At subsidiaries of foreign-owned corporate groups operating in Hungary, the question often arises whether accounting should be performed under the Hungarian Accounting Act or under IFRS.
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Characteristics of Accounting Under the Hungarian Accounting Act
The advantage of
Hungarian accounting lies in its consistency and clearly structured rules,
while its disadvantage is that it is not suitable for international comparison.
- it is highly regulated in detail,
- it is closely linked to taxation
considerations,
- the format of financial statements is
prescribed,
- the scope for interpretation is limited.
Characteristics of Accounting Under IFRS
IFRS is the abbreviation of International Financial Reporting Standards. Its primary purpose is to inform investors and decision-makers, as opposed to local financial statements, which are mainly prepared for the Hungarian tax authority (NAV) and other regulators. Instead of formal requirements, it focuses on economic substance. It is transparent, allows greater room for professional judgment, and supports international comparability.
IFRS requires a complex approach, detailed documentation, and continuous coordination with various business areas. It gives accounting a stronger analytical and interpretative role, rather than merely serving an administrative function.
The accounting team of LeitnerLeitner takes full control of your company’s accounting tasks. Beyond standard bookkeeping, we provide practical advice to help identify risks and opportunities. Thanks to our integrated service package, you can access tax, payroll, legal, and labor-related advisory services through a single contact person. With our modern technological solutions, administrative tasks do not divert resources from your core business activities. Our recommendations are tailored, efficient, and always up to date.
Revenue and Expense Recognition
IFRS specifies in detail when revenue can be considered realized, how long-term contracts should be treated, and how performance should be recognized over time.
Valuation of Assets and Liabilities
The domestic system approaches assets and liabilities conservatively, focusing on historical cost, whereas IFRS emphasizes fair value, present value, and economic usefulness.
Is IFRS Accounting Accepted in Hungary?
IFRS accounting is optional in certain cases and mandatory in others (e.g. for listed companies or group-level consolidation). In many situations, both systems are used in parallel: Hungarian accounting for local compliance and IFRS for reporting to the parent company.
It is clear that selecting the appropriate system—or aligning the two—is a strategic decision that requires experienced accounting support with an international perspective.
Domestic vs. IFRS Accounting – What Are the KeyDifferences?
What challenges do the Hungarian subsidiaries of international corporate groups face in accounting?
