In Hungary, the accountancy requirements and the auditing activities are regulated by the Accountancy Act based on the aws accounts sell principles of the EU.
The Accountancy Act defines the reporting and bookkeeping obligations that come under its scope, the principles to be followed when
compiling reports and keeping accounting records, the related regulations, as well as the requirements connected to publishing and disclosing reports, and auditing.
The accounting and reporting obligations of sole traders are governed by the Personal Income Tax Act. However, a separate law applies to entrepreneurs and businesses that are registered for payment of simplified enterprise tax.
Accounting and bookkeeping services may only be provided by a person entitled to perform accounting and bookkeeping services and who is listed in the register held by the Ministry for National Economy.
Mandatory audits are governed by the Act on the Hungarian Chamber of Auditors, the Activities of Auditors and the Public Supervision of Auditors.
Basically, companies must support their reports with double-entry accounting records. In a small number of cases (e.g. foundations, associations, sole traders, etc.), single-entry – turnover approach – accounting records may also be kept.
Sole traders may apply the rules for single-entry accounting records. The scope of the records they must keep is governed by Annex V to the Personal Income Act.
Enterprises and companies that are registered for payment of simplified enterprise tax (SET) can basically be categorised in two large groups:
Doubly-entry is compulsory for a part of the enterprises in accordance with the Accountancy Act, while it is only optional for others.
Economic organisations without legal personality (limited partnerships, general partnerships), private companies with unlimited liability, as well as sales agencies of foreigners in Hungary may keep simplified books (only entry records).
Companies are obliged to keep the report for the fiscal year, as well as the supporting inventory, assessment, ledger extract, journal ledger or other records in legible form for at least 8 years.
The statement of accounts that supports the accounts directly and indirectly must be kept for at least 8 years in legible form and in such a manner that it can be retrieved using the accounting record’s reference. Accounting records must be stored securely at the company’s headquarters/premises, or at another place reported to the tax authority.