company must prepare and maintain many financial documents throughout a financial year, which can testify all the transactions of the company, as well as its current financial status.
In Hungary, a financial year starts on 1st of January and ends of 31st of December. The company is required to submit the documents concerning the current financial year no later than 31st of May of the following year.
For most Hungarian companies, the legal requirement is to prepare the following 3 documents: 1) the profit and loss statement, 2) the balance sheet, 3) the additional notes.
The 1st document, the profit and loss statement, will contain information about the following: 1) the company’s revenues, 2) the costs and expenses, 3) the net profit obtained in a financial year. These have to evidenced in HUF.
The balance sheet presents information on the property of the company. Please mind that all the documents presenting the financial situation of the company have to be maintained for a period of 8 years.
For larger companies, additional documents must be prepared by an accountant in Hungary. Such documents can refer to: 1) the business report, 2) the audit report, 3) the owners’ resolution.
What are the bookkeeping obligations in Hungary?
Bookkeeping refers to the procedure of keeping the records of the financial activities of the company in all aspects of the business. These documents have to be maintained on a continuous basis.
The accountant in Hungary will have to maintain all these documents so that, based on them, the financial reports can be completed and submitted to the Hungarian institutions.
According to the Accounting Act, Section 12, bookkeeping activities can only be closed at the end of the financial year – section 12(1). The company is obligated to maintain these documents in Hungarian.
All bookkeeping documents must respect the provisions of the Sections 159-169 of the Act, by respecting the single-entry or double-entry principles.
In most cases, companies are required to respect the procedures for double-entry principles – Section 12 (3), with the exception of entities that can complete simplified records – Section 12 (4).
You can find out more information regarding the bookkeeping obligations of a company from our accountant in Hungary.
When is a company required to complete consolidated annual accounts in Hungary?
As presented above, companies are allowed to complete simplified annual accounts, which will be prepared by an accountant in Hungary.
In Hungary, companies must also prepare consolidated annual accounts, which refer to more complex financial documents, that present a very detailed image of the company. Our accountant in Budapest can prepare this financial document for your company.
They are necessary for large businesses, and this is the case of structures where there is a parent company and more subsidiaries or branches.
The procedure is necessary if the company meets 2 of the following 3 criteria (if it exceeds 2 of them): the balance sheet of HUF 2,700 million, the annual net revenue of HUF 4,000 million and the number of employees of 250 in a financial year.
Other services for your business in Hungary
Investors are also invited to address to our accountants and specialists in company formation in Hungary if they need audit services. Audit services are also available for companies that have to maintain double-entry bookkeeping systems.
While theappointment of an auditor might not be necessary if the company fulfills certain conditions, businesses can still choose tovoluntarily hire an auditor.
Our Hungarian company incorporation consultants can perform qualified audits that observe the regulations set forth by the Hungarian National Auditing Standards.
What is the law on audit in Hungary?
In certain situations, companies are required to complete audit formalities. Thus, if you plan to open a Hungarian company, we advise you to check the main requirements applicable in this case.
Audit in Hungary has last been amended in 2016, with new regulations being applied starting with 17th of June 2016. The new law transposed the latest modifications that were introduced at an EU level.
Audit rules also derive from the Act LXXV of 2007 on the Chamber of Hungarian Auditors, the Activities of Auditors, and on the Public Oversight of Auditors.
According to these rules, an accountant in Hungary is required to start the audit procedures on a local company if 2 thresholds are met.
The 2 thresholds refer to the company’s annual net sales (the minimum is of HUF 300 million in a financial year) and the company’s employees (the company hired more than 50 employees in the last 2 financial years).
According to the Act LXXV of 2007, the audit can be performed only by an accountant in Hungary who has received the right to act as an auditor.
In other words, all persons who graduated from tertiary studies and have obtained an accounting diploma can be accountants, but not all accountants can be auditors, as additional requirements have to be completed.
For instance, auditors need specialized studies and they must also have at least 3 years of practice. It is also required to work as an apprentice auditor for a member of the Hungarian Chamber of Auditors for a period of 3 years.
If you want to open a company in Hungary, please do not hesitate to contact our Hungarian company incorporation agents for more information. Our accountant in Budapest can help you prepare the accounting formalities for your business.