Under Hungarian accounting regulations, companies keeping double-entry books must fulfil their obligation to file and publish their financial statements by the last day of the fifth month following the financial year. For financial years ending on 31 December, this means a deadline of 31 May each year.

NAV is acting increasingly quickly

Experience from recent years shows that the Hungarian Tax and Customs Administration (NAV) is placing increasing emphasis on monitoring compliance with the publication obligation. Last year, the first tax authority notices concerning the publication of financial statements were issued in the second half of July. This year, the authority started the process earlier: the first notices arrived as early as June. It is clear that NAV is paying increased attention to ensuring that businesses comply with their financial reporting obligations by the deadline wherever possible. As a result, businesses have an increasingly narrow window in which to remedy the omission without consequences.

The first notice still arrives without a fine

In the first notice, NAV draws the taxpayer’s attention to the failure to publish the electronic financial statements. The company has 30 days from delivery to fulfil its obligation.

The second notice already carries a fine

If publication has not taken place by the expiry of the deadline, the tax authority sends a repeat notice, sets a further 30-day deadline calculated from delivery, and imposes a default fine of up to HUF 200,000. In our experience, the second notice does not necessarily arrive immediately after the expiry of the first deadline; however, this does not constitute an additional statutory deadline.

The next step may be the cancellation of the tax number

If the financial statements have still not been published after both deadlines have expired, NAV cancels the company’s tax number ex officio and initiates proceedings to have the company declared defunct. An appeal may be lodged against the decision cancelling the tax number within 15 days of delivery; the appeal has suspensive effect on the enforcement of the decision. The tax number may not be cancelled if the taxpayer fulfils its filing and publication obligations before the decision becomes final.

An uncollected document may also be deemed served

In addition, the business must also take the deemed service rules into account. If the taxpayer has an authorised representative, tax authority documents must, as a general rule, be served on the representative. In the case of postal service, a document returned marked “not collected” is deemed to have been served on the fifth working day following the second delivery attempt. If the addressee refuses to accept the document, the date of the attempted delivery is regarded as the date of service.

A document sent to an official electronic contact address is deemed served at the confirmed time of receipt. If the addressee does not collect the message, the system notifies them twice, and the document is deemed served on the fifth working day following the time stated in the confirmation of the second notification, even if no one has opened it.

Notices must be dealt with immediately

Overall, a trend can be observed whereby NAV is taking an increasingly strict approach to failures to comply with the financial statement publication obligation and initiating warning procedures and, where necessary, sanctioning procedures more quickly than before. It is therefore particularly important to publish financial statements by the deadline and to deal with any notices immediately.

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If you require further support in relation to the financial statement publication obligation, the legal consequences of non-compliance or other accounting and tax compliance matters, the experts of Grant Thornton Hungary are at your disposal.