23.06.2020

Document archiving and scrapping

Guide through the labyrinth of legislation

Document archiving and scrapping

How long do you have to keep certain documents and accounting documents? What do you have to archive on paper, and what electronically? What happens if different regulations prescribe different rules? In our article we have gathered together what is essential to know about document archiving for Hungarian entities.

These days, with the growing number of documents managed electronically, it is particularly vital how to handle original documents properly. Without doubt, the future of document archiving lies in electronic archiving, and with the spread of digitalisation Hungarian companies are looking for more and more efficient solutions to reduce the time and money spent on storing documents. 

Document archiving in accordance with different legislation

Document archiving, storage and scrapping are detailed in various pieces of Hungarian legislation. If these rules define different archiving periods for the same documents, then you must always take the longer period into consideration.

Pursuant to Act CL of 2017 on the Rules of Taxation, accounting documents must be stored until the limitation period of the right to tax assessment expires. By default, the limitation period extends until the last day of the fifth year from the last day of the year the tax return or declaration is filed, or the tax payment is due. The limitation period, and thus the archiving period, may be extended in certain cases. A self-revision in favour of the taxpayer may even interrupt this period.

Pursuant to Act C of 2000 on Accounting, financial statements and business reports prepared on the financial year and their supporting documents must be kept for eight years.

In accordance with Act LXXXI of 1997 on Social Security Pension Benefits, document archiving in terms of employment documents is the duty of the employer until the end of the fifth year from the insured person reaching the applicable pension age. Document archiving for wages is highly important.

Document archiving on paper or electronically?

The Hungarian Act on VAT also defines rules for the period and method of archiving documents. In line with this law, documents issued on paper must be archived on paper, and the archiving obligation may be fulfilled by storing the document issued on paper in an electronic format. Electronic documents may only be archived electronically. Decree 1/2018 of the Hungarian Ministry of Innovation and Technology defines the rules for digital archiving. In accordance with the decree, protection against the deletion, destruction, subsequent modification, damaging of and unlawful access to electronic documents must be ensured until the archiving obligation expires. Furthermore, the electronic document must remain understandable and readable. In all cases, compliance with these conditions is the entity’s responsibility.

According to the Hungarian Act on Accounting, electronic copies may be created of accounting documents not issued electronically – in compliance with legal regulations – and the document-archiving obligation may be fulfilled in this way too, if all the data on them can be queried without delay, they are always readable and cannot be subsequently modified. Pursuant to the Act on Rules of Taxation, the archiving obligation pertains to the original documents or to their copies prepared pursuant to legal regulations. If archiving the original copy of certain documents is not prescribed by law, it may not be requested in a tax authority procedure.

Document archiving on paper is costly and time-consuming after reaching a certain quantity, so the documents must be scrapped in accordance with the limitation periods prescribed by law and with the company’s scrapping policy. Furthermore, looking ahead it is worth transitioning step by step to electronic document management and digital archiving, which ensures smooth access to documents even beyond the limitation period.

During their work the accountants of WTS Klient Hungary also prefer to forward and store documents electronically, since bearing the requirements of digitalisation in mind we constantly strive to develop modern solutions to enhance the efficiency of work processes and provide data as quickly as possible. We look forward to hearing from you should you need a reliable team with expertise in electronic invoicing.

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