Get free access to
Our legislation updates make it easy for you to keep on top of the latest changes affecting your business. Receive our articles, opinions, tips, industry news, country profiles, regional overviews and studies, latest events and even more, directly into your mailbox.
Check out our Newsroom to see what is included!
We will send you only relevant information we consider may be of your interest and treat your personal data in compliance with our Privacy policy and GDPR statement.
Unable to subscribe? Try this page.
Startup, or early stage enterprise based on the Hungarian legislation, usually means a newly founded company with high growth potential. The common feature of these companies is that they can grow rapidly in a relatively short period of time with some innovation, which requires initial capital.
It is also an important feature of the so-called startups that they tend to expand to international areas quickly to build an international network.
The question is whether or not there is an accounting specialty for such companies and whether there is a generally valid accounting rule that the accountant must be familiar with in any case.
Firstly, it must be stated that there is no exact law especially for startups, although these companies are subject to the general accounting/taxation rules as any other ’normal’ business.
Nonetheless, there are some specialties that may occur more frequently for startups. Let’s go through these specialties – without the need for completeness.
A great startup accountant should be aware of the international accounting standards (IFRS, USGAAP) as the emergence of a large international investor may occur in the company’s vicinity because of the international presence and the ongoing capital requirements. These international investors may expect reporting according to the international standards. Depending on the activity of the company, the international report may contain significant deviations from the accounts compiled according to the Hungarian rules, especially in the case of activation/cost accounting.
As noted above, startups are characterized by innovation – developing a new idea and implementing this idea later. Therefore, it is very important for the accounting Team to be aware of the accounting and tax specialities of research and development related costs and the possible tax advantages.
Startups often claim domestic or European Union support to start their businesses. For this reason, it is important for you to be aware of the terms and conditions of subsidies when managing the books. For each grant, the proposer of the grant is generally required to justify the proper use of the funds, which can only be achieved by proper accounting, cost allocation and ledger separation. These rules should be laid down prior to the granting of the aid, as the subsequent dismantling of expenditure / costs may result in significant additional work.
Domestic or foreign investors often provide special coverage for the innovation to be developed by the startup. The adviser, who works in the background, does not just need to track the relevant transactions (capital / credit, option rights, convertible bonds, etc. ) but also, if necessary, assist the Client in finding the most optimal investment form of accounting / taxation.
Because of these specialties mentioned above, startups – especially at the beginning – should outsource their administration to a consulting company, where the mentioned accounting and taxation knowledge is provided. Moreover, in an ideal scenario, the accounting colleague of the startup can benefit an assistance of a complete tax and legal advisory team within the consulting company.
In the last years, mainly because the short-term rental and property rental are becoming more popular year by year, the real estate market in Hungary is started to continuously uplift. As it didn’t change this year neither, it might be important to discuss every expense and obligation about real estate sale and purchase to not to be caught unprepared if the time comes, therefore in our recent newsletter we are going to cover the duties, taxes, rules, allowances and expenses of property buying and selling in Hungary.
According to the Civil Code of Hungary, the following costs will be charged to the seller:
These may include the basic expenses, what are necessary for the legitimate selling, such as the settlement of utility bills and mortgage liabilities, or the cost of real estates and their intermediaries, if the transaction happened this way.
In case of property selling, some other administrative expenses might arise in connection with the seller such us the drawn up of the energy certification (green cad) and the procurement of the title deed and the property layout.
In case of selling an apartment, house or any other real estate, a personal income tax payment obligation arise on the income from the selling, regulated by Article 59-64 of Act CXVII of 1995 on Personal Income Tax. From 1 January 2016, the domestic personal income tax rate on property selling is 15 %, but the amount of required tax depends on several factors:
1) After selling a property, the first thing to do is to determinate the income; what should be calculated by deducting the following expenses from the selling price (i.e. the income):
(It is important to note that only costs proven with official receipt counts as eligible cost)
2) The value observed counts as income and the taxpayers should pay their taxes after this amount, with a rate what depends on the date of purchase:
It is important to highlight, that this write-off can be only applied on residential houses and flats, but this gradually decreasing payment obligation is available for every type of property, only with different terms. The tax rates for every other type of property can be calculated by a calculator what can be found on the webpage of the National Tax and Custom Administration of Hungary, wherewith the rate of tax liability can be easily calculated in every case for every actual property.
In case of purchasing, there is no tax paying obligation, just a duty on onerous transfer, what should be paid. The rate of this duty is independent from the type of property, currently its 4% uniformly, while in case of part-ownership, every owner should pay this value after the extent of their ownership interest.
Without attempting to be comprehensive, the tax allowances in 2016 are the following:
1) Tax exemption:
2) Discounted tax:
Above these expenses, the buyer is charged by the contracting expenses (for example lawyer fees or the property deed expenses) or the expenses of the ownership change registration in land register.
The matter of wage supplements in Hungary could affect almost every employee, because it is a completely generalized set of regulations and covers many conditions, but many people are not aware of the criterions and details of it. That is why it could be important to mention the main elements and clarify, that when and which kind of allowances are employees are entitled to. Although we cannot discuss every wage supplements in this article, but we tried to highlight the main elements and successfully cover the most common types.
Currently we call every allowance as wage supplements; what the employees gets when their work condition differs from the normal. This could be either different way of work, in different time or different duration. The basis of wage supplements is the basic salary from the labour contract, and employees only entitled for additional allowances by a certain way and level the specified by categories. In our current article, we are going to review the most important information about these main allowances.
According to the Hungarian Labour Code, shift supplement is an additional payment, what’s primary condition is that may be paid only for the additional work between the period of 6 p.m. and 6 a.m. However, the conditions are more complex, as it regulates that it only affects employees who is working in a regularly changing time interval and those will not affect those, who are working permanently during this period.
Employees only clearly entitled to this allowance, if the number of their workdays differs from their work schedule starting time for at least 1/3 in an actual month, with 4 hour difference between the earliest and latest starting time. The rate of this allowance is 30% which only affects the period between 6 p.m. and 6 a.m. and while in case of a collective agreement, employers may exclude this condition; in case of wage agreement the contract only can differ in favour to the employee.
If the shift supplement is applied on public holidays, the employer should provide this allowance in addition to the wage given on that day.
Only those employees are entitled for night shift pay who is working between 10 p.m. and 6 a.m. at least one hour and not entitled to shift supplement. The night shift pay is given for only a period set in law; the rate of this allowance is 15%. While in case of a collective agreement it can differ to any direction, but in case of labour contract/wage agreement, it only can differ in favour to the employee.
If the night shift pay is applied on public holidays, the employer should provide this allowance in addition to the wage given on that day.
According to the Hungarian Labour Code, in Hungary the following days count as public holidays (red-letter non-work days):
If the public holiday falls on a Sunday, then the rules of non-work day pay should be applied and not the rules of Sunday workday. The rate of this supplement for these days is 100%, only employees can work on the day of public holiday during normal working hours and pay, who’s working in a job role, what is needed for general safeguarding, preventing/averting health and environment threatening risks or because of generally accepted social standards and needs (entertainment and tourism).
Perhaps this type of wage supplement is the most common and could affect most people. The overtime work means that period of time, when the employees no longer have any working obligations according to their working hours, but they still have to continue their work or they have to start work on their rest day, public holiday or vacation. However the amount of overtime work cannot be unlimited, and their detailed rules and conditions are outlined in law. According to the law, every employee (together with the overtime work) can only work 12 hours daily and 48 hours week at most; is entitled to the 8 hour rest period between the work shifts and entitled to the 2 day rest day weekly, regardless of the overtime works.
In case of full time employment, the amount of overtime work with labour contract/wage agreement is controlled by 250 hours yearly, while in case of collective agreement, it is controlled by 300 hours yearly, which should vary by an equivalent amount if the employee started to work during the year and if this ‘framework’ runs out, employers no longer have any legal option or opportunity to put their employees to work.
Employers can compensate their employees about the overtime work in three ways
In case of overtime work the rate of this allowance is 50%. If the overtime work falls on a rest day or on a public holiday, this rate is modified to 100%, but if the employer wants to provide a rest day in exchange, the 50% wage supplement is still compulsory.
The modified regulations about the Sunday workday supplement are the most actual, because since the Hungarian Government revoked law on the Sunday shopping ban, the conditions of this supplement has changed, employees are now entitled to only a 50% allowance rate instead of the previous 100%. However, this Sunday workday supplement is not intended for everyone, those employees who are working on Sundays due to the type of their employment, not just because of their organization of work are still not entitled to this supplement. This includes employees who are working in commerce, who are at standby work and who are working in a shift work schedule.
The call duty and duty is an interesting exception, because normally in this case there is no actual working, just the employee have to be continuously available and standby until called to work. The difference between them is that in case of on call duty, the employees can determinate the place where they are staying until the time of availability, while in case of emergence duty, the employers determinate the place where the employers have to stay. From that moment, that the employee starts to work, from then it falls under the category of extraordinary work. It is important, that an on call only can be ordered, if the technology used during the work is requires the continuous work/lookout, if the employee is needed for general safeguarding, preventing/averting health and environment threatening risks or if the job is needed in order to serve the public needs. If employers want to order their employees in for a stand-by or an on-call, at that case, according to the local law, they should represent the plan and the details of it to the employee, a month before the actual workday. The duration of the on-call is controlled by 250 hours yearly in case of a labour contract/wage agreement and by 300 yearly in case of a collective agreement.
If employers order their employees in for an extraordinary work on their weekly rest day, then employees are entitled to a 100% wage allowance, or to a 50% wage allowance if the employer can provide and additional rest day for and employers has the right to decide, which way they want to choose.
Of course, this is just a general summary, it is impossible to include every detail. Therefore if you feel that you want to know more about the wage supplements in Hungary, their condition and amount and you need additional details, feel free to contact us, our advisors would be pleased to help you.
With effective date 1st January 2015, a new VAT regulation entered into force in the European Union related to the services may be provided remotely. The place of fulfillment of such services is determined according to the customer’s place of residence from 2015. The electronically supplied services contain the service proved by the distributors of mobile applications also. According to the law modification the place of fulfillment and thus the applicable VAT rate will be determined according to the principle of destination, the location of the end user, instead of the state of distributor or the intermediary platform (AppStore, Google Play). If the case is not clear (e.g. travelling on vacations, holidays) the country code of the SIM-card of the user’s cell phone defines the state of taxation. We examine in our current summary the VAT impact on income generated from sale of mobile applications in Hungary, and how can the VAT declaration and payment liability fulfilled with the lowest administration burden.
It’s important to highlight that this regulation only affects the services provided to costumers (B2C), but not the services between businesses (B2B).
This regulation introduced unified taxation for every member of the European Union, and the same rules apply to every developer and distributor. However, as a result of the principle of destination, different VAT rates will be applied in each member state.
The aim of this regulation is to create equal competition and by the same conditions state members with higher VAT rates suffer no detriment, furthermore to decrease the administration burden of the service providers thereby increasing the cost effectiveness. This has a positive effect on Hungarian distributors, as they can charge abroad with more favorable VAT rates, but has negative effect on Hungarian costumers who wants to order the same services from abroad because they will be charged with the domestic VAT rate of 27 percent.
This means that a developer who is selling a popular application may have tax obligations in all the 28 member states.
In order to simplify the administrative process, the European Union introduced the MOSS system.
The so called mini-one-stop-shop system (MOSS) is a one-window administrative system, which allows distributors to perform their activities in every state of the European Union with tax return and taxpaying liability only to their domestic tax authority. The collected tax is divided between the states in the proportion of the transactions
This administrative system is only optional, but a huge help to avoid having to register at the tax authority of all states where they provide services. In case of the taxpayer choose this system to fulfill the VAT liability, the system can be reached through the link of the webpage of the tax authority.
The tax return should be declared until 20thof the month following every quarter, the payments should be made with same deadline (in currency EUR). After the administrations the authorities transfer the collected tax to the state of the final consumption.
If you or your company is interested in this taxation form or need further information, contact us, our tax advisors would be pleased to help you.
Based on 33/1998. (VI.24.) NM Ministry Decree on medical examination for employees in Hungary, concerning suitability for sphere of activity, profession, and in regard to personal hygiene, the medical examination required for the position can be: 1-preliminary; 2-periodical; or 3-extraordinary
Periodical medical examination is required on an annual basis for the following cases:
Extraordinary medical examination concerning suitability for sphere of activity shall be provided in the following cases:
If you’d like to receive more information about details of medical examination in Hungary, please feel free to contact us.
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.
