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Accounting in Hungary combines strict regulations, detailed reporting requirements, and opportunities for digitization, making it both a challenge and an opportunity for businesses. Whether you’re a local entrepreneur or an international corporation, understanding Hungary’s accounting standards, tax obligations, and recent changes is crucial to staying compliant and making informed financial decisions. This article highlights the key aspects of accounting in Hungary to help you navigate this complex but rewarding environment.
In this article, you’ll learn about:
The primary legislative act governing accounting in Hungary is Act C of 2000 on Accounting. This Act defines the reporting and book-keeping obligation of those enterprises to which it applies, the principles to be observed in the preparation of accounts, sustainability reporting and the keeping of books, the rules established upon such principles, as well as disclosure, publication and audit requirements.
According to Act C of 2000 on Accounting: „The operation of a market economy requires the availability of objective information regarding the assets and liabilities, financial position and profits and losses of businesses, non-profit oriented organizations and other types of economic operators, including trends and changes thereof, so as to enable market players to make informed decisions relying on the information available. This Act contains accounting rules which are in harmony with the relevant directives of the European Communities, and with international accounting principles, and based upon which reliable information resulting in a true and fair view can be provided in respect of the profitability, financial position and performance, the assets and holdings, and the future plans of the enterprises falling under the scope of this Act.“
Additionally, there are specific rules for financial institutions, insurance companies, state budget organizations, and municipalities.
Government Decree 72/2006 (IV.3.) is related to the accounting tasks of liquidation.
Special provisions for the liquidation of civil organizations can be found in Act CLXXV of 2011 on the Right of Association, Public Benefit Status, and the Operation and Support of Civil Organizations (hereinafter: Civil Act).
Hungary’s Accounting Act and International Financial Reporting Standards (IFRS) share common principles but differ in approach, structure, and specific applications. While IFRS is mandatory for listed companies, credit institutions, and financial entities, the Accounting Act is widely used for local compliance. IFRS focuses on principles, materiality, and fair value, while the Accounting Act emphasizes statutory formats, numerical guidance, and historical costs. Key differences arise in areas like reporting formats, treatment of leases, depreciation, and provisions.
For a detailed comparison of Hungarian Accounting Standards and IFRS, including specific examples and use cases, read the full article here.
The Chart of Accounts in Hungary is the foundation of an entity’s accounting system, ensuring a standardized and structured approach to financial reporting. It organizes assets, liabilities, revenues, and expenses into predefined sections to facilitate compliance with the Hungarian Accounting Act while allowing customization to meet business-specific needs.
Key sections include:
Businesses can leverage the flexibility of the Chart of Accounts by creating sub-accounts tailored to their unique operations. For detailed insights, including mandatory setups, customization options, and compliance requirements, read the full article here.
Hungarian businesses must prepare financial statements in accordance with the Accounting Act (Act C of 2000), ensuring a true and fair view of their operations, financial position, and performance. These statements must be in Hungarian and can follow either Hungarian Accounting Law or International Financial Reporting Standards (IFRS).
Key requirements include various types of financial reports such as annual accounts, simplified annual accounts, and consolidated annual accounts, depending on the size and type of the entity. Additional considerations include mandatory reporting periods, detailed structures for balance sheets and income statements, and deposit and publication obligations.
For a full breakdown of reporting requirements, compliance obligations, and guidelines on preparing financial statements in Hungary, read the complete article here.
The purpose of an audit is to ascertain that the annual account, simplified annual account, or consolidated annual account of a company has been drawn up in accordance with the provisions of this Act and, accordingly, provides a true and fair view of the financial position and performance and of the operations of the company (and that of the companies included in the consolidation). The audit shall also investigate whether there is agreement between the annual account, the consolidated annual account and the associated annual report.
With the below-mentioned exception the auditing of accounting documents shall be statutory for all companies keeping double-entry books.
The auditing of accounting documents shall not be statutory if both of the conditions below are satisfied:
From January 1, 2025, the following new rules must be applied for the economic year:
The two previous financial years (calculated for the period of one year) shall be taken into consideration.
The audit is obligatory:
The exemption from the audit requirement does not apply if the company has any outstanding public dues – as provided for in the Act on the Rules of Taxation – on the balance sheet date of the financial year owed in excess of HUF 10 million which are more than sixty days overdue.
Proper record archiving is essential for compliance in Hungary, with strict retention periods and legal requirements for various documents such as financial statements, VAT records, and labor documents. Key obligations include preserving documents for up to 8 years or more, depending on the document type, ensuring their integrity and readability, and complying with digital storage requirements. Businesses must also adhere to location-specific rules for document storage and report these to tax authorities if they differ from the registered office.
Failure to comply with record-keeping obligations can result in penalties of up to HUF 1 million, highlighting the importance of proper document management.
For a detailed guide on archiving requirements, digital storage regulations, and retention periods in Hungary, read the full article here.
Hungary’s VAT regulations require both domestic and foreign businesses to register and comply with specific obligations. Domestic taxable persons must register for VAT before starting business activities, and foreign entities must do so before performing VAT-liable operations in Hungary. Group VAT registration is available for affiliated companies, and the EU VAT number is mandatory for intra-community transactions.
Compliance includes filing monthly, quarterly, or yearly VAT returns, submitting EC sales lists, and adhering to reverse charge mechanisms for specific goods and services. Hungary’s standard VAT rate is 27%, with reduced rates for various products and services.
For a detailed explanation of VAT rules, registration requirements, and filing procedures, head over to our dedicated eBook.
Corporate income tax in Hungary, regulated by Act LXXXI of 1996, applies to domestic entities conducting economic activities and non-residents with taxable activities in Hungary, such as operations via a permanent establishment. The tax base is determined by pre-tax profit adjusted with specific items, such as depreciation, development reserves, or R&D expenditures.
The standard tax rate is 9%, with specific rules on minimum profit thresholds and loss carry-forwards. Taxpayers must file annual tax returns by the last day of the fifth month after the financial year ends, specifying tax payments and advances.
For a detailed overview of corporate income tax rules, compliance obligations and key adjustments, head over to our tax guideline for Hungary.
As mentioned above, the statutory accounting in Hungary does not apply IFRS rules, although Hungary have implemented in its local laws many of the IFRS standards, to be aligned with international accounting systems, but some differences still remain. So companies should be aware there will be a few transactions that will have to be booked differently in Hungarian accounting than in IFRS: for example small value assets and their depreciation, provisions/accruals. Group reporting may have to be different than statutory accounting in Hungary, as a solution these adjustments can be handled on different general ledgers, so that the company will comply to both requirements.
Hungary has its local Chart of Accounts for general ledger numbers, which are not the same as IFRS account numbers. In the accounting software it is mandatory to have the Hungarian GL account numbers, which in group reporting can be mapped to the relevant IFRS accounts.
Calculation of Corporate Income Tax was detailed in previous paragraph, this also holds some Hungarian specialities that foreign management have not known before. From accounting point of view, it is important to choose an accounting software which is able to calculate CIT depreciation (and not only accounting depreciation, the two are different). If the multinational company uses its own foreign software, that software probably does not have the proper setup to calculate this second type of depreciation, so likely they will need some IT development. Or they can ask the Hungarian accounting firm to use their software.
If the foreign company considers opening a Hungarian Branch, they should be aware of local legislations. For example, we have a client in Switzerland, who has a Hungarian branch. According to the foreign management, in their understanding, the parent company and the branch are one legal entity, have their consolidated financial statements together, so any transaction between them is only internal transfer. On the contrary, Hungarian Accounting Law and Hungarian VAT Law clearly states that Branch should be treated as if it were an independent entity from the foreign parent company, so transaction between the IC entities should be accounted as sales/purchase and receivables/liabilities and must be shown in Hungarian statutory financial statement accordingly. The Hungarian entity must have its accounting done separately from the parent company, according to local statutory rules.
The deadline to submit yearly Financial Statements in Hungary is 31 May (or, if the financial year is different than calendar year, the last day of the following fifth month). If the company’s figures exceed certain limits, statutory audit must be performed before signing the financial statements, during which Hungarian auditors check if everything is compliant to local legislations.
Hungary is embracing the global shift toward digital accounting with initiatives like mandatory online invoicing and electronic reporting systems. The digitization process, accelerated by the COVID-19 pandemic, has enabled businesses to streamline operations, improve compliance, and leverage advanced tools like AI and cloud-based platforms.
While the benefits are clear – improved efficiency, reduced errors, and enhanced decision-making – small and medium-sized enterprises often face challenges in transitioning due to financial and technical barriers. However, with government support and the long-term advantages of digital tools, the future of accounting in Hungary is undeniably digital. For a comprehensive guide on digitization trends, challenges, and solutions in Hungary, read the full article here.
The following new rules must be applied to reports prepared for the business year starting in 2025.
These changes will reduce the number of companies subject to audit obligations and simplify reporting for many businesses.
Regulatory change regarding the obligation to prepare the cost calculation regulations If the net sales revenue of the sales, less the purchase of goods sold and the services provided, exceeds four billion forints in a given year, or the total cost of the cost types exceeds two billion forints, starting from this year, the cost of the products and services produced by the company itself shall be calculated using the method of the value of the regulations on the cost calculation procedure.
As a result of the introduction of the deferred tax institution, the income statement also changes in such a way that the deferred tax difference must also be taken into account when determining the after-tax profit for the business year. When determining the after-tax profit for the business year, the profit before tax reduced by the deduction of the tax liability is modified by the deferred tax difference – in accordance with the sign. The deferred tax institution was incorporated into the Accounting Act by Act LXXXIV of 2023 on supplementary taxes ensuring a global minimum tax level and on the amendment of certain tax laws in this connection.
From 2025, entrepreneurs will not have to present in the supplementary notes any cash and in-kind benefits provided during the business year to non-governmental organizations carrying out public benefit activities in the fields of environmental protection, sports, healthcare, social, cultural and educational purposes without compensation.
Accounting in Hungary involves navigating detailed statutory requirements, frequent regulatory updates, and the complexities of VAT, corporate income tax, and financial reporting. For international businesses, adapting to local frameworks such as the Hungarian Accounting Act and managing the mandatory Chart of Accounts can be particularly demanding. Small and medium-sized enterprises may also face resource constraints, making it challenging to keep up with compliance and digital transformation.
Outsourcing your accounting needs offers an effective way to overcome these challenges. A reliable provider can handle compliance, improve efficiency, and provide access to local expertise, enabling businesses to focus on their core operations.
At Accace, we provide tailored accounting and reporting services in Hungary designed to simplify your processes and ensure full compliance. Our solutions include:
When you work with Accace, you’re choosing a trusted partner committed to simplifying your accounting processes and helping your business thrive. Learn about our accounting and reporting services in Hungary or get in touch with us to see how we can support your success.
About Accace
Accace is a proactive consultancy and outsourcing partner who bridges the gap between needs and solutions. Combining smart and streamlined technology with a holistic approach, we provide an all-round care to clients and consider their matters as our own. With over 800 experts and approximately 2,000 customers, we have vast experience with facilitating the smooth operation and growth of small to large-scale, global businesses.
About Accace Circle
Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 60 jurisdictions with more than 7,000 professionals, we support over 80,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 800,000 pay slips globally.
