Increasing salary costs, lack of professionals with specialized knowledge, harmonization and standardization of corporate financial processes, or optimization of the processes make “offshoring” or “nearshoring” solutions – when processes are removed to a center in a near or far country – more and more popular on the field of accounting and payroll as well. Before outsourcing the services to another country is worth considering some important things, because they can influence not only the development of the processes but also the costs of the reorganization.
1. Language issues
Although knowledge of English is becoming more common in Hungary, communication in English with local authorities is still difficult. Not only during the company establishment but also in daily accounting and payroll tasks it is necessary to be in contact with the Hungarian authorities which requires Hungarian language knowledge. A good example of this is the compulsory forms of the tax returns and the software needed for the submission of these forms; all are available and acceptable in Hungarian only.
Moreover, in some cases, the local regulations don’t allow the usage of the English language. Such rule is included in the Hungarian Law on Accounting which defines that the books must be kept, and financial statements must be prepared in Hungarian (https://net.jogtar.hu/jogszabaly?docid=A0000100.TV, Sections 4§ (1) and 12§ (2)).
For act on behalf of the company at the authorities, and for completing the daily account and payroll activities we will need different PoA’s and registrations. Some of these can be submitted electronically, but others – like registration for submitting tax returns – require Client gate registration which can be arranged (in absence of a Hungarian ID card) only personally in government offices, priority tax authority offices, some post offices or in embassies. (Client gate is the electronic identification system of the government that allows the electronic administration of authority cases.)
If we would like to give to the administrator full authorization for tax authority issues than a Hungarian tax number should be requested for the private person.
3. Localized accounting and payroll software
In the case of accounting software, it is more common that the system used by the company globally is also used for the Hungarian accounting tasks. Even so, we have to be sure that the software is localized, to fully comply with local legal requirements. However, we will have a harder situation with payroll. While for accounting programs localization is generally feasible -with some cost implications, but due to the complexity of payroll and social security regulations, it is more likely that we will only be able to use locally developed software for payroll calculation. An important standpoint when selecting payroll software is whether the software is available in English and has English-language support, helpdesk. There are only a few programs in the market meeting these criteria, so we should count on increased costs in connection with the implementation of the software due to consultancy hours with the software provider or training in English.
4. Professionals with special accounting and payroll knowledge
It is worth bearing in mind that in some cases Hungarian law requires special qualifications for doing accounting and payroll activities. For example, if the company’s yearly net sales income in the preceding 2 financial exceeded 10 million HUF than the company must appoint a registered accountant for the bookkeeping and the preparation of the financial statements.
There is a similar regulation in the field of payroll as well because companies having more than 100 employees are required to establish a Social Security Pay Office and appoint a certified social security administrator for the fulfillment of social security tasks.
5. Monitoring of changes in the legislation
Laws on accounting and payroll change quite frequently in Hungary. Reliable information about the changes can be obtained only from the text of the laws published by the government, so for the interpretation of the changes it worth considering the appointment of a consultant who can help to understand the legal phrases.
All in all, nearshoring and offshoring solutions can be effective also in accounting and payroll, provided that all aspects are considered carefully and experts with local professional knowledge are involved in the processes to ensure full compliance with the Hungarian regulations.
For solving all these issues, the professionals of BPION with experience in European BPO processes are ready to help you.
Feel free to contact us!