A registered company that keeps double-entry accounts must file the accounts approved by the approving body by the last day of the fifth month following the balance sheet date of the financial year (31 May following the end of the month in question in the case of a financial year corresponding to the calendar year). If the Company is subject to statutory audit, the independent auditor's report, including the audit opinion or the report of the independent auditor refusing to grant the audit opinion, must also be filed. The accounts must be deposited in the same form and content (wording) as the basis on which the auditor reviewed the accounts - points out Gábor Gulyás, Chief Auditor of International Consulting Team Audit Ltd.
In addition to the above, the resolution on the use of the profit after tax (approval of the dividend) must also be deposited. There may be situations in the life of a company where the record date and the 5 months for filing are not sufficient.
According to the data of the Hungarian Central Statistical Office (KSH), there are slightly more than 527,000 partnerships operating in Hungary in 2021. Based on the statistics of previous years (typically limited liability companies and limited liability companies), it is assumed that there could be thousands of companies that have not fulfilled the above-mentioned obligation to file and publish their accounts by 31 May 2022.
What sanctions could be imposed on defaulting companies?
If the Tax Authority finds that a company has breached the requirements for filing and publishing the Report, it will act in the following manner under Act CL of 2017 on the Rules of Taxation, warns Gábor Gulyás, Chief Auditor of International Consulting Team Audit Ltd:
- The state tax and customs authority will call the taxpayer to comply with the obligation by setting a thirty-day deadline. In practice, this means that during this period the omission can be made up without penalty.
- If the taxpayer fails to comply with the obligation within the time limit set in the notice, the tax authority will again call the taxpayer to comply with the obligation by setting a 30-day deadline and imposing a default penalty of HUF 200 000.
In imposing the default penalty, the Tax Authority takes into account the tax authority's classification of the company. For example, in the case of a reliable taxpayer, the maximum amount of the default penalty is 50% of the maximum amount of the default penalty that could otherwise be imposed, i.e. HUF 100,000. However, in the case of a taxpayer with a risk rating, the Tax Authority may not waive the imposition of a fine, the minimum fine that may be imposed is 30% of the maximum fine that may be imposed, and in the case of a fixed penalty amount or level of penalty, the fine is 130% of the otherwise applicable fine, i.e. HUF 260 000.
- If the taxpayer fails to comply with the obligation to deposit or publish the report within the deadline set in the repeated request, the Tax Authority will cancel the taxpayer's tax number ex officio and will immediately notify the Commercial Court of this by electronic means and initiate the declaration of the company's dissolution.
If the taxpayer fulfils the obligation to file or publish the tax return before the decision to cancel the tax number becomes final, the tax number will not be cancelled.
What can we lose?
According to Gábor Gulyás, Chief Auditor, it is important to comply with the filing and publication deadlines not only to avoid the direct sanctions mentioned above, but also because companies may be at a significant competitive disadvantage vis-à-vis other market players.
Such negative discrimination may include, for example:
- being at a disadvantage when applying for a grant,
- be given a higher risk rating in a loan application, or the rating required for a loan application is not given until the company has fulfilled its depository and disclosure obligations.
In many cases, companies deposit and publish their accounts but are unaware that they are otherwise subject to audit, and thus complete the deposit without an audit report, which can also cause problems," says the lead auditor of International Consulting Team Audit Ltd.
The laws to be considered are:
Act C of 2000 on Accounting
Act CL of 2017 on the Tax Code
Act V of 2006 on company registration, court proceedings and winding-up
Act CCXXII of 2015 on the General Rules for Electronic Administration and Trust Services