Accounting service

We offer comprehensive financial reporting, tax minimization strategies and business advisory services to both private and company property owners. We have the experience required to accurately determine what deductions you qualify for and will develop a comprehensive plan to limit your tax liability.

Our accounting services include:

• Accounting management
• Cash flow analysis
• Business formation
• Tax deferral transactions
• Lease analysis and review
• Preparation of financial and tax related policies

All of our tax and accounting advisors are chartered accountants and we offer our services at very reasonable rates!

General tax regulation

Hungary and most of the foreign countries have signed agreements to avoid double taxation. What does that mean? In all official contracts it is stated: the real estate owner pays the tax in the country where the real estate lies (so, if you have an apartment in Budapest, you are obliged to pay the tax in Hungary). The paid tax is ’accepted’ in all foreign countries though usually the home country asks for the difference according to home regulations. So: if you want to reduce your tax payments at home, it is reasonable to pay tax in Hungary.

Anybody possessing any kind of a property (e.g. apartment) is obliged to have Hungarian Tax Identification (HU tax id). That consists of 10 digits, in a credit card size, containing all personal data (name, date and place of birth) plus the 10 digit tax id number itself. Important note: if you are not the sole owner of the apartment, all other partners in ownership must have the HU tax id.

All persons who have business-like income (in other words: other than salary) must have tax nr (for everyday use I call it: business tax nr). If a tenant wants to get an invoice, only those can issue invoice possess a have business tax number. The tax id is not enough!

At the end of the calendar year all persons who have any kind of income, are obliged to file Personal Income Tax (PIT) return to the Tax Office. For our foreign clients, we always recommend the cost deduction method, because – in their special case – it is more reasonable. From the rental fee received by the apartment owner during the year, we deduct all costs paid by the owner such as the managing fee, insurance, repair, or business trip to Hungary, etc. It is a quite new – and useful – possibility to deduct annually 2% of the real estate’s value as depreciation – in order to calculate it, we always ask for a copy of the sales and purchase contract. Important: all costs must be certified by official invoices, stating the full name of the taxpayer and the exact – Hungarian – address. A receipt is not enough! The difference of all (incoming rental fee and expenses) is the income, and the PIT is – for that year - 15%) of it. Which shall be transferred to the bank account of the Tax Office.

Building tax. In Hungary municipalities in the towns, villages and in the capital have the right to lay for special taxes. One of these is the building tax. In Budapest apartment owners in the 6. district are obliged to pay the building tax without exception, in other districts only business enterpsrises have to pay (it is common among foreigners to establish company when obtaining property in Budapest). The building tax is be paid by the size (square meter) of the apartment yearly. For the moment the building tax is cca 1500 HUF/m2/year – it used to be cca 600-700 HUF 5-6 years ago.

Liability. General liability in all tax related cases is strict: the taxpayer is liable for the current year plus 5 previous years.

Steps. To proceed, the necessary steps:

- to get main personal data (name, date & place of birth, etc) in order to prepare an authorization (to be able to act on behalf of the client at authorities)
- collecting basic documents (purchase contract, renting contracts, invoices, etc)
- to obtain the necessary tax documents (HU tax id, business tax nr).
- preparing the PIT (and, if needed: the building tax) return
- obtaining the official Hungarian Tax Certificate – the taxpayer can prove in his/her homeland the amount of the tax paid in Hungary.

We are in contuniuous contact with the clients during the tax-preparation in order to achieve the best available result.

Important and good to know.

The National Tax Office has unlimited right to get all details of every bank account – so it is almost impossible to hide any income. It seems to be more reasonable to pay the personal income tax – it is among the lowest in Europe – than to risk a potential tax revision: if the Tax Office finds unpaid tax, above the due amount a 100% fine, as well as a huge portion of late payment fee must be paid – much cheaper to pay everything in time.

Personal taxation system works on an annual system. It is not possible to bring some loss – or profit – to another year: every December a period is closing and in every January a new is starting.