Financial Insights for Smarter Business Decisions

The EU directive on pay transparency is supposed to be implemented by June 7, 2026 in all member states. Because of the recent general elections and change of regime in Hungary, the introduction of the new regulations will probably be delayed. However, Hungarian companies should still prepare for the new obligations.

If your Hungarian company does not comply with regulations, its tax number can get canceled and the company can be liquidated. However, this forced liquidation procedure can be stopped if you take steps to restore compliance.

What you know as sales tax in the U.S. is more or less the same as VAT or Value Added Tax in Europe. Both are consumption-based taxes that are collected indirectly, meaning that while it is the end user who ultimately pays them, they are integrated into prices and collected by the seller. However, while sales tax should be collected only from the end user, VAT is collected at every point of sale – while remaining economically neutral for businesses.

Small companies operating in industries where long delays are typical between invoicing and settlement sometimes struggle with paying VAT on time – since the VAT content of their invoices must be paid according to the date of delivery, not settlement. Cash accounting was designed to counterbalance this, but it has some serious drawbacks.

In the European Union, most countries have a minimum wage. Each state determines their own minimum wage, and they adjust it regularly to maintain it as a living wage that provides a decent standard of living for full-time workers. A minimum wage can also increase productivity and motivate efficient business operation. Hungary has a minimum wage too; it is applied to everyone without exceptions and adjusted yearly.