According to the Accounting Act and the Act on Company Disclosure, all double-entry bookkeeping companies are obliged to publish their financial statements and the resolution on the appropriation of taxable profit prepared in accordance with the Accounting Act - including the auditor's opinion if they are subject to an audit - by the last day of the 5th month following the balance sheet date of the financial year. It is important to be aware of the consequences of a company failing to comply with this obligation. The consequences should also apply if the accounts are submitted by a person who is not entitled to do so," says Csaba Szabó, professional director of the accounting department of ICT Europa Finance Zrt.
The Company Information Service forwards the relevant form to the tax authority (NAV) after receiving the report. If the tax authority does not receive it by the required deadline, it will be immediately notified of the omission.
Notice, default penalty
In the event of failure to comply with the obligation to file and publish the accounts under the Act on the Tax and Customs Code, the State Tax and Customs Authority will issue a notice to the taxpayer setting a 30-day deadline for compliance. If the taxpayer fails to comply with the obligation within the time limit set in the notice, the state tax and customs authority shall again require the taxpayer to comply with the obligation by setting a thirty-day deadline and imposing a default penalty of HUF 200,000.
Termination of business, removal from the register of companies
If the taxpayer fails to comply with the obligation to file or publish the tax return within the deadline set in the repeated request, the State Tax and Customs Authority will cancel the taxpayer's tax number ex officio and will immediately notify the Commercial Court by electronic means and initiate the process of declaring the company dissolved. Within 15 working days, the court will take action to cancel the company, i.e. the compulsory liquidation of the company will begin. The process of compulsory liquidation cannot be reversed. In all cases, the activity of the liquidator selected from the list of liquidators (if necessary by reclassifying the proceedings as liquidation) leads to the winding-up of the company. In the final analysis, therefore, failure to publish the accounts may lead to the company being wound up within approximately 4-6 months of the default.
Personal liability of the manager
In addition to the dissolution of the company, the consequences of failure to report are also set out in the Bankruptcy Law for the chief executive of companies in liquidation. Under the Bankruptcy Law, the interests of creditors are presumed to be prejudiced if the company's chief executive has failed to publish the company's financial statements before the date of the commencement of the winding-up. In such a case, the burden of proving that the director who failed to disclose the information was discharging his or her management duties in accordance with the interests of creditors after the liquidation threat had occurred is on the director. If he fails to prove this to the requisite standard, he may even be liable to pay the creditors' unpaid claims. A director who does not meet his payment obligations (including through enforcement proceedings against him) may not hold a director's position in another company for 5 years.
The company director must also face the criminal consequences of failing to publish accounts.
According to Article 403(1) of the Criminal Code, whoever fails to comply with the obligation to prepare statutory accounts and thereby fails to review or control his/her financial situation for the financial year in question is punishable by a criminal offence punishable by imprisonment for up to three years.
As a result, the failure to deposit and publish the accounts may not only cause the impossibility of the company's economic activity, but may also lead to the personal liability of the executive officer, to his/her disqualification from holding a similar position, and in extreme cases to criminal proceedings - summarises Csaba Szabó, professional director of the accounting department of ICT Europa Finance Zrt.