Deferred tax in financial statements from 2024
New concepts pertaining to deferred tax have been introduced to the Accounting Act. The concept of deferred tax may be familiar to companies subject to IFRS accounting and those required to prepare consolidation packages. As of 1 January 2024, entities may opt to recognise deferred tax assets/liabilities in their financial statements, irrespective of the fact whether they prepare IFRS financial statements or not. The concepts of deferred tax asset/liability have also been included in the balance sheet and income statement of the annual financial statements.
Which companies can adopt IFRS for annual financial statements? – read previous blog posts from RSM experts.
Limited liability companies: cross-border transformation
For the purpose of cross-border transformation, the provisions of Act CXXIV of 2021 on Cross-Border Conversions, Mergers, Divisions of Limited Liability Companies shall be applied.
Reporting on Corporate Income Tax Information
The report on the corporate income tax information must be disclosed by the subsidiary of the parent company not subject to EU law and by the branch of such parent company or standalone company and, if the parent company or standalone company has not provided any or all the information, the subsidiary/branch must declare and publish this.
As of 1 January 2024, the report on corporate income tax information published on the company's website must be made available for inspection for at least 5 consecutive years.
This requirement will apply for the first time to the financial statements for the financial year starting on or after 22 June 2024.
Small business tax base (KIVA) modifying items
Under the amendment, adjustments are to be presented in the supplementary notes not only for the corporate income tax base but also for the small business tax base from 2024.
Deposit refund on reusable products
On 1 January 2024, the new return system for beverage packaging, the so-called mandatory deposit refund scheme (DRS),entered into force in Hungary.
Certain provisions of the Accounting Act have also been amended accordingly.
The accounting treatment is different for:
- the deposit refund on non-reusable products subject to mandatory deposit refund
- the refund on reusable products subject to mandatory deposit refund
- the refund on products with voluntary refund by the producers.
The mandatory deposit refund scheme (DRS) and its VAT implications (DRS and VAT) have been covered in a separate blog post.
Waived supplementary payment, dividend
The changes to the Accounting Act, entering into force from 2024, extend the scope of entities applying the provisions on waiving the claims arising from supplementary payments and dividends to entities in general, which will include, in addition to companies, cooperatives (previously only business associations were allowed to do so).
Building right
As of 2024, under the new accounting regulations, the building right is to be recognised as a valuable right relating to land and buildings within tangible assets. For the owner of the real property, the consideration for the sale of the building right is recorded as the net proceeds of the sale, but as the building right is for a fixed term for a number of years, it must be deferred – and released evenly over the term of the contract.
Under the Civil Code, the consideration for the building right may be determined as periodic payments (building lease) in consideration for a service received.
Appointing the auditor
The auditor personally in charge of the audit must also be appointed at the same time as appointing the audit firm.
Value limits of the simplified annual financial statements of micro enterpises
The entity not subject to mandatory audit may choose to prepare simplified financial statements in accordance with the provisions of the government decree under Section 6 (5) (simplified financial statements for micro enterprises) if, for two successive years, on the balance sheet date the value of at least two of the following three features indicating the company's size do not exceed the limit values below:
- balance sheet total: HUF 150 million (previously HUF 100 million)
- annual net sales revenue: HUF 300 million (previously HUF 200 million)
- 10 average number of employees during the financial year: 10 persons
Provisions pertaining to the sustainability report (CSRD Directive)
Chapter III/A of the Accounting Act. The requirements will be phased-in gradually, with the obligation first applying from the financial year beginning on or after 1 January 2024. Entities subject to the CSRD Directive must prepare a sustainability report with information on environmental and social issues, human rights and governance factors that affect them.
A new subtype of demerger: spin-off
Transfers of assets (assets and liabilities) in the context of spin-off, and entering the shares received in exchange in the books shall be recognized in accordance with the accounting regulations related to the formation of business associations.
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* 2023 interim changes in legal regulations affecting accounting
- Act LXX of 2023 on provisions related to the further simplification of the operation of the State
- Act XXXIX of 2023 on amendments to the law to facilitate the competitiveness of the economy
- Act LXXXIV of 2023 on supplementary taxes ensuring the global minimum tax level and related amendments of certain tax laws;
- Act LIX of 2023 on contributions from airlines and amending certain tax laws
