The deadline for closing the business (or financial) year is May 31 each year, which comes with several mandatory tasks and decisions. Below we summarize what to pay attention to during the closing process, what tax obligations arise, and what opportunities this period offers for businesses.
**Preparation and Approval of the Financial Statement
Every company registered in the company register and keeping double-entry bookkeeping is required to prepare its annual financial statement, have it approved by the appropriate body (typically the general meeting or the managing director), and publish it through the Electronic Reporting Portal. The deadline for submitting the statement is the last day of the fifth month following the balance sheet date, which, for companies operating on a calendar year, is May 31, 2025.
When preparing the financial statement, special attention should be paid to the following:
- Proper capitalization of assets put into use during the year and accounting for depreciation.
- Reconciliation of general ledger accounts, especially between accumulated depreciation and expense accounts.
- Transferring any unfinished investments to the appropriate asset accounts.
- Preparing the balance sheet, profit and loss statement, supplementary notes, and—if necessary—the business report.
It is the managing director’s responsibility to review, approve, and ensure timely submission of the financial statement.
Corporate Tax (TAO) Filing and Payment
Corporate tax (TAO) must also be filed and paid by May 31. The TAO return is submitted on form ’29 using the ÁNYK program to the Hungarian Tax Authority (NAV). The corporate tax rate remains unchanged in 2025, and the filing and payment deadline is the last day of the fifth month following the tax year. Companies under the KIVA regime are exempt from TAO and follow different rules.
Local Business Tax (HIPA/IPA) Filing and Payment
Local business tax (HIPA) is also part of the May closing. The tax must be filed and paid to the local municipality where the company’s registered office or site is located. The tax rate varies by municipality but is capped at 2%. The tax base is calculated by deducting material costs, the purchase value of goods sold, subcontractor fees, and intermediary services from revenue. Companies opting for simplified tax base calculation must also file by May 31.
Dividend Payment Opportunity
After the financial statement is approved, if the company is profitable, there is an opportunity to pay dividends. The amount of the dividend is decided by the general meeting or the managing director, provided the company has a positive result and adequate capital position. Taxes related to dividend payments (personal income tax, social contribution tax) must also be paid[4].
Other Important Tasks and Tips
- Check that all invoices and documents for the business year have been received and properly recorded.
- It is advisable to schedule the finalization of the financial statement with your accountant in advance to ensure approval and publication by the deadline.
- If, for any reason, submission of the statement is delayed, a request for justification can be submitted to the tax authority (NAV), which may waive penalties in justified cases.
The end-of-May closing is not just an administrative obligation but also an opportunity to review the company’s financial position, make necessary tax decisions, and—in the case of a profitable year—pay dividends. Timely and precise closing contributes to the stable operation of the business and compliance with legal requirements.
If you are uncertain about the details, seek assistance from Everest Accounting to ensure that all obligations are met accurately and on time