Accounting Services in Hungary

 

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. 
 

 

What is the law on accounting in Hungary? 

• • 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. 

 

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. 

 

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. 

 

 

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. 

 

 

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.

 

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.