Author HU - Licska Péter Archives

Find a short summary below on what to do when a business decides to conduct its books in another currency in Hungary, instead of HUF.

The first, and most important step to take, is that the company’s shareholders decide on the currency change with a shareholder resolution. The fact of the change of the currency than shall be registered by the Court of Registry and from that date on, the company may conduct its books in the currency chosen.

According to the Section 145 (1) of the Accounting Act, an annual report or simplified annual report shall be prepared by the transition date, in the currency used before the change occurred. In this case, it is advisable to switch currency at the end of the financial year, thus the creation of a separate report is not necessary. It is important to point out that the pre-transition annual report are to be published according to the general rules (last day of the fifth month following the end of the financial year).

The next step is to convert the data contained in the annual report or simplified annual report to the selected currency, and an annual report or simplified annual report, which contains the opening data, must be prepared in the selected currency.

During recalculation the following points should be taken into consideration:

Recalculation has to be carried out at the official exchange rate published by the National Bank of Hungary using a reciprocal value. (special rule that must be pay attention to)
Claims, foreign currency stocks, and liabilities in the chosen foreign currency shall be shown on the registered value
The registered capital must be displayed in the chosen currency registered at the Court of Registry

During the above-mentioned recalculations, differences may arise, which should be settled as follows:

With profit-type differences, the capital reserves need to be increased
With loss-type differences, the retained earnings need to be reduced

The differences in the registered capital should be shown as follows:

In case the recalculated value is lower, the capital reserve must be reduced till the amount of the capital reserve, than the retained earnings must be reduced
In case the recalculated value is higher, the capital reserve needs to be increased

The opening annual report or simplified annual report in the chosen currency must be verified by the auditor, but does not have to be published. This annual report shall be the basic document for the opening ledger of the chosen currency.

Péter Licska

Accounting Supervisor | Accace Hungary

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The rules of the simplified liquidation in Hungary have changed from the 1st July 2018. Taxpayers shall be entitled to simplified liquidation, who:

are not required to statutory audit based on Section 155 of Act C of the year 2000 on Accounting
completes the liquidation within 150 days of the starting date of the liquidation

The simplification itself lies in the fact that it is not necessary to report liquidation to the Court of Justice, but only to the tax authorities. Tax authorities automatically report the fact of liquidation to the Court of Justice, and they automatically register the change in name into the company register. The tax administration announcement is available for 15 days from the date of the decision on the liquidation. This notification must be made on the general change reporting statement (T201), in the section for this purpose (B04 sheet).

In the case of simplified liquidation in Hungary, the duties of the liquidator are performed by the Chief Executive Officer of the company. The tasks of the liquidator do not differ from the rules and responsibilities of the normal liquidation.

In case, the supreme body of the company decides to terminate the liquidation and to continue the operation of the company, they have notification obligation towards the tax authority.

Termination of simplified liquidation in Hungary

The procedure of the termination of simplified liquidation in Hungary must be reported to the tax authorities before the expiry of the 150-day deadline. In this case, it is also true that the tax authority automatically informs the Court of Justice about the termination of the liquidation. The permission of cancelling the company is given by the tax authorities in case there is no tax administration and/or social security obligation (ie. the company has fulfilled all disclosure requirements). In this case, it is not necessary to ask the tax authorities for proof in the form of a separate application, which states that the company has fulfilled all (data)reporting and social security obligations. At the same time as the tax administration announcement, the proposal for the allocation of assets and the related acceptance decisions shall be sent to the Court of Justice in an electronic form. However, in the case of simplified liquidation, it should be noted that the proposal for the allocation of assets and the related decision can only be made based on a specific pattern. If the company cannot complete the termination of the liquidation procedure within the given 150 days, it may continue the procedure in accordance with the general rules on liquidation (in this case, a change request is required), or, due to lack of this request, the Court of Justice decides on the settlement of the liquidation on day 211.

Thus, in the case of simplified liquidation in Hungary, the practice is reversed; the notification is not made to the Court of Justice but to the tax authorities, who notifies the Court of Justice. In the light of the above written, the simplified liquidation procedure may allow excluding attorneys from the whole business process since it is not necessary to countenance any document by a lawyer and its submission to the Court of Justice. This saves time and money to all of those, who meet the criteria of the simplified liquidation.