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We asked the management of Grant Thornton Hungary to evaluate the 2021 financial year in terms of what was their greatest success, the biggest challenge they had faced, what words they would use to characterise last year, how market trends affected their business line, and what their plans are for 2022.
In the following, we have compiled and will now also share with you GT Hungary’s review of the year 2021, and the further goals set by the leaders and teams of each division.
What was the greatest success you achieved in 2021?
For the Tax Advisory division, the beginning of the year started with a fairly significant transformation, as there was a change in the management, and then from the beginning of April József Vizer became the sole person responsible for the management of the Tax division, who is now also a Group Partner. “The handover of the tasks was quick and smooth, and the tax division remained stable also afterwards.”
In the Transfer Pricing Advisory business line, success came in the form of new clients, thanks to many years of constructive work, as well as the opportunities offered by the Group. There has been a shift in the market since, in addition to legislative changes in recent years, access to the databases used has also become more expensive, which accentuated the quality gap between market players, to the benefit of GT.
In the Accounting area, Balázs Szentirmai said that “in the interest of the more efficient handling of our own company processes, as well as providing a higher level of service for our clients from an accounting and controlling point of view, in a parallel way with the introduction of our new ERP system, we have also changed the organisational structure of the accounting department. This serves the purpose of using the automated data processing capabilities offered by our new system to the maximum extent possible.” Balázs is also a GT Partner starting from this year.
In connection with the HR department, the business unit newly established in 2021, Zsófia Vajna highlighted the following, and perhaps most important success of the year: “Our launch was the success itself!” She further highlighted the success of her well-functioning and stable team, as well as the positive impact of the development of internal human resources functions.
Judit Gittinger, leader of the Audit division, believes that last year’s success was in the growth in terms of clients, turnover and staff, which she says was due to the satisfaction of the clients and more familiarity with their work. In Judit’s words, “we have no idle periods.”
Anna Szabadfalvi believes that the success of the Payroll division is due to the professional recognition of her colleagues by clients. Further, she said that “last year, several of our clients relied on our colleagues’ work, in outsourcing arrangements, performed at their premises as on new tasks within their company or taking over the tasks of their staff that left the company.”
The head of the Valuation division considered the highest volume of revenue in the company’s history as one of the biggest successes of last year. According to Ágoston Jakab, this is due to the fact that “Based on the current trends in the real estate market, we received a higher number of inquiries and assignments than in previous years in the field of real estate valuation and technical advisory services for banks,” and he also underlined the orders received from 17 banks in a contractual relationship.
Szabolcs Nagy, the managing director of M&A Consulting, attributed the success of the business line to the positive feedback from his clients, and stating that “We have been able to secure business thanks to our positive references, and the decisions to choose us was not primarily made by the clients based on our fees.”
What were the biggest challenges last year?
Here, the recurring responses concerning the main challenges identified by the management included how to correctly handle the situations arising due to COVID and the difficulties that this caused. These included the provision of professional support for colleagues working in home office, maintaining team spirit and motivation, organising and carrying out work abroad, travelling, as well as the difficulties of building contacts and ensuring the availability of the suitable equipment and technical systems.
In addition, the challenges also included the tasks related to starting the new HR business line and, last but not least, the change of management within the Tax and Accounting divisions.
What are the 3 words that best describe last year from a business perspective?
Unsurprisingly, one of the most frequently used expressions was Home Office, as this was and still is the safest mode of operation both for the employees and the company last year and also currently.
Based on the previous phrase, the words Innovation/Digitalisation are not a surprising answer either, as this is a necessary precondition for our colleagues in home office and the clients being able to work together efficiently.
And last but not least, Growth. By this we mean growth in terms of headcount, revenue, awareness of our company, inquiries received and clients.
What impact, if any, has the market had on each business line?
Here, of course, a different impact can be observed for each business line. For example, for Accounting, it was digitalisation (processes and demands for automated data processing), while in case of the Tax division, it was the social media presence of competitors.
In turn, it can be said that each division has seen an increase in the demand for its services.
Plans for 2022
Like all companies, one of our top priorities is to increase our market share. In addition, it is very important for us to keep our existing clients satisfied and properly served. We are also planning to further develop our current services, as well as to implement new ones, thus expanding our portfolio to provide a more complex and professional service to our existing and future clients.
We place particular emphasis on employee satisfaction, as we consider it important to provide a suitable working environment, given that our employees are our most important resource.
Thank you to the management of Grant Thornton Hungary for taking the time to answer our questions! We hope that we have been able to give you an overview of last year’s performance, as well as this year’s objectives.
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Act CLI of 2021 on amending the Act XLVI of 2008 on the food chain and its official supervision Act XLV of 2020 on the Retail Tax was published in the Hungarian Gazette on 22 December 2021. The legislation introduces food rescue rules for the highest-turnover food retailers and (partly to these company groups) raises the retail tax rate in the top band of the mentioned tax type. In this current, second part of our two-part newsletter, we present the changes in the rules of retail tax.
The only change is that the rate of the retail tax will increase from the current 2.5% to 2.7% after the part of the tax base exceeding HUF 100 billion (approx. EUR 274 million). The tax rates of the other bands remain unchanged.
The following table summarizes the current, furthermore the future Hungarian retail tax rates (the change shall be applied only after 1 February 2022):
| The rate of retail tax based on the part of tax base… |
Until 31 Jan 2022 |
From 1 Feb 2022 |
| below HUF 500 million (ca. EUR 1.37 million) |
0.00% |
0,00% |
| between HUF 500 million (ca. EUR 1.37 million) and
HUF 30 billion (ca. EUR 82.20 million) |
0.10% |
0.10% |
| between HUF 30 billion (ca. EUR 82.20 million) and
HUF 100 billion (ca. EUR 274 million) |
0.40% |
0.40% |
| above HUF 100 billion (ca. EUR 274 million) |
2.50% |
2.70% |
In connection to the change, the amendment also stipulates how the companies affected, i.e. with a turnover above HUF 100 billion (approx. EUR 274 million), must calculate their payable retail tax.
If a company’s payable retail tax base in the tax year including the effective date of the above-mentioned change (1 February 2022) is more than HUF 100 billion (approx. EUR 274 million), then the company concerned may determine its payable retail tax, using one of two possible methods of its choice.
This means, on the one hand, that the change only applies to companies with a retail tax base of above HUF 100 billion (approx. EUR 274 million), and on the other hand, not only to those companies, that are affected by the new food rescue rules presented in the first part of our newsletter.
When using the first calculation method, as a starting point, it should be determined how many calendar days have elapsed in the given company’s tax year until 31 January 2022 (i.e. the last day on which the “old” tax rate is still applicable).
These calendar days must first be divided by 365 (i.e. proportionating; neither 2021 nor 2022 is a leap year) and then the quotient obtained must be multiplied by the annual tax determined according to the tax table in force until that day (the table above shows that for the part above HUF 100 billion, or ca. EUR 274 million, the tax rate is 2.5% until 31 January).
Thereafter, the company must also divide (proportionate) the remaining days of its tax year, not taken into account in the calculation, by 365 and multiply the resulting quotient by the annual tax rates determined on the basis of the new tax table. In this case, for the part above HUF 100 billion (approx. EUR 274 million), the payable retail tax must be calculated with 2.7%.
Under the second method, the taxpayer shall apply the increased, 2.7% tax rate only to the difference between its tax base accruing in its whole tax year and its tax base accruing up to 31 January 2022, provided that the latter is supported by an accounting closure.
As can be seen, the change only applies to companies with a turnover of over HUF 100 billion (approx. EUR 274 million), therefore only a few – almost without exception – multinational companies and company groups are affected.
Should you have any further questions regarding the contents of this newsletter, Grant Thornton’s tax experts are gladly at your disposal.
This newsletter is written on the basis of the information available on the day of its publication and is for general information purposes only, so it does not in any way constitute or replace personal tax advice.
Act CLI of 2021 on amending the Act XLVI of 2008 on the food chain and its official supervision Act XLV of 2020 on the Retail Tax was published in the Hungarian Gazette on 22 December 2021. The legislation introduces food rescue rules for the highest-turnover food retailers and (partly to these company groups) raises the retail tax rate in the top band of the mentioned tax type. In this current, first part of our two-part newsletter, we cover the most important details of the new food rescue rules.
According to the amendment, in order to prevent and reduce food waste, although from 1 February 2022 expired food can still not be placed on the shelves as food (i.e. a product intended for human consumption), however, these products are available for free donation, provided that certain conditions set out in the EC Regulation (EC) No. 852/2004 of the European Parliament and of the Council on the hygiene of foodstuffs are met and in the possession of a so-called FELIR identifier, based on the last year’s amendment to the Regulation.
The best before date indicates the time interval within the food should retain its quality. Unopened food stored in the recommended manner in most cases is still fit for human consumption after its “best before date”, but it may have lost its flavour, odour, or texture.
In contrast, the use by date refers to the time until the food can be consumed safely. In other words, the consumption of expired food unfit for human consumption is, in extreme cases, particularly harmful to human health.
If a food retailer (natural or legal) person, selling daily consumer goods, liable for the payment of the food chain supervision fee (hereinafter referred to as the “Fee”), gained during the calendar year 2021 (i.e., not during its business or tax year) a total net sales revenue (excluding excise duty and public health product tax) of at least HUF 100 billion (approx. EUR 274 million) from its activities underlying the Fee, then
- on the one hand, will be entitled to offer food in its possession for the benefit of a charitable organizations;
- on the other hand, will be obliged to act in accordance with its own food waste reduction plan and offer food placed on its shelves – with a best before date longer than 48 hours – at least 48 hours before the expiry of its best before date to the newly established Food Rescue Centre Nonprofit Limited Liability Company (hereinafter referred to as the “FRC”, or after its Hungarian abbreviation: “ÉMK”).
For food retail companies, who do not achieve the above-mentioned sales revenue, donations to FRC/ÉMK will be voluntary and, of course, these companies will also be eligible to donate to charities (at least 48 hours before the expiry of the best before date).
Thus, according to the amendment, food retail companies with a net turnover of at least HUF 100 billion (approx. EUR 274 million) in 2021 will be obliged to follow the best before date of food with a shelf life of more than 48 hours from 1 February 2022 and before (at least 48 hours) the expiry of this date they will be required to provide the relevant foodstuffs to the FRC/ÉMK free of charge. It is not clear from the wording of the law who can dispose of the food during the last 48 hours of the best before date: the food retailer who has been holding it on the shelves of its shops until then, or the FRC/ÉMK.
FRC/ÉMK will be a 100% state-owned company, over which the ownership rights will be exercised by the food chain supervisory body (currently the National Food Chain Safety Office; abbreviated in Hungarian as “NÉBIH”) on behalf of the Hungarian State. The main task of FRC/ÉMK will be the co-ordination of the food rescue process at the national level, in the framework of which it will, among other things, supervise the food waste reduction plan of the companies obliged to prepare such document (if necessary, FRC/ÉMK will propose amendments to it) and maintain a food rescue database of food rescue organizations.
The food waste reduction plan (hereinafter: “Plan”) is also a novelty, which will be introduced from 1 February 2022. The preparation of such document will be obligatory only for those food retailer companies, that realized a net turnover of at least HUF 100 billion (approx. EUR 274 million) in 2021 (under the conditions already detailed above).
The Plan will have to include the amount of food waste generated at the given company, the amount of reduction to be achieved, and the type and amount of the voluntarily or obligatory food donation.
Failure to prepare the Plan or failure to submit the prepared Plan to the FRC/ÉMK may result in the imposition of the newly established food rescue fine, which the food chain supervisory body will be entitled to levy.
The same fine will be imposed on companies that have submitted a Plan but have found out during the year that the food waste they produce has exceeded the amount set in their Plan by more than 2% per year.
The minimum amount of the food rescue fine will be HUF 15,000 (approx. EUR 41), and the maximum amount will be 0.6% of the Fee for the previous business year. As the amount of the Fee is 0.1% of the previous year’s net sales revenue, the amount of the fine may exceed HUF 600,000 (approx. EUR 1,644) for companies with a turnover of more than HUF 100 billion (approx. EUR 274 million) in 2021 (i.e. for the exclusive subjects of the fine).
The law now passed does not stipulate whether a single payment of the fine will replace the preparation of the Plan for the given year or, on the contrary, the fine may be imposed more than once until the Plan is submitted.
As already mentioned, the new regulation will enter into force on 1 February 2022, so the Plan – for the food retailer obliged to prepare it – shall be prepared and submitted to the FRC/ÉMK for the first time by 31 May 2022.
Based on the above, the changes only apply to companies with a turnover of over HUF 100 billion (approx. EUR 274 million), as a result, they affect only a few, almost without exception, multinational companies and company groups. However, it is not inconceivable that in the future the regulation will be extended to companies with lower turnover.
Should you have any further questions regarding the contents of this newsletter, Grant Thornton’s tax experts are gladly at your disposal.
This newsletter is written on the basis of the information available on the day of its publication and is for general information purposes only, so it does not in any way constitute or replace personal tax advice.
A bargain has been born: the increase of the minimum wage and the guaranteed minimum wage will also affect other types of taxes
On 17 December 2021, Act CXXXI of 2021 was published in the Hungarian Gazette. This law contains other tax necessary measures in connection with the increase of the minimum wage and the guaranteed minimum wage in 2022. In this newsletter, we have collected the most important details of this legislation.
2 days before the publication of the said law, on 15 December 2021, Governmental Decree No. 703/2021 was also published, in which it was announced that in 2022 the gross monthly minimum wage in all Hungarian industries and concerning all employers in Hungary will be HUF 200,000 (approx. EUR 548), while the gross monthly guaranteed minimum wage – this is for employees employed in jobs requiring at least secondary education or secondary qualifications – will be HUF 260,000 (approx. EUR 712).
However, much earlier, in September 2021, negotiations between the representatives of the private sector and the Government on the exact amounts and the related tax benefits, which are “in exchange” for the employers for these additional expenditures, started. The Government was also forced to make such a gesture because, according to information published in the press (based on the data of the Hungarian Central Statistical Office), the increase in the minimum wage and the guaranteed minimum wage directly affects the 34% of the people, who are employed in the corporate sector and the minimum wage has increased by almost 20%, while the guaranteed minimum wage has increased by almost 19% compared to 2021.
Under the law passed in December, the rate of social contribution tax payable by the employer on the employee’s gross wage decreased by 2.5 percentage points, from 15.5% to 13%, from 1 January 2022, furthermore the 1.5% vocational training contribution was also abolished on 1 January (earlier than the originally planned 1 July). In connection with the latter, the tax relief for specialized education and dual training will be maintained, i.e. they will also be applicable in the social contribution tax.
Overall, therefore, the tax burden on employers’ wage payments will be reduced by 4%, which now means only the 13% social contribution tax.
The reduction of the social contribution tax rate results in a change in two other types of tax: on the one hand, the rate of the payer’s simplified public contribution (Hungarian: egyszerűsített közteherviselési hozzájárulás; abbreviated as “EKHO”) is also reduced to 13%, and on the other hand, if a private individual is liable to pay social contribution tax, then during the calculation of his / her own personal income tax base, he / she shall take into account 89% of his / her relevant income, compared to the previous 87%.
The rate of the small business tax (Hungarian: kisvállalati adó; abbreviated as “KIVA”) will also be reduced, from 11% to 10%. However, due to the reduction in the social contribution tax detailed above, companies wishing to switch to this tax type in any case will have to calculate whether it is really worthwhile for them to choose it.
Although not related to the social contribution tax, the legislator states in the law under examination that, similarly to 2021, the rate of the local business tax (Hungarian: helyi iparűzési adó; abbreviated as “HIPA”) in 2022 for small and medium-sized enterprises with a turnover or balance sheet total of less than HUF 4 billion (approx. EUR 10,959,000) will also be maximized at 1%, and in 2022 the companies concerned will only have to pay 50% of their local business tax advance at the tax rate according to the given municipal decree.
As in the previous year, this local business tax discount is again conditional on a prior declaration, submitted by 25 February, except for companies that already did it in the last year (the latter firms only have to submit again, if they have a new headquarters or business premises which has been created after the submission of the declaration in 2021).
The law also states that local governments are not allowed to introduce any new local / municipal tax type for 2022.
Finally, as a result of the increase, the maximum amounts of state subsidies related to childbearing already (partly) linked to the minimum wage will change: the amount of the so-called “GYED” (childcare fee, or in Hungarian: gyermekgondozási díj) will not exceed HUF 280,000 (approx. EUR 767) gross per month, while the “GYOD” (home care fee for children, or in Hungarian: gyermekek otthongondozási díja) will not exceed HUF 200,000 gross (approx. EUR 548).
Should you have any further questions regarding the above, Grant Thornton’s tax experts are gladly at your disposal.
Grant Thornton grows global revenues from USD5.8 billion to a record USD6.6 billion
London – 17 December 2021: Grant Thornton International Ltd today announced its revenues grew from USD5.8 billion to a record USD6.6 billion for the financial year ended 30 September 2021 (up 14.3%). Over half of Grant Thornton member firms globally achieved double-digit growth in constant currency terms* during a challenging year.
Overall headcount grew from 58,000 to 62,000 reflecting the network’s ongoing investment in its people and its commitment to building a diverse and inclusive global culture.
Peter Bodin, CEO Grant Thornton International Ltd says: “By staying true to our values, putting our people first, and supporting our clients and communities, together with our investments in common technology platforms, we have performed when it counted the most. I’m immensely proud of the network’s collective success, thanks to the efforts of our people during what has been the most difficult time in a generation for our profession and society.
“As the world continues to evolve and adapt, so does Grant Thornton with the launch this year of a new five-year network strategy that will take us through to 2025. Our network strategy is built around our purpose to care for our people, clients, and communities and to help create a sustainable impact in the world. It has a laser focus on growing and protecting our international business. Everything we do will be aligned around this goal and making sure we have the core infrastructure to deliver it. We will focus on building strategic capabilities, managing risk, quality and building our international culture. Our new Go Beyond brand was also launched this year to support the network strategy so that we can deliver a different experience to our people and clients, grow international business, and attract the right talent around the world.
“With sustainability one of the biggest external forces for business we were invited this year to join the Glasgow Financial Alliance for Net Zero to ensure all our financial decisions take climate change into account. I am very proud to have signed this commitment on behalf of our network.
“While these results are encouraging, the macro-economic outlook remains uncertain with increased risks from disrupted trade conditions, supply chains and concerns about the pandemic. Nevertheless, I believe Grant Thornton has proved its resilience and we are extremely well-positioned to respond to market opportunities and to the increasing demands for change in our profession.”
After postponement by a quarter of a year, NAV’s service of sending to taxpayers draft VAT returns (also called eVAT) will be introduced soon. As reported in our newsletter of 21 July, the tax period starting on 1 October 2021 will be the first one for which NAV sends draft VAT returns. In addition to the fact that the draft VAT returns cannot be used initially for a number of domestic transactions subject to the reverse charge mechanism, they must also be supplemented with data on the import of goods, as well as intra-Community acquisitions of goods and services.
The eVAT system is mainly based on online invoicing data disclosure that has become mandatory basically for all invoices issued by domestic taxpayers, with a substantially wider data content than before. Since, in essence, the draft VAT return will be a structured database query, its usability fundamentally depends on the accuracy of the data submitted into the Online Invoice system, and whether the system of NAV is even able to process the submitted data submitted. In order to ensure that the draft VAT returns be generated in the best possible quality, from October 2021, NAV will regularly notify taxpayers of online invoice data submissions that were unsuccessful or triggered a warning.
Based on information provided by NAV, the notification is sent to the electronic storage space of the taxpayer submitting the online invoice data. Since a significant part of the data reporting errors are due to the incorrect parameterization of the invoicing software, NAV informs the developer of the invoicing software before contacting taxpayers, provided that the tax number of the developer is included in the data supply (in the ”softwareDevTaxNumber” field). It seems logical to add this data to the XML data supply, so that the developer of the invoicing software can start correcting the error on the basis of first-hand information; however, it is advisable to proactively test the quality of the online invoice data supply with the help of tax IT experts, because the later an error is discovered, the more costly it will be to deal with its consequences.
It is important to emphasise that NAV can only send a list of data that is obviously missing from the XML file and a list of relationship errors; however, an apparently correct online data supply may also be incorrect if it contains data that is different from the invoice image. In the latter case, the draft VAT returns sent to both the issuer and the receiver of the invoice will show a difference from the VAT analytics drawn up on the basis of the accounting data. When taxpayers start using the eVAT system, parameterization errors of the invoicing software will quickly be revealed due to which, for example, the date of issue of the invoice is reported instead of the date of performance, as a result of which the eVAT system will indicate the amount of VAT due or deductible after the given invoice into the wrong reporting period. As business partners start to notify each other about the errors in the data supply discovered, a new wave of software debugging can start, ultimately resulting in further improvements in the quality of the draft VAT returns.
In the near future, we will have more information and experience about the eVAT system and its practical application, but it is already known that the interface is expected to be very similar to the one used in the Online Invoice system. It should be pointed out that the use of the eVAT system is not mandatory and that – unlike the PIT return proposal – the VAT return proposal is not automatically finalized and submitted to NAV at the end of the tax return deadline. Nevertheless, it is worth paying due attention to the comparison of the draft VAT returns with taxpayers’ own VAT analytics, as the analysis of discrepancies may also result in the detection of software setup errors, with the quick correction of which default penalties imposed for incorrect online invoice data submission can be avoided.
In the framework of our tax IT services, we are at the disposal of our clients with services such as the checking of online invoice data supplies (including the comparison of the XML files against the invoice images), the correction of XML files, the provision of expert advice for software developments and parameterizations, as well as the support of data supplies with technological solutions.