Standard returns to be sent to the National Tax and Customs Administration 

The first standard return to be filed by newly established businesses in Hungary is the T201T form, which generally includes the registration with the National Tax and Customs Administration (NAV), the chosen MNB or ECB exchange rate, and if applicable, the registered office service and the company’s document archive for the tax authority. The filing deadline is 15 days from the date of the change.

From the moment the company has a valid tax number, it is also obliged to submit VAT returns. Newly established businesses have to file monthly returns in the year of registration and in the following year, so before starting to keep accounts, it is also necessary to check which periods require monthly VAT returns, possibly retrospectively. VAT returns can be submitted on form 65 by the 20^th day of the month following the month in which the return is filed.

For contributions, the requisite return is 08, the deadline for which is the 12^th day of the month following the given month. In this case, it is also advisable to check whether any return has been missed and needs filing.

Moreover, at the end of the financial year, newly established businesses must submit the 01 return for other contributions, the deadline for which is 25 February after the end of the financial year. Year-end closes in Hungary include the corporate tax return (29) and the local business tax return (HIPAK), the deadline for which is the last day of the fifth month following the end of the financial year.

It is important to note that these returns must be submitted even if they don’t contain any data (nil returns). In all cases, returns must be submitted electronically to the NAV, and if the company decides to submit the returns through a representative, it is also necessary to fill in the so-called EGYKE form.

In addition to what is listed above, all organisations in Hungary that conduct economic activities – businesses, civil society organisations, foundations, churches or religious organisations – are obliged to register on the business gate. Business gate registration allows companies to communicate electronically with the various authorities and institutions, thereby improving the efficiency of their relations with public authorities.

Other reporting obligations of newly established businesses 

In addition to the commonly known returns for submission to the NAV, newly established businesses must also register with other institutions. To register with the Central Statistical Office, form 1032 must be sent to the CSO regional directorate with jurisdiction for the location of the company’s head office, within 15 days of the date of establishment. This form collects preliminary information on the company’s activities, sales revenue and other data.

In addition, all companies have to register with the Hungarian Chamber of Commerce and Industry. Entities engaged in agricultural activities have to register with the Hungarian Chamber of Agriculture instead.

The registration for local business tax is done electronically to the local authority with jurisdiction for the location of the company’s registered office or place of business, using the form designated by the local authority.

And you shouldn’t forget that for companies incorporated in Hungary, the head of the company must open at least one domestic bank account within eight days of the company’s establishment. In addition, if the company has a bank account abroad, this must be notified to the Hungarian Tax and Customs Administration. And that’s not all… 

Problems encountered when the bookkeeping starts 

Bookkeeping currency: As an accountant, I often find that newly established businesses don’t necessarily choose the right bookkeeping currency. Many companies have a significant part of their transactions in a currency other than the forint, such as the euro, and while the parent company’s bookkeeping currency is also the euro, the firm chooses to keep its accounts in HUF in its articles of association. This can cause a number of difficulties with reconciliations and reporting, and the fact that changes in the forint exchange rate can have a significant impact on the operation and performance of companies should not be ignored.

Audit: One might rightly think with newly established businesses that there is no need for a statutory audit, as they have not yet started their activities and have no sales revenue, only registered capital. However, if the company is a consolidated entity, an audit is always mandatory, regardless of the size of its activity.

Different legal environments: Another complication is that companies registered in Hungary must be accounted for in accordance with the Hungarian Accounting Act, and of course, Hungarian law applies to all other legislation. This means that a number of reconciliations are needed at the outset with the foreign parent company to deal with accounting and taxation issues.

Financial year: The financial years of companies incorporated in Hungary often don’t align with the financial year of the foreign parent company, which makes information reporting, accounting, the preparation of reports and consolidation processes much trickier. When established in Hungary, companies can determine the end of their financial year, so choosing a different financial year from the conventional one can avoid difficulties that may arise later.

As our article shows, newly established businesses face a number of reporting and filing obligations, whether they have actually started trading or not. Yet in addition to a thorough analysis of these, before starting the accounts it is also very important to deliberate on other issues, such as the choice of financial year or bookkeeping currency, in order to avoid the difficulties associated with making corrections afterwards. The staff at the accounting division of WTS Klient Hungary have over 25 years of experience in helping clients make these decisions.

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Registration of taxable person in Slovakia

In accordance with the proposed amendments to VAT Act of Slovakia, the rules for registration of both Slovakian and foreign taxable persons will undergo significant changes. A Slovakian taxable person will become a taxable person as soon as the prescribed criteria are met and not on the date specified in the tax administrator’s decision. The threshold for income above which a Slovakian taxable person is obliged to submit an application for registration, has been raised from EUR 49,790 to EUR 50,000 or 62,500. The time period for submitting an application for registration is also shortened, i.e. within 5 days from the day a reason for registration arises (i.e. exceeding the prescribed criteria). The tax administrator will issue a registration decision within 10 days.

The conditions for the registration of a foreign taxable person will also change according to the proposed amendments to the VAT Act of Slovakia. Now such a taxable person is obliged to submit an application for VAT registration without delay, and the tax administrator is obliged to register the taxable person immediately after receiving the application.

Financial leasing, reverse-charge on import of goods, late registration

The new rules in the VAT Act of Slovakia will also affect the treatment of financial lease contracts where, at the time of conclusion, the purchase at the end of the contract represents the only economically rational choice for the lessee. Such a transfer will constitute a supply of goods and not a service.

It is also planned to introduce a reverse-charge mechanism for import of goods for domestic taxpayers who have the status of an authorised economic operator in the Slovak Republic. As a further simplification, special taxation scheme for small businesses will be introduced, as well as the possibility to deduct tax on the basis of a document other than an invoice when acquiring goods from another Member State.

Another significant change in the VAT Act of Slovakia is the introduction of some relatively strict rules for late registration as a taxpayer. The new legislation proposes to submit individual monthly tax returns for this period, together with a control statement containing the transactions on which tax liability has arisen. Once the conditions have been met, the deduction of the related input tax will be allowed.

Further changes to the VAT Act of Slovakia

Finally, the amendment would also introduce a number of minor changes, namely:

• The value of the simplified invoice is reduced to EUR 400;
• The obligation to reimburse VAT in the event of theft will be extended to any case of theft or misappropriation;
• It is proposed to change the place of supply of cultural, educational or entertainment services if they are supplied online/virtually to a non-taxable person.

Most important amendments to the Income Tax Act of Slovakia

One significant change that will affect the preparation of the 2023 tax returns in Slovakia is an amendment that will allow the deduction of employers’ expenses for the operation of their own kindergartens and childcare facilities for children up to three years of age. The employer must therefore be the founder of the facilities in question.

At the same time, the concept of ‘sports professional’ is introduced into the Slovakian law. The income of such a sports professional will be subject to withholding tax. As in the case of income from the creation and from the performance of an artistic work, the possibility will be introduced for the taxpayer to agree that no withholding tax will be levied and the sports professional will declare the income in the tax return.

The new rules will also affect the scope of taxation of incomes from non-state bond accruing to taxpayers with limited tax liability. The income in question will not be subject to tax since 2023.

With effect from April 2024, the range of buildings that are not treated as depreciable tangible asset is extended. In accordance with the new wording of the provision in question, small buildings for agricultural, forestry or hunting purposes and simple buildings for these purposes will not be regarded as depreciable tangible assets.

The amendment also introduces an exemption from taxation for in-kind income in the form of acquisition of shares by employees in start-ups.

Further changes to income taxation

Other amendments to the Slovakian Income Tax Act include the following:

• Changes to the taxation of virtual currency;
• Expansion of the range of tax-deductible expenses in the taxation of income from capital property;
• Extension of the exemption to income from the sale of stocks;
• Increase in the exemption limit for income from advertisements for charitable purposes;
• Changes in the tax bonus;
• Increase in the rate for dividends paid to an individual to 10%;
• Introduction of a minimum tax for corporations;
• Increase in the limit for the application of the reduced corporate income tax rate up to EUR 60,000.

If you want to know more about the 2024 changes to Income Tax Act and VAT Act of Slovakia or other tax issues in the country, we recommend you visit the website of Mandat Consulting, k.s. and contact the local WTS experts in Slovakia.

A Amendments to Income Tax Act and VAT Act of Slovakia from 2024 bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Legal background

Based on Sections 2 (2) and 3 (1) 2 of Act C of 2000 on Accounting (Hungarian Act on Accounting), the Hungarian branch of a foreign-registered company, as a business entity, is subject to the Act on Accounting; at the same time, it is bound by the rules of Act CXXXII of 1997 on the Hungarian Branches and Commercial Representative Offices of Foreign-Registered Companies (Branch Office Act).

Initial registered capital based on the Hungarian Branch Office Act 

In legal terms, i.e. by definition, the registered capital of branch offices differs from the registered capital of other business entities, i.e. from share capital. While a limited liability company may be founded with share capital of HUF 3 million, and a private company limited by shares with HUF 5 million, the Branch Office Act defines no minimum amount for the initial capital in relation to founding a branch office. However, it does prescribe that a foreign company must continuously provide the assets required to operate the branch office and settle debts.

Registered capital of branch offices based on Hungarian Accounting Act 

Section 35 (6) of the Act on Accounting stipulates that in respect of Hungarian branch offices of foreign-registered companies, the capital provided and made permanently available by the foreign-registered company (including the endowment capital prescribed by law) for the operation of the Hungarian branch office, and for the settlement of its debts, must be recognised as registered capital.

So this is the registered capital of branch offices, which is not designed to cover the daily operating expenses of business activities, but to ensure operational conditions on a prolonged basis and be a source of assets required for operation.

As a result, it must be set forth in an agreement what the foreign-registered company allocates to its Hungarian branch office, and at what value. For non-cash contributions, the cost of the asset is the value defined in the agreement or contract in accordance with Section 50 (7) of the Act on Accounting. 

Registered capital at the Court of Registration

The allocated amount mentioned above, as set out in an agreement, must be registered at the Court of Registration once a year. Although the foreign-registered company may transfer permanent resources to the branch even several times a year to ensure continuous operations, without the obligation to register this at the Court of Registration, the cumulated amount of capital provided to the branch office must still be registered at the Court of Registration once a year.

If your foreign-registered company is considering opening a branch office in Hungary, or planning to make changes to registered capital (capital increase or decrease) at an existing branch office, we recommend you contact our expert advisers to get answers to any questions arising in relation to their accounting, or any other accounting issues related to the registered capital of branch offices. The accounting specialists at WTS Klient Hungary are here to help.

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Which changes do you need to prepare for?

The European Commission in particular objected to the incorrect definition of the so-called material beneficial owner, which the Czech Republic conceived in the ARBO differently from the Anti-Money Laundering Directive, this being by means of a two-component definition. This is to say that in its wording to date, the ARBO distinguished between an ultimate beneficiary and a person with ultimate influence.

The amendment to the ARBO now omits this division altogether and redefines beneficial owner as “a natural person who ultimately owns or controls a legal entity or legal arrangement”.

The amendment to the ARBO continues to work with the 25% threshold for the size of the shareholding, for voting rights and for profit received, which means that the profit-sharing criterion will continue to be maintained. However, in addition to the persons who receive a specified portion of the distributed funds or control the company, a person who only owns a share of the relevant size is also deemed to be a beneficial owner.

It is still the case that the concept of beneficial owner is linked only to a natural person. It also holds true that there may be more than one beneficial owner.

The amendment also significantly narrows the exceptions to the obligation to register the beneficial owner. In addition to other legal entities, the obligation to register the beneficial owner will now also apply to home owners’ associations, for which the concept of beneficial owner did not exist according to the previous wording of the ARBO. In the case of these legal entities, the members of their statutory body (typically the members of the HOA committee) will automatically be “copied from other registers and records” as the beneficial owners.

Transitional provisions of the amendment to the ARBO

The new legislation, effective as of 1 October 2022, determines a six-month deadline for meeting of the registration obligation in the case of entities which were previously deemed not to have a beneficial owner.

The transitional provisions also contain so-called protective provisions for legal entities which have duly met their registration obligation under the current legislation. These legal entities will have a period of six months from entry into force of the amendment to register a beneficial owner that meets the criteria of the new legislation. However, the ARBO provides for a transition period only for corporations which have everything properly registered, otherwise the obligation exists that they register or modify their entry without undue delay.

If any details need to be changed in the Register of Beneficial Owners during the transitional six-month period, the obligation exists that the party concerned adapt its entry to comply with the new rules together with this change.

In the period of one month, according to the latest information, it will not be possible to make changes to the recorded data due to its extensive automatic overwriting and lock-out of the Register.

Conclusion

Business corporations will be forced to evaluate who their beneficial owner is according to the new statutory definition after the amendment comes into force. Formal changes in the designation of beneficial ownership status will also be made by automatic copying from other registers and records. However, some business corporations, particularly those with complicated ownership and management structures, will be forced to submit a new proposal for change to their registered details.

Basically, all business corporations should check their entry in the Register of Beneficial Owners after the amendment comes into force and verify whether there are any material or formal errors even in the case of automatic copying from other registers and records, or whether the amended entry is complete.

If you have any queries about the Czech ARBO or need to adapt to the new legislation, the experts of WTS Alfery, the exclusive representative of WTS Global for the Czech Republic will be happy to provide you with professional support.

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What do call-off stock and the simplification rule mean? 

In the context of Hungary, call-off stock is basically the Hungarian stock of a seller from another Member State, where the goods are used from the stock and supplied at the customer’s discretion. The call-off stock simplification rule means that the seller from another EU Member State is not required to register as a Hungarian taxpayer because of the call-off stock kept in Hungary; consequently, it is not necessary to report the stock supply as the shipping of own goods and charge Hungarian VAT when selling the stock later on. Two transactions become one, namely, for the seller this means a tax-exempt sale within the EU, while for the customer it is an intra-EU purchase using the stock.

What has changed since 1 January 2020?

Due to compliance with EU regulations, Hungarian rules on call-off stock changed from 1 January 2020, and in terms of application they became more stringent. Most important changes:

• the seller must know who the potential customer is and what their tax number is at the time of the goods transfer;
• the fact of the goods transfer must be indicated on the EC sales list, while both the entity transporting the goods and the potential buyer must have detailed records on the goods.
• the customer has to call off the goods within 12 months of delivery.

In line with EU law, starting from 1 January 2020, the rules on call-off stock in the Hungarian VAT Act also stipulate that in case of the destruction, loss or theft of products within the call-off stock (collectively: stock shortage), the conditions for applying the call-off stock simplification rule are no longer met when the product has actually disappeared or was destroyed, or if it is impossible to define this time, then the conditions for simplification are no longer met when it transpires that the product has been destroyed or is missing.

How to treat destroyed or stolen goods

Goods can be destroyed in transit, or perhaps there is a fire at the customer’s warehouse, or the goods stored in the warehouse simply disappear without a trace. In this case, from a call-off stock perspective it is important to note that when the goods are destroyed or the theft is detected, the conditions for call-off stock simplification are no longer met, so at this time the transfer of goods for call-off stock qualifies as an intra-Community transaction. Consequently, the foreign business must apply for a tax number and the competent authorities in both countries must be notified of the goods movement.

Is it always necessary to apply for a Hungarian tax number in the case of a call-off stock shortage, or are there any exceptions? 

According to Taxation Issue No. 2021/7 issued on 26 November 2021 by the Customer Relations and Information Division of the National Tax and Customs Administration, any shortage derived from the very nature of the product (natural decrease) is an exception to the above rule i.e. such minor stock shortage will not automatically render the call-off stock simplification rule inapplicable, or the pertaining obligation to register in Hungary.

“The basic goal of the tax payment liability required in respect of a call-off stock shortage is to prevent untaxed final consumption. Yet the nature of the product may also result in a stock shortage, but this is due to a natural “decrease” of the product (e.g. perishable food, natural evaporation). However, payment of the tax liability imposes an administrative burden on taxpayers moving their own products, which was possibly avoided because of the call-off stock simplification. To ensure that the natural “decrease” derived from the nature of the given product does not result in the loss of the administrative relief granted to the taxpayer moving its own products because of the call-off stock simplification rules, it is best to recognise minor shortages/losses in call-off stock as ones that do not create the status of a goods transfer” – states the National Tax and Customs Administration.

However, this information does not contain an exact specification of the extent of the stock shortage qualifying as a minor shortage. This always has to be defined in light of the nature of the product and all of the circumstances of the given case.

One additional important note in this information is that if the stock shortage exceeds the “minor” threshold, the tax payment liability shall set in not only for the part above the “minor” portion, but for the total shortage as well.

In the event of a tax payment liability and registration in Hungary, the taxpayer may, of course, deduct the tax payable for the intra-Community purchase of goods to the extent it can prove that the product was destroyed or any other material damage was caused for a reason beyond the taxpayer’s control, or in the case of other material damage, if it can prove that it acted as would normally be expected in the circumstances in order to prevent or mitigate the damage.

Based on the above, in the case of call-off stock held in Hungary, any shortage in the stock will immediately render the simplification rule inapplicable if such shortage is not a natural decrease derived from the very nature of the product, or is not minor. If your foreign business plans to hold call-off stock in Hungary, please bear the above in mind and consult a tax expert if you are uncertain. Feel free to contact the tax advisory team of WTS Klient Hungary.

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The system already existed in the Romanian Fiscal Code under the name “Mini One Stop Shop” (MOSS) before 1 July, but only for electronic services. On 1 July 2021, it was expanded to include several categories of transaction, becoming the “One Stop Shop” (OSS).

These provisions aim to extend the simplification measures applicable to certain transactions with non-taxable persons (mainly natural persons) and applying VAT from the Member State of the buyer (thus avoiding registration for VAT purposes in multiple EU states).

Three special OSS regimes in Romania

Since 1 July 2021, three special OSS regimes are in force in Romania:

• The first of the special OSS regimes can be applied for certain services provided by taxable persons not established in the European Union towards non-taxable persons.

• The second of the special OSS regimes can be applied for transactions with non-taxable persons for distance sales of goods between Member States, for deliveries of domestic goods made by electronic interfaces facilitating such deliveries and for certain services provided by taxable persons established in the EU towards non-taxable persons, but not in the Member State of consumption.

• The third of the special OSS regimes can be used for the distance sale of goods imported from outside the EU.

A single ceiling of EUR 10,000 (roughly RON 46,337 in Romania) has been set in all Member States for intra-community deliveries of distance goods or, inter alia, for services provided electronically. So if this threshold is exceeded, the special regime is applied. However, it is possible to apply the special regime for at least two calendar years even if the ceiling is not exceeded.

Basically, in the case of sales to individuals from other EU countries, a Romanian company will apply:

• the Romanian VAT rate for sales under the ceiling,
• the VAT rate in the buyer’s state for sales above the ceiling.

Special regime for services provided by taxable persons not established in the European Union

Any taxable person not established in the European Union may use a special regime for all services provided to non-taxable persons who are established in the EU. The special regime allows, inter alia, the registration in a single Member State of a taxable person not established in the EU for all services provided to non-taxable persons established in the EU.

The entity will receive a special registration code for VAT purposes, and it is not necessary to appoint a tax representative.

By the end of the following month after the end of each calendar quarter, this entity must submit a special VAT return (in EUR) – regardless of whether services were provided under the special regime – which will contain:

• the special registration code for VAT purposes;
• total value, excluding VAT, of the services under the special regime, the applicable VAT rates and the corresponding amount of VAT subdivided into quotas, due to each Member State of consumption,
• the total amount of VAT due in the EU.

The taxable person not established in the EU must pay the total amount of VAT due in the EU, to a special account, in EUR, by the date on which the special declaration must be submitted. It cannot deduct VAT through the special tax return, but it can request a VAT refund under certain conditions (amongst others, if there is a reciprocity agreement regarding the VAT refund between Romania and the respective country).

Click here if you want to read the full article about the new special OSS regimes in Romania on the homepage of Ensight, the exclusive representative of WTS Global in the country.

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In addition to a stricter definition of the term ‘beneficial owner’ and related definitions, the new law also regulates in more detail the proceedings for registration in the records of beneficial owners in the Czech Republic. And what is even more important, compared to the previous regulation, it introduces completely new sanctions for failure to comply with the obligation to perform proper registration in the records of beneficial owners. These new sanctions comprise, on the one hand, the possibility of a financial fine for a missing or incorrect record in the records of beneficial owners, but also a restriction or prohibition on the payment of a profit share and a restriction on the exercise of voting rights for those members not recorded as beneficial owners even though they are.

New definitions 

The Registration Act was adopted in connection with the requirements of the fifth EU Anti-Money Laundering Directive. These are intended to improve the transparency and efficiency of the legal regulation of records of beneficial owners. The Registration Act therefore imposes on ‘registrants’ (basically meaning every legal person with a registered office in the Czech Republic and the trustees of trust funds) the obligation to ensure that all natural persons who meet the definition of beneficial owner are registered in the records of beneficial owners in the Czech Republic.

According to the new definition, a beneficial owner is any natural person who is an ‘end beneficiary’ or person with final influence. The Registration Act then defines in detail these new terms for various types of legal person. For example:

• an end beneficiary of a business corporation (meaning an enterprise) is any person with a direct or indirect right to a share in the profit, other own resources, or the liquidation balance of a business corporation of over 25%, and who does not pass this share onto others;

• a person with final influence in a business corporation is any natural person who is a controlling person pursuant to the Czech Business Corporations Act.

If it is not possible to determine any beneficial owner even after the registrant take all efforts that can reasonably be required of them (while the performance of such steps must be demonstrably documented), every person in the senior management of the corporation will be considered a beneficial owner.

Registration, public access and inconsistencies in records of beneficial owners in the Czech Republic

The new Registration Act also newly regulates the proceedings for registration in the records of beneficial owners performed by register courts. There will now be partial public access to records of beneficial owners in the Czech Republic. This means that anybody will be able to obtain a partial extract from the records showing information about the beneficial owner.

The Registration Act also introduces the institute of ‘inconsistencies in the records of beneficial owners and court proceedings on inconsistencies. This is intended to enable the register court to effectively enforce the obligation to register. New obligations in relation to inconsistencies are also imposed on obligated persons pursuant to the Act on Selected Measures Against the Legitimisation of the Proceeds of Crime and Financing of Terrorism (e.g. financial institutions like banks and insurance companies, but also e.g. auditors, lawyers, notaries, tax advisers and others) who will, in some cases, be obliged to notify their clients – and potentially also the register court – of inconsistencies.

Significant new sanctions

Sanctions for failure to comply with the obligation to perform proper registration in the records of beneficial owners in the Czech Republic will also undergo significant changes compared with the current legislation.

In accordance with the requirements of the fifth EU Anti-Money Laundering Directive, sanctions of up to CZK 500,000 (roughly EUR 20,000) will be introduced for infractions. These can be imposed both on the registrant (e.g. a business company) but also on its beneficial owner, end beneficiary or e.g. person with final influence, if they do not provide the necessary cooperation to the registrant. The introduction of sanctions impacting the internal decision-making of a business corporation is completely revolutionary.

If a beneficial owner of a business corporation is not registered in the records of beneficial owners in the Czech Republic, the business corporation may not pay them a share of the profit. Nor may it pay this share to a different legal person (e.g. a parent company) where they are also a beneficial owner. The same applies if the business corporation does not have any beneficial owner recorded in the records of beneficial owners. The payment of a share of the profit in violation of this prohibition would represent, on the part of the statutory bodies of that company, a breach of their obligations and could establish their personal obligation to compensate the company.

Similarly, if the beneficial owner of a business corporation is not recorded in the records of beneficial owners, they may not exercise voting rights during decision-making by the general meeting of that business corporation or make decisions as its sole member. Decisions taken in breach of this prohibition would be invalid, and would need to be enforced at a court of law through a procedure pursuant to the Business Corporations Act.

These latter sanctions (restrictions or prohibition on the payment of a share in the profit and restrictions on voting rights) represent an unprecedented and significant intervention through the public law regulation of records of beneficial owners in the internal relations of legal persons, in particular business corporations.

For the above reasons, we recommend in particular that all statutory bodies of business companies and also members do not underestimate their preparations for the Registration Act. It is in the interest of companies and their beneficial owners to supplement any missing or incomplete records in the records of beneficial owners as soon as possible.

If you have any queries or need to adapt to the new legislation, the experts of WTS Alfery, the exclusive representative of WTS Global for the Czech Republic will be happy to provide you with professional support.

A Changes to records of beneficial owners in the Czech Republic bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

What does BIREG mean exactly? 

The Provisional Electronic Permit Registration or BIREG system (bilateral registration system) is the new electronic system operated by the authorities from 1 January 2021. It was created by the Ministry of Innovation and Technology to check and track the lawful use of bilateral and multilateral as well as CEMT permits required for international road freight.

Who is affected by the BIREG registration requirement? 

Use of the BIREG system and registering in the system can affect all companies that conduct passenger and freight transportation activities by road. This does not include EU companies which handle freight exclusively with a Community permit. 

Which freight services must be registered? 

Registration in the BIREG system is required for lorries with a mass over 3.5 tonnes handling international road freight for a fee on Hungarian territory, lorries with a maximum authorised mass of over 3.5 tonnes handling international road freight on own account, and lorries handling cabotage transportation on the territory of Hungary.

When do you have to register? 

The registration is related to entering and leaving Hungary as well as to loading and unloading.

How does the BIREG system work, how do you register? 

Registering in the BIREG system is a two-stage process. Firstly, the given company has to register in the system. You have to enter the company name, registered office, contact details, Community permit or international road freight permit number, as well as define a unique company ID that is used to identify the company within the BIREG system. Then the freights are registered, indicating the places for loading and unloading, the vehicle number plate and its environmental classification. The system decides on this basis whether or not the freight requires a permit. Events must be assigned to these freight transactions. Such events are entering the territory of Hungary, unloading then loading in Hungary, and leaving Hungary. In the case of cabotage transportation, the recorded events are the freight to Hungary before the cabotage, and the international freight after leaving Hungary.

What do consignors and consignees have to do? 

From 1 January 2021, consignors and consignees have to register in the BIREG system and check the validity of their international freight permits, as well as record the freight data on the freight log or permit. The plan is to supplement these tasks from 1 July 2021 with registering the freight data in the BIREG system and uploading the waybills. If problems are detected they must be notified to the transportation authority, the customs authority or the police by the consignee or the consignor.

What are the consequences for failing to fulfil the BIREG requirements? 

From 1 February 2021, failure to use the BIREG system is the same as handling freight without a permit. The haulier, the consignor and the consignee can all be penalised. Hauliers can be fined HUF 800,000 (roughly EUR 2,200) for failing to use the BIREG system, i.e. failing to register, while the consignor and/or the consignee can expect a fine of HUF 300,000 (roughly EUR 817) for failing to meet their notification and permit administration obligations.

We recommend consulting with logistics specialists at your company about the need to register for the BIREG system, and if you use external logistics providers you should check your partner is aware of the changes and handles your consignments accordingly. If you have any questions about the system requirements, please get in touch with the tax specialists of WTS Klient Hungary.

A BIREG system besides EKAER from 1 January? bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Case manager registration, step by step

1. The person authorised to use the business gate accesses his/her personal storage space after the identification process (Central Identification Agent) on the tarhely.gov.hu website (available in Hungarian), then selects the business gate storage space for the company (indicated with the first eight numbers of its tax number) from the drop-down list in the navigation menu.

2. To complete the case manager registration, first click on “beállítások” (settings) in the top right corner of the screen, then in the “ügykezelők” (case managers) menu click on “új hozzáadása” (add new).

3. During the case manager registration, the following personal identification details of the new case manager must be supplied: name at birth, name at present, mother’s maiden name, place of birth, date of birth. It is important that the person assigned as a case manager for the business gate has individual storage space too. During the case manager registration, the following settings can be made:

• “új üzenetküldés tiltása” (block new messages): by ticking the box the case manager’s right to send documents is blocked;
• “meghiúsulási igazolás menüpont tiltása” (block the presumption of service notification menu) by ticking the box the case manager’s right to access the presumption of service notification menu is blocked;
• “cégképviseletre jogosult” (authorised to represent company): by ticking the box the case manager is entitled to handle documents received in the business gate addressed to natural persons and bearing a limited access label. (“Blocking the presumption of service notification menu” and “authorised to represent company” options may not be selected at the same time.)

After supplying the above details and settings, click on the “mentés” (save) button.

Approval of case manager registration

Contrary to earlier practice, case managers assigned to the business gate are only given a temporary status (awaiting approval) for the business gate storage space until they approve. Please note that a case manager with temporary status does not yet have access to the business gate.

The system sends a notification to the email address provided for the assigned case manager’s personal storage space, asking the assigned case manager to approve of the assignment within five days. Should the case manager fail to do so, the system will send a notification message one day before the deadline. If the person assigned as case manager does not approve the assignment by the above deadline, it will automatically be revoked by the system.

New function – request for deleting case managers

In addition to fine-tuning the above rules of case manager registration, the business gate service in Hungary has some new functions. Among other things it is now possible to request the deletion of an assigned case manager for the business gate under the “beállítások” (settings) menu. The deletion request is approved by the person authorised to use the business gate within 30 days. If this person fails to meet this deadline, the system will automatically delete the case manager’s assignment for the business gate storage space.

Business gate users are advised to keep an eye on the changes to the business gate storage space functions. If you have any questions about the registration of case managers, the professionals at WTS Klient Hungary are here to help.

A Business gate administration: case manager registration, step-by-step bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

In the first issue of our 2019 CEE newsletters we present you the beneficial owner concept applied in twelve countries in Central and Eastern Europe. We have written about the current regulations of this area in different CEE countries in several previous articles, but now we have summarised the situation and we can compare what is happening regarding the registration of UBOs in some EU countries (Austria, Czech Republic, Estonia, Hungary, Latvia, Lithuania and Poland) as well as third countries like Russia, Serbia and Ukraine.

Implementation of Directive (EU) 2015/849

The data reporting obligation affecting ultimate beneficial owner (UBO) data, or in other words, the registration of UBOs, is designed to comply with the provisions of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. The Directive stipulates that “With a view to enhancing transparency in order to combat the misuse of legal entities, Member States should ensure that beneficial ownership information is stored in a central register located outside the company, in full compliance with Union law. Member States can, for that purpose, use a central database which collects beneficial ownership information, or the business register, or another central register.”

For the registration of UBOs some European countries have already launched such a central register, while the non-European countries have their own legislation and specialties too.

Definition, default penalty and court practices

Our articles focus not only on the definition of the beneficial owner, the obligations regarding the registration of UBOs or the status of central registers. In some countries, a default penalty derived from non-compliance with the registration obligation also has to be taken into consideration, and there are still uncertainties in this context. For example, the Russian beneficial ownership concept, which follows the OECD approach, has already become one of the major mechanisms applied by the Russian tax authorities to counteract tax avoidance schemes, limit capital outflow and raise fiscal revenues in Russia, but the number of uncertain issues related to applying the beneficial ownership concept and negative court practices are also growing.

Strange abbreviations in connection with registration of UBOs

After reading the articles about the registration of UBOs in the different countries, you will probably remember that WiEReG or MAMLA are not magic spells but the name of the beneficial owner register in Austria and the related law in Bulgaria. The trends suggest that the number of strange abbreviations used for such registers is set to increase and all countries will introduce this system.

We hope you will find our articles informative and useful, but please bear in mind that before starting anything you should contact your local tax advisor to understand all the rules and requirements in detail.

A Registration of UBOs in Central and Eastern Europe bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.