Budapest Business Journal 2804

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BUSINESS JOURNAL BUDAPEST

VOL. 28. NUMBER 4

FEBRUARY 28 – MARCH 12, 2020

SPECIAL REPORT

Taxes and Accountancy

SPECIAL REPORT

Hungary’s Tax Morale Improved, but Still Average for the Region

The willingness of Hungarians to pay taxes was traditionally regarded as poor, which fits into the region’s communist era history and culture. Recent government initiatives have led to a whitening of the economy and improved morale, but the country remains more or less average in CEE. 13

SPECIAL REPORT

The Drive Toward Automated Accounting

How are Hungarian companies adapting to the appearance of online solutions, how is the government incentivizing them to do so, and how might automation further affect the accounting profession?  16

SOCIALITE

Visiting the Buda Shrine to Harry Houdini David Holzer and friends wander Budapest’s Castle District struggling to find the House of Houdini at 11 Dísz tér. “The irony of trying to find a museum dedicated to celebrating a legendary escapologist that was clearly hiding in plain sight didn’t escape us.”  22

Togetherness and Trust

BUSI

N E SS

Dale A. Martin, winner of the HIPA Partnership Award at the BBJ Expat CEO of the Year gala, talks about NEWS his management philosophy of hard Inflation Surges, work, good communication but Economy Receives and shared values.7 Acknowledgement BUSINESS Although inflation unexpectedly jumped to 4.7% in January, annual inflation will be close to the government’s projection of 2.8% this year, according to the finance minister. For now, the MNB is taking a wait-and-see attitude; however, March is likely to be more interesting when it comes to monetary policy decisions. 3

Korean Air Launches Cargo Flights Between Budapest, Seoul Budapest Airport has celebrated the launch of a direct cargo connection between Budapest and the Korean capital of Seoul, with the first flight carrying some 40,000 tonnes of freight landing on February 20. 11

News

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Budapest Business Journal | February 28 – March 12, 2020

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THE EDITOR SAYS

Kester Eddy, Bence Gaál, Gergely Herpai, David Holzer, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Robert Smyth, Zsófia Végh. LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

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“When France sneezes, the whole of Europe catches a cold,” the 19th century Habsburg-era statesman Klemens von Metternich is credited with having said in relation to the French Revolution and the rise of Napoleon. In the 20th century, America came to replace France, and the rest of the world stood in for Europe. Some might argue in the 21st century that China has now deposed the United States. Whether that’s actually true or not, the COVID-19 coronavirus that was first reported in Wuhan, the capital of China’s central Hubei province, in December 2019 has certainly had tragic results for much of the rest of the planet. At the time of writing, the virus has not been detected within Hungary’s borders, but it does feel like it is circling closer. Greece has confirmed its first case, as have Austria, Croatia and Switzerland (all in people returning from trips to northern Italy). France and Germany have new cases (the former has also reported its first death); Spain has its first mainland case. In Italy, where there have been 11 deaths, the virus is spreading into the central and southern regions. A group of 11 students, two drivers and one accompanying adult who returned to Hungary from a school trip to Lombardy in Italy have been put into a twoweek quarantine at the Szent László Hospital in Budapest, Hungary’s designated clinical center for receiving, treating and isolating those affected. The National Institute for Infectology and Haematology is based at the hospital. There is (again, at the time of writing, but this is a very fluid situation) one Hungarian being treated for the infection: a crew member on the Diamond Princess cruise liner quarantined in Japan. He is not believed to be seriously ill. (A woman being treated in a hospital in Vienna who was thought to have contracted the virus turned out to be a false alarm.)

Budapest Airport, the operator of Ferenc Liszt International Airport, began screening flights from China at the end of January; back then, three airlines operated 13 flights a week from five cities, but Shanghai Airlines and Hainan Airlines have suspended all flights until the end of March, while Air China has reduced the frequency of its flights and, from March 4, will fly only once a week on the route. On Monday (February 24), Budapest Airport also began screening flights from northern Italy. On the morning that we went to print (Wednesday, February 26), it announced that was being extended to also include passengers from Seoul, South Korea. All of this illustrates how interconnected cheap air travel has made our world (not to mention the ever busy sea lanes, highways and railways). Health ministers from the EU have thought about but, for now, held off on closing borders. “We’re talking about a virus that doesn’t respect borders,” bbc.com quoted Roberto Speranza, the Italian health minister, as saying. The price of gold is rising, while shares around the globe have been falling, including at the Budapest Stock Exchange, where the BUX has gone from 45,803.84 on February 24 to 42,754.55 at 9 a.m. on February 26. That is unfortunate, to say the least, but not a tragedy when people are dying. Much of the key advice is surprisingly basic, beyond not traveling to the identified hot spots, and includes plenty of hand washing, avoiding touching your eyes, nose and mouth, and covering your mouth with your bent elbow or a tissue when you sneeze or cough. Keep well, and spare a thought for all those working in the health sector. Robin Marshall Editor-in-chief

Photo: fortepan.hu/Alice Császy

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BATTLING TO KEEP THE CORONAVIRUS AT BAY

THEN & NOW

At left, Canadaʼs Kimberley Dynamiters take on the Hungarian national team on January 10, 1937 on the City Park Ice Rink near Heroeʼs Square (note the lack of helmets). The Dynamiters, as holders of the Allan Cup, were in Europe to play a series of exhibition matches ahead of the World Championships, held that year in London. The Canadians would go on to win the gold medal. In the color photo, Romaniaʼs HSC Csíkszereda Miercurea Ciuc (in the white jersey) take on Hungaryʼs DEAC Debrecen (in black) in the quarter-finals of the Erste Liga on February 24. Debrecen won 1:0.

Photo: MTI/Zsolt Czeglédi

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Balázs Barabás, Zsófia Czifra,

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News///macroscope

Inflation Surges, but Economy Receives Acknowledgement

Although headline inflation unexpectedly jumped to a whopping 4.7% in January, annual inflation will be close to the government’s projection of 2.8% this year, according to the country’s finance minister. For now, the central bank is still taking a waitand-see attitude; however, March is likely to be an exciting month when it comes to monetary policy decisions. ZSÓFIA CZIFRA

After headline inflation in Hungary reached 4.7% in January, far exceeding the mid-term target of the central bank, and the forint hit all-time lows against the euro earlier this month, the National Bank of Hungary (MNB) has been forced to change the tune of its communication on ratesetting decisions. MNB Deputy Governor Márton Nagy finally pledged that the bank would use “all available tools” if needed to combat high inflation. However, at its latest rate-setting meeting on February 25, the Monetary Council left the base rate on hold at 0.9%, and the O/N deposit rate at -0.05%. In a statement issued after the meeting, the council said it would continue to decide on adjustments to monetary policy on a quarterly basis, adding it would carry out a “comprehensive assessment of macroeconomic developments” in the next Inflation Report, due to be published when the rate-setters meet in March. While the central bank is confident that inflation rate will overall be close to its 3% mid-term target this year, and will return to below 4% by the end of this quarter, it is worth noting that the January figure was the highest

In a photo released by the Prime Minister’s Press Office, Prime Minister Viktor Orbán (right) talks with Charles Michel, President of the European Council (second left) and V4 Prime Ministers, at an extraordinary EU summit in Brussels on February 21. Photo by MTI/Prime Minister’s Press Office/Vivien Cher Benkő.

among European Union member states, according to data from the block’s statistical agency, Eurostat. The euro area annual inflation rate was 1.4% in January 2020, up from 1.3% a month before. In January 2019, the rate was also 1.4%. For the EU 28, annual inflation was 1.7% in January 2020, up from 1.6% in December. The rate stood at 1.5% in January 2019. As for Hungary, it has been mostly fuel, food, alcoholic beverages and tobacco product prices that have been responsible for the acceleration in the CPI.

Pork Prices Soar

As detailed KSH data shows, food prices were up by 6.9%, within which pork prices rocketed by 27.6%, the price of other meat preparations was up 17.4%, seasonal food items (potatoes, fresh vegetables, and fruits) rose by 10.8%, sugar prices by 8.4% and the price of meals at restaurants and canteens was 7.2% higher. The price of alcoholic beverages and tobacco rose by 7.4% on average, within which tobacco prices grew by 11.3%. Consumers paid 3.6% more for services, with rent increasing by 10.3%. Motor fuels became 13.5% more expensive. Compared to December 2019, consumer prices rose by 0.9% on average. Food prices were up by 2% on average, within which the price of seasonal food items jumped by 7.9%, both pork and pasta products prices rose by 2.5%, the price of non-alcoholic beverages was up 2.3% and of other meat preparations were 1.5% higher.

Consumers paid 1.2% more for alcoholic beverages and tobacco, within which tobacco (due to an increase in the excise duty imposed on it) became 1.2% more expensive. Some 0.5% more was paid for services, within which postal services were 8.7% more and games of chance 7% more. The price of motor fuels rose by 2.8%. Clothing and footwear cost 2.2% less for consumers due to end-of-season sales.

Viral Infection

Fourth quarter GDP data also came out in the past weeks, and showed a deceleration from the previous quarter. The economy expanded by 4.5% year-on-year in the Q4 of 2019, the first reading of data by the KSH shows, slowing from 5% in Q3. GDP growth was exceptionally strong in the first quarter, reaching 5.3% before slowing to 4.9% in Q2. Full-year GDP growth reached 4.9% in 2019. In 2018 full-year growth was 5.1%, up from 4.3% in 2017. In spite of the deceleration, it came as a positive surprise for analysts, who nonetheless expect the moderate slowdown to continue this year. Now the government has also cut its earlier prediction of 4% to 3.5%, which is the slowest pace in four years. It is mainly due to the impact of the coronavirus and Brexit. “We do not need to make changes to this year’s budget,” Minister of Finance Mihály Varga said in a recent interview, adding that trends in the global economy were so volatile that it is still possible that the original 4% growth projection could be achieved.

On a positive note, the past weeks have also seen Valentine’s Day surprises as well: there were two credit rating reviews scheduled for the Hungarian economy; one was carried out by Fitch Ratings on that affirmed Hungary’s “BBB” sovereign rating, two notches over the investment grade threshold, with a “stable” outlook. The other review, also issued on February 14, saw S&P Global Ratings change its outlook on Hungary’s “BBB” sovereign rating to “positive” from “stable”. “The outlook revision reflects Hungary’s strong economic growth outlook with macroeconomic imbalances remaining contained,” S&P said, noting that the country’s economy is still growing at one of the fastest clips in the European Union.

Numbers to Watch in the Coming Weeks Fourth quarter investment figures will be published by KSH today (Friday, February 28). On March 4, we will find out how domestic spending was in January. On March 6, KSH will release data on the January industrial performance. A few days later, on March 10, we will learn whether the rise in consumer prices was only temporary.

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Walking the streets of Budapest, you can see plenty of CCTV cameras, but no one knows for sure how many there are; most are oblivious to whether they are being watched at all. The Budapest Business Journal talked to three experts about this issue, which concerns all citizens and raises questions that touch on public security, data protection and GDPR. GERGELY HERPAI

Let us start with the question of how densely Budapest is covered by CCTV cameras. Many people seem to believe there is a camera on almost every corner, but Arthur Keleti, president of the Voluntary Cyber Defense Consortium (KIBEV), self-styled cyber-secret futurist, IT security strategist and author of the book “The Imperfect Secret”, says that is certainly not the case. “We do not have accurate information, but according to our assumptions and public data, much of Budapest – 50-60% – is not covered,” he tells the BBJ. In any case, he argues the real concern should be quality, rather than quantity. “Most of the authorities are working with lower quality cameras due to the low budgets of the municipalities and the public cameras are often not properly set up. Many times, cameras are only good at documenting, and they may lack even that level of quality. The capabilities of older analogue or LP systems are limited compared to today’s more expensive, modern cameras.” As for the security cameras installed by smaller companies, they usually

Photo by Azat Valeev/Shutterstock.com

CCTV: Is Big Brother Budapest Watching You? Albert advises concerned citizens to find out which organization is using the camera and visit its website for details on its data management. “If we do not find it – and that is the often case – we contact their data protection officer and ask to be informed about those issues,” she adds.

Facial Recognition

And what might the future bring? There are already scandals about facial recognition software and its unauthorized use (though not, thus far, in Hungary), so the real question is, what use authoritarian regimes may have for making such recordings?

only monitor the shop and space immediately around it. “Most of these are not properly set up and are often not regular cameras either. If someone reports these cameras, say because they are disturbed by the location or what it might record, then the authorities will take action, but only in that case,” the expert emphasized. In other words, the authorities are reactive, rather than proactive, when it comes to policing who is recording what. Is an ordinary citizen entitled to set up CCTV to monitor his or her garden or front gate? How seriously do the authorities deal with unauthorized use of security cameras? “At the moment, public spaces cannot be photographed or recorded either by an individual or by a company, meaning you only have the right to set up cameras to capture private space,” says Keleti.

Court Evidence

“This is the official interpretation by the National Authority for Data Protection and Freedom of Information, according to GDPR regulations. Otherwise, the authority (usually meaning the police) does not necessarily mind if a camera records a public space and provides evidence for them in the case of a crime. These recordings can help on the investigative basis, but cannot provide evidence to present to a court during a trial.” The expert has a story to illustrate exactly that point. “A few years ago, in a housing estate apartment, a camera recorded a burglar who tore the front door open, broke in and stole many things from someone

living there. The burglar looked into the camera, he was perfectly and clearly recognizable. He was later captured by the police but the footage could not be used as evidence in court because it was not recorded on official hardware and it was not indicated outside the front door that there was camera surveillance inside,” he explains. What about public security systems. Could these cameras see into our homes through a street side window? According to Keleti, this is unlikely to happen. “They’re not focused there, and the resolution isn’t good enough,” he says. However, a lot depends on the actual capability, resolution, focus, or extra features of the camera (e.g. night vision, voice recording), as well as angle of view; technically, given the right equipment, it is possible. However, Dr. Ágota Albert, a data protection lawyer and officer, adds that no self-respecting company or council would allow such a thing. “This type of data processing is such a level of interference with the private sector that any organization operating the camera is likely to seriously infringe upon the fundamental constitutional rights of the persons concerned and the principles of data management,” she says. But what organizations have access to public recordings in Hungary and do they have well-defined legal regulations on what they can use them for? According to Keleti, that question need refining: “If we think there was an unauthorized video taken of us or we have other questions about it, can we find out who is managing the footage and who has access? ”

“A few years ago, in a housing estate apartment, a camera recorded a burglar who tore the front door open, broke in and stole many things from someone living there. The burglar looked into the camera, he was perfectly and clearly recognizable. He was later captured by the police but the footage could not be used as evidence in court because it was not recorded on official hardware and it was not indicated outside the front door that there was camera surveillance inside.” Zoltán Kovács, a cybersecurity content consultant, gives the rather alarming example of China, where the police use professional image capture devices like Google Glass in public places and have developed a complete system based on citizen behavior (street behavior, attendance at demonstrations, regular alcohol shopping, etc.) The police classify citizens according to their behavior, and the authorities decide what disadvantages he or she may receive at a state level (such as prohibiting bus, train, or airline ticket purchases), or benefits if the person “acts like a proper citizen”, Kovács says. “This very specific system will follow the citizen for the rest of his life, and it is expected to be applied to all residents of Beijing by the end of 2020,” Kovács explains. Big Brother may not be watching you in Budapest; it seems the same cannot be said for Beijing.

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News | 5

CTP Extends its Network in Hungary and CEE Regional logistics park developer and operator CTP currently has 100,000 sqm under construction in Hungary, most of which is already preleased, and plans to develop another 100,000-130,000 sqm in the country this year in both the greater Budapest area and the regions, the company says. GARY J. MORRELL

Of the 400,000 sqm of industrial take-up in Hungary last year, 150,000 sqm was at CTP developments according to the firm. “The countryside is still an interesting location for CTP. We plan to commence development in prime countryside locations by busy motorways and large city junctions,” says Rudolf Nemes, country manager at CTP Hungary. “We have development plots in Győr, Komárom, Kecskemét and Tatabánya with a total of more than 125,000 sqm. Despite the above, our planning focus remains on the Budapest proximity market. I see

buildings at CTPark Tatabánya and CTPark Budapest West, at Biatorbágy, have been accredited and new additions are in the pipeline. CTP plans to have all 300 facilities of its portfolio BREEAM In-Use certified by 2020. “The certification process requires longterm effort and investment on our side as these certifications need to be renewed every year. Nevertheless, we believe that BREEAM In-Use is worth the effort. CTP Hungary is committed to energy efficient and sustainable operation, also to the benefit of its tenants,” Nemes explains. The company currently has 5.5 million sqm of industrial space in around

90

locations

CTPark Budapest South. that demand for countryside locations will be dominated by the manufacturing and distribution sectors,” Nemes says. CTP has completed a 30,000 facility at CTPark Budapest West. The company has also undertaken development of the 30,000 sqm B1A6 facility at CTPark Budapest West and a 37,000 sqm warehouse at CTPark Budapest East that is due to be completed in the third quarter. The 23,000 sqm DNHI building at CTPark Budapest South is due to be handed over this spring and a

requirements. This is the challenge in Hungary,” Nemes admits. Regional industrial developers and park operators are building sustainability accredited and more highly specified projects in reaction to changing tenant demands and environmental regulations. CTP is now committed to developing BREEAM buildings and gaining BREEAM In-Use accreditation throughout its Central European logistics portfolio.

further

36,000 sqm

building is planned. “We have almost zero vacancy in the industrial sector, which means that there is huge demand. In order to satisfy this demand, we need to offer competitive rents but in order do this we need to somehow deal with the high construction prices while at the same time meeting tenants

Excellent Rating

The company has achieved BREEAM In-Use “Excellent” sustainability certification for the B1A2 building at CTPark Budapest West. Currently, two

in seven countries across the region and says it plans to double this figure. CTP is now the largest owner of industrial and logistics space in Romania, where the company is developing a massive 167,000 sqm extension to CTPark Bucharest West, and has also extended its network to Serbia. Industrial developers and park operators have, to date, been reluctant to enter the South Eastern Europe markets and therefore there is a very limited provision of modern, developer-led logistics/light industrial space. The company has commenced construction of CTPark Belgrade North, described as the largest industrial park in Serbia. The complex, located on a 15-hectare site between Novi Sad and Belgrade, is planned to deliver three buildings totaling 70,000 sqm of class “A” industrial space. The engine parts manufacturer, BMTS is set to move to a 24,000 sqm facility at CTPark Novi Sad, close to the Hungarian border. The facility will cater for production and R&D activities. CTP has further acquired a further development site close to Sofia in Bulgaria.

Industrial Demand High but Market Underperforming The Hungarian industrial sector is generally regarded as underperforming in comparison with its Central European neighbors. However, demand is present and there are development opportunities with Hungary having the lowest vacancy rate in the region at 1.8%, a historical low in a market in the greater Budapest area with a total stock of 2.2 million sqm. GARY J. MORRELL

Few existing logistics schemes have 5,000 sqm plus spaces available according to the Budapest Research Forum (BRF), consisting of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary. “Moving forward, the market is expected to remain built-to-suit dominated, with

while in Hungary stock is collated in the Budapest area. In Hungary, companies establishing light industrial facilities in regional cities have tended to develop their own facilities. “The Hungarian market produced high vacancy levels during the

years

2007-2014,

but since then, the market has performed nicely, and Hungary now has very low vacancy, which means more construction is needed,” says Ferdinand Hlobil, head of CE industrial at Cushman & Wakefield.

some speculative developments picking up. The 2020 pipeline is already well prelet,” Expansion Continues comments Cushman & Wakefield. The developer-led market is mainly limited “In Hungary, expansion outside Budapest will continue. Compared to the to the Budapest area in contrast to the Czech surrounding countries, Hungary still has Republic, Poland, Romania and Slovakia, further potential for development in the in all of which a functioning commercial regions,” Hlobil explains. market has been established in logistics An estimated 110,00 sqm of industrial and industrial hubs outside the capital. space is expected to be delivered in Registered stock is spread across Hungary this year, with a total of countries elsewhere in Central Europe

180,00 sqm under construction according to JLL. The consultancy puts vacancy at below 2%. The Central European industrial and logistics market is continuing to thrive as total stock across the five Central European countries identified in this article stands at

more than

33 million sqm,

according to Cushman & Wakefield. Poland and the Czech Republic continue to be the dominant CE markets with regard to market activity: stock for Poland stands at around 18 million sqm across the country, while it is 8 million sqm in the Czech market. As of the turn of the year there was 1.9 million sqm of industrial space under construction in Poland, including 450,000 sqm in Upper Silesia and more than 500,000 sqm in the Warsaw area, according to JLL. Romania is also emerging as a major industrial and logistics market with 2.5 million sqm of stock.

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Do you know someone on the move? /// Send information to news@bbj.hu

Szecskay Attorneys at Law Appoints Partner

Afterwards, she worked at KELER Central Securities Depository Ltd. and KELER KSZF Central Counterparty Ltd. in capital and financial compliance from 2015 until 2019. As chief compliance officer, she oversaw core and ancillary CSD services, the issuance of securities, certain specialized credit institution services, clearing services, central counterparty services, and guarantee undertaking. She obtained her Doctor of Jurisprudence (J.D.) from the University of Szeged’s Faculty of Law in 2007. Concurrently, she enrolled in the University of Potsdam’s German Economic Law program from 2002 until 2004, held fully in German. She is currently pursuing her LL.M. in compliance at the University of Miskolc’s Law Faculty.

Szecskay Attorneys at Law has announced the promotion of Adrienn Tar to partnership; she is now responsible for the firm’s corporate practice management and corporate services. Tar’s field of expertise comprises everything from labor to contract law and licensing questions, with clients ranging from startups to large established multi-nationals. Her transactional and long-term clients include Arriva Hungary Zrt., Reckitt Benckiser, New Frontier, and many others. Recently she has also focused on mediation in shareholders’ disputes and solving problems amicably among business partners, the law firm says. Katalin Márton Márton notes that Praktiker has rebuilt its website, and launched career pages on Facebook, Instagram, and LinkedIn. The firm also takes part in local career expos and participates in employer forums. The appointment means that there are now two women in Praktiker’s upper management, which is made up of country manager Karl-Heinz Keth, CFO Sándor Ónody, sales and operations director László Bagaméri, supply director Tamara Vass, and the recently appointed Márton.

Adrienn Tar “Adrienn Tar is an extremely capable and highly regarded member of our firm,” says András Szecskay, founder and managing partner. “I consider organic growth and the almost equal gender balance in our partnership team as a long-term strategy to our success as one of the leading business law firms in Hungary,” he adds.

Praktiker Names HR and CSR Director Home improvements retail chain Praktiker has appointed Katalin Márton as the firm’s HR and CSR director, effective January 1. “We are experiencing the most successful years of Praktiker’s domestic history, but management sees the human values and performances behind the statistics too,” Márton says. “Our success lies in our Praktiker team: most of our employees have been a member of the Praktiker family for five, 10, 15, or even 20 years. Our company wants to maintain and reinforce this cohesive spirit while making its employer brand attractive to the younger generations, which requires a truly effective, dominant and prominent human resource management,” she adds.

Katinka Tölgyes

New President-CEO at Commerzbank Hungary

Citi Hungary Picks Head of Commercial Banking Business

Citi Hungary has announced the appointment of Balázs Toldi as the head of its commercial banking business (CCB) effective January 16.

Andreas D. Schwung

Kapolyi Law Firm Appoints Head of Competition Practice

Kapolyi Law Firm has announced the appointment of Katinka Tölgyes as head of its competition law practice. She has some 10 years of experience in competition, capital markets law, and compliance Besides her new role, she will continue to work in other practices, the company says. Tölgyes began her career in 2007 at the Hungarian Competition Authority (GVH), where she worked on civil, competition, consumer protection law, marketing communication, and public procurement cases until 2014.

his contribution we can continue to grow our core client relationships and to help clients grow in Hungary while supporting their expansion efforts regionally and globally. We wish him all the best at this stage of his career.”

Balázs Toldi The Citi Hungary CCB predominantly serves the upper tier of the SME network and digital initiatives, focusing on a variety of growth industries, the bank says. Toldi is now responsible for developing, implementing and executing business strategy to support the bank’s organic growth targets in Hungary. He earned a dual global executive MBA degree from the University of Minnesota and Vienna University of Economics. He has 20 years of experience in banking and financial services and has returned to Citi after 12 years. His previous experience includes commercial leasing and sales force management. Most recently, he was head of commercial banking at Budapest Bank. “I am very glad that Balázs has rejoined our team as a colleague, who has comprehensive knowledge in commercial banking for Citi Hungary,” says Kevin A. Murray, Citi CEO for Central Europe and country head for Hungary. “We are pleased that with

Andreas D. Schwung has been named the new president-CEO of the board of Commerzbank Zrt. in Budapest, replacing Klaus Windheuser who is leaving the group after more than three decades, the company tells the Budapest Business Journal. The appointment has been effective since January 14. Windheuser is moving to be a board member with responsibility for corporate clients and treasury business at Sparkasse Bremen. Schwung was born in Emmerich, Germany. He obtained a bachelor’s degree in banking business management. He is married and has three children. He has extensive experience and broad expertise across Commerzbank’s corporate banking services, having joined the bank in 1982, working in various corporate banking positions, in Germany, the United States, Russia, China, and Japan. Before his current role, Schwung acted as country-CEO of Commerzbank AG Iberia in Madrid with responsibility for Spain and Portugal. “I am very glad to have engaged Andreas, a colleague with extensive knowledge in corporate banking for our Hungarian subsidiary,” says Sven Gohlke, regional board member of Commerzbank for Central and Northern Europe and chairman of the supervisory board. “We are pleased that we can continue the growth trajectory of Hungary together. We wish him every success and a positive start. Klaus Windheuser has shown outstanding engagement and has been highly successful in his work in various positions within the Commerzbank Group. He has been a driver of the outstanding development of Commerzbank Zrt. in recent years. I wish him all the best in the next stage of his career,” Gohlke adds.

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Business

Last, but not least, we provide solutions and services in various fields, such as healthcare, electricity generation and distribution. Our “digital factory” division automates and digitalizes production, building automation optimizes heating and cooling, whilst mobility gets things moving, mainly rail-bound. It is an exciting array of activities that would not be possible without our Hungarian colleagues who, with their commitment, creativity and ingenuity deliver excellent as well as reliable achievements. Photo by Marianna Sárközy

Hard Work, Good Communication, Togetherness and Trust A well-known figure in the business community, Dale A. Martin has a foot in many camps, and proved a popular winner of the HIPA Partnership Award at the BBJ Expat CEO of the Year gala. We asked the Siemens Hungary President-CEO to reflect on what that recognition means, both for him and his company.

“What I say about myself is that I am not entirely foreign but not really Hungarian, either. When you have had the chance to experience various cultures and backgrounds during your life and career, you might see more – or different – risks and opportunities than if you had only stayed in one place.”

ROBIN MARSHALL

BBJ: Congratulations on winning the Hungarian Investment Promotion Agency Partnership award for all you have done to promote investment in Hungary in partnership with HIPA. In your speech, you talked a lot about your colleagues at Siemens. Would it be fair to say this is at least in part, recognition for them, too? Dale A. Martin: Yes, certainly; what a company achieves is always a joint achievement of the colleagues. This acknowledges the dedication and commitment of our 3,800 colleagues over the past many years, and I have the honor to represent them. Importantly, we should also thank our customers who challenge us and give us a valuable reason for being here in Hungary! BBJ: Siemens has a long history of investing in Hungary. What keeps the company so engaged with this country? DM: We have a long and rather proud history in Hungary, going back more than 130 years, starting with the first electric tram line in Budapest connecting Nyugati railway station with Oktogon in

BBJ: What would you say characterizes your leadership philosophy? DM: I value diligence (in other words “hard work”) as well as quick, encouraging and honest communication. Getting things done together is the aim. The basis for this is a relationship based on mutual trust, with clearly aligned goals.

Dale A. Martin

“I value diligence (in other words “hard work”) as well as quick, encouraging and honest communication. Getting things done together is the aim. The basis for this is a relationship based on mutual trust, with clearly aligned goals.” 1887 and the first metro on the continent in 1896. We have been actively present here ever since (with an intermission due to historical reasons), delivering

and building infrastructure that was important and, I trust, valuable for the country’s development. We continue to have a significant footprint with “two-and-a-half” factories: two rather traditional ones in manufacturing (turbine components and transformers) and Hungary’s largest software house, evosoft with more than 1,500 colleagues. We also continue to invest successfully, as one can see at our turbine component plant in Késmárk utca, where a EUR 30 million expansion is now being followed by a roughly EUR 10 mln equipment upgrade. We have regional centers of competence and colleagues who fly around the world, installing and commissioning wind and gas turbines, be that in Bolivia or Taiwan or somewhere in between. We proudly engaged in innovation with our electric aviation program, which was acquired by Rolls-Royce last September.

Having achieved this alignment – which is a never-ending, continuous process – we “only” need to challenge ourselves. Personally, I enjoy supporting our colleagues in reaching these goals and like to encourage them to “try, try and try again.” Perseverance is an important element to achieving tangible results and success that is valued by our customers. In the end, this is the yardstick, that our customers “feel good” about what we provide. BBJ: Your family background is quite international, with Austrian and American connections, not to mention three Hungarian grandparents. You have had diverse international postings in your career, not least to Asia. What advantages would you say this mixed heritage gives you in adapting to the world around us? DM: What I say about myself is that I am not entirely foreign but not really Hungarian, either. When you have had the chance to experience various cultures and backgrounds during your life and career, you might see more – or different – risks and opportunities than if you had only stayed in one place. You might also adapt to changes more quickly, as you have already experienced that things can be Continued on page 8 ► ► ►

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Continued from page 7 ► ► ► different. In addition, what you might experience in another country or culture can serve as an inspiration, enabling you to “copy with pride.” BBJ: Both through Siemens and in your work leading the German-Hungarian Chamber of Industry and Commerce (DUIHK), you have got to know the Hungarian market very deeply. What do you think are its most urgent challenges and opportunities? DM: Current economic policies rightly focus on boosting the added value of all economic activities within Hungary. A key challenge is to enable the local SME sector to become a pro-active part of international supply chains. That requires significant investments; into people, R&D, modern management methods and structures with a strategic focus. Secondly, the business sphere and the state with all its sub-sectors must accelerate efforts to jointly master digital transformation. This is not only a question of hardware, but very much a question of mindset: establishing new business models, rethinking processes, raising openness to innovations. Finally, we have to address the long-term trends of the labor market; we have to encourage and ascertain that lifelong learning becomes the basis of all educational efforts of individuals and also policy-wise, in

By adapting our company structure to better meet customer requirements, we are making changes to our business set-up. Therefore our energy-generating entities will become a separate legal entity internationally. “Siemens Energy“ will come to life in Hungary as of March 1 and, together with 90 000 colleagues, will be spun off at the stock exchange this September.

Dale A. Martin (left) receiving his award from Róbert Ésik, CEO of HIPA. order to have the capacities to react to fast structural and technological changes. Digitalization is an opportunity that Hungary has already taken steps to embrace. How and when this can be turned into a (not only short-term) opportunity will define the future.

BBJ: What is next for Siemens in Hungary? DM: We are flexibly adapting ourselves to the market challenges, both geographically and strategically. Innovation, excellence and responsibility remain our key values, also here in Hungary.

BBJ: Is there anything else you would like to add? DM: I would like, as a Hungarian phrase puts it, to say thank you three times plus one: To HIPA, for honoring my past with this award; to the companies and persons who encouraged me during my tenure as President of the German- Hungarian Chamber of Industry and Commerce, along with my colleagues at Siemens for having provided support and tangible results, allowing me to take some initiatives further; and, last but not least, on a more personal note, my three Hungarian grandparents – although they didn’t live in Hungary – for handing down their “Hungarian-ness” to their children and thus also to me.

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Private Equity in Central Europe Private Equity in Central Europe Charts

The small and medium enterprise (SME) sector represented 99.8% of companies and 69% of total employment in the Visegrád Four (the regional grouping of Czech Republic, Hungary, Poland and Slovakia also known as the V4) countries in 2019. Les Nemethy and El Mehdi Hosni look at the involvement of private equity in the field.

Annual Private PE Value in the CEE region, EUR million 2,482 2,449

546

1,413

2,685

1,279

1,475 1,031

1,7001 ,703

877

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Invest Europe Annual Report 2019

of generating attractive risk-adjusted financial returns. Over the past three years, while target rates may have been higher, PE investments in Europe generated a return of approximately

16%

Much of the rapid growth in Central Europe over the past decades has been driven by SMEs, which in turn has required substantial amounts of capital, including private equity investment. PE refers to an asset class in which an investor-controlled vehicle purchases shares of privately held companies. In exchange for their capital, PE firms take ownership stakes that can range from a concentrated minority to majority ownership in a company, usually requiring current management to remain in place with a sizeable equity holding. PE firms typically invest for a period of three to seven years, with the expectation

upon exit, according to “The World Bank: Private Equity and Venture Capital in SMEs in Developing Countries”, by S. Divakaran, P. McGinnis and M. Shariff Some PE investors provide little more than capital, while others also provide deep expertise in areas such as finance, governance, scaling companies, and sometimes even industry specific expertise. Because of the three-to-seven-year time horizon typical of PE investors, company owners should not consider a PE investment as an end-goal with respect to exit, rather an important step towards a major liquidity event, such as an initial public offering or eventual total exit. The first chart below summarizes annual PE investments in CEE since 2004.

4%

PE Investment by Sector, 2018 (EUR thousands) Transportation Financial and insurance activities Business products and services ICT (Information and communication technology) Consumer goods and services Biotech and healthcare

Source: Invest Europe Annual Report 2019

3,532

508

per annum

The Corporate Finance Column

1,997 1,667

6% 12%

32%

PE investments hit their peak in 2017 and 2018, thanks to favorable economic outlook, low interest rates and high GDP growth, compared to Western Europe. In 2018, eight countries in the region achieved annual growth above 4%, according to International Monetary Fund data. As shown in the second chart, PE investors are not sector-agnostic. The biotech and healthcare sectors accounted for 32% of PE investment in CEE in 2018; consumer goods and services represented 27% of PE investments.

Strong Tech

In addition, the region benefits from strong technology credentials: a Romanian start-up process automation company with artificial intelligence expertise, UiPath, achieved a EUR 6.3 billion valuation during its last funding round in early 2019, which provides a regional record and makes it one of the world’s most valuable AI companies. Success breeds success. PE funds are searching for the next Eldorado, supporting hundreds of new ventures throughout the region. Poland attracted the highest investment amount in 2017 and 2018 within CEE, while Hungary had the highest number of companies receiving investments (190 in 2018,

almost

15%

27%

50%

Business | 9

of the total). This was driven by a particularly high GDP growth rates reaching 5.1% in Poland, 4.9% in Hungary and 4.1% in Romania. Thus,

the PE market appears to be concentrated in CEE and relies on a few countries that experience strong economic growth. Mature stage companies still constitute the major type of investment made by PE firms in CEE. PE firms play a major role in SME development and have a relatively important role as a source of financing SMEs in the aforementioned sectors in which they are active. However, PE firms provide only a minor slice of the financing pie for SME’s in CEE (see our previous article: Sources of Financing for SMEs in the Visegrád Countries) as SMEs rely heavily on many other financing sources, from banks to Government grants. The five largest private equity transactions in CEE in 2019 all had a value above EUR 1 bln, according to CMS Cameron McKenna, Emerging Europe M&A report 2019/2020. They were: Central European Media Enterprises (Bulgaria, Czech Republic, Romania, Slovakia, Slovenia), PPF Group, EUR 1.89 bln; Innogy Grid Holding (Czech Republic), Allianz, Macquarie Group, British Columbia Investment Management, EUR 1.8 bln; Vivacom (Bulgaria), BC Partners Holdings, EUR 1.28 bln; DCT Gdansk (Poland), Tamasek Holdings, Polski Fundusz Rozwoju, Industry Super Holdings, EUR 1.18 bln; and Avito (Russia), Naspers, EUR 1.02 bln A final take-away point for SME owners who might be considering PE funding: in our opinion, capital is a necessary but insufficient condition for bringing on board a PE investor. Seek out the “smart” money: those investors who bring industry knowledge and connections, ability to help a company develop systems and governance. Shared objectives and personal chemistry are also key.

Les Nemethy is CEO of EuroPhoenix (www.europhoenix. com), a Central European corporate finance firm, author of Business Exit Planning (www.businessexitplanningbook. com) and a former president of the American Chamber of Commerce in Hungary.

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How Green is my Puszta? Statistics, Damned Statistics and Hungary’s Environmental Claims Climate change, off-setting your carbon footprint, planting trees; you just can’t be green enough these days. KESTER EDDY

And here’s where Hungary has some news it just can’t wait to tell the world. Well, actually, it has waited quite some time, but now the powers at be have taken up the cause, they can’t wait to tell you. The country is among the top 10 EU member states when it comes to reducing greenhouse gas (GHG) emissions, according to European Union statistics, no less. Minister of State for Energy Affairs and Climate Policy Péter Kaderják feels there are huge misconceptions out there regarding the country’s green credentials. “Sometimes we get the feeling that Hungary’s achievements are not fully understood. Indeed, sometimes we hear that nobody is doing anything in Hungary for climate protection. We definitely do not share this view,” he told a press briefing last month. Kaderják, as reported in the last issue of the Budapest Business Journal (see Hungary Plans Massive Investment in Solar Generation), cites the EU’s 2019 report on greenhouse

gas (GHG) inventory, which reveals Hungary has cut its GHG

emissions by

32%

between 1990-2017. This compares to an EU average of just 23.5% over the same period. “Within the community we have member states that could not reduce even a tonne, not a percentage, not even a tonne of emissions in the last 30 years,” Kaderják said, pointing the finger at Austria, Spain, Portugal and Ireland. Compared to these countries, Hungary’s performance “is not bad”, he said. “We have the ninth best performance, together with Denmark, in reducing GHG levels compared to 1990.” A perusal of the report verifies these claims. Hungary, then, is surely right to demand some greenie points when negotiating in Brussels?

Poor Performers

Except another recent EU energy report (Eurostat, Renewable Energy Statistics) labels Hungary, along with Cyprus, Luxembourg and Malta, as one of the poorest performers in terms of “green” electricity production in the Union.

Hungary in 2018 had a mere 8.3% share of electricity generated from renewable sources; that’s barely a quarter of the EU average of 32.2%. This miserable performance is hardly surprising when you consider that, almost alone in Europe, Hungary has failed to install a single wind turbine in the last decade. Of course, the two figures are measuring different metrics, but the disconnect must leave the average citizen perplexed. Where does Hungary really stand in its “greening” claims? And can it honestly pretend to shine against Austria, a country with a long environmentalist tradition, where campaigners forced the closure of its sole nuclear power station in 1978 before the reactor could split a single atom? The answer to the latter is easy: While Austria does indeed produce more GHG today than in 1990, overall Hungary cannot hold a candle to its Alpine neighbor.

In

2018,

utilizing its hydro, wind and solar potential, Austria generated a massive 73.1% of its electricity from renewables, almost nine times the Hungarian figure. As to the overall environmental picture, clarification lies in the exact choice of statistics and, crucially, the starting date. Hungary, along with all its former Eastern Bloc allies, flatters to deceive when measuring GHG emissions from a base year of 1990. This was the very year when much heavy, highly inefficient industry dating from communist times suddenly met the real world, and real oil prices. A close study of the EU inventory reveals Hungary cut its GHG emissions from 94 million tonnes of CO2 equivalent in 1990 to 64 million tonnes by 2017.

The difference, 30 million tonnes, equates to that impressive 32% reduction cited by Kaderják. But of this, 19 million tonnes, almost two-thirds of the total, was achieved by 1995, within just five years of the post-communist transition, when vast swaths of energy guzzling industry closed down.

“Sometimes we get the feeling that Hungary’s achievements are not fully understood. Indeed, sometimes we hear that nobody is doing anything in Hungary for climate protection. We definitely do not share this view.” Let’s not kid ourselves, nor be kidded: Hungary certainly has become less polluting and more climate friendly in the past three decades, but that is primarily from reacting to economic forces, not from any principled rush to adopt green energy policies. The Bottom Line is a monthly column written by Kester Eddy, a long-standing and well respected Budapest-based business and economic journalist, who has written for the Financial Times and many regional publications. The opinions expressed in the column are not necessarily those of the Budapest Business Journal. To comment on this column, or on anything else in the BBJ, email the editor at robin.marshall@bbj.hu

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Korean Air Launches Cargo Flights Between Budapest, Seoul

BENCE GAÁL

Budapest Airport (known as BUD) CEO Rolf Schnitzler lauded the emerging importance of Budapest as the most important cargo hub in the region. “Today we arrive at yet another major milestone at Budapest Airport. Ahead of its passenger flights starting from May, Korean Air is establishing as of today a direct cargo connection between Seoul and Budapest. The initial frequency of this dedicated cargo flight will be twice a week, and it will be operated by one of the most effective and modern cargo aircraft in the world: the Boeing 777F,” he said.

Excellent Location

Photo by MTI/Szilárd Koszticsák

Budapest Airport has celebrated the launch of a direct connection between Budapest and the Korean capital of Seoul, with the first flight (carrying some 40,000 tonnes of freight) landing on February 20.

Business | 11

“While Hungary does not possess raw materials, or resources that other countries have, we do have an excellent geographical location, which may be our greatest treasure,” the deputy minister noted. He also explained that the government would like to have an increasing number of world economic actors utilize this “teasure” in the future, arguing that this is the reason behind the construction of the cargo base, the development of railroads and motorways, as well as the purchase of a port in Italy.

“While Hungary does not possess raw materials, or resources that other countries have, we do have an excellent geographical location, which may be our greatest treasure.” From left: Celebi Ground Handling managing director Taner Sari, South Korean Ambassador to Hungary Kyoo Sik Choe, Budapest Airport CEO Rolf Schnitzler, Korean Air managing vice president for Europe Jeong Soo Park, Budapest Airport chief property and cargo officer René Droese. “We are especially proud to welcome a new airline customer to the BUD Cargo City, the cargo hub of Central and Eastern Europe, just over a month after its opening,” he said. “The direct aerial connection is not only a huge advantage for Hungarian and international companies, but also an opportunity for Hungary and the Hungarian capital airport to become the number one cargo hub in the region,” Schnitzler added. Jeong Soo Park, managing vice president for Europe at Korean Air, added, “I am very confident our cooperation will lead our business to connect and both economies to make a fruitful result. Furthermore, Incheon airport is becoming a major hub for cargo traffic in East Asia and Budapest

will take an advantageous position in the Central European market.” Levente Magyar, deputy minister at the Ministry of Foreign Affairs and Trade, emphasized the benefits of South Korean investment, now surpassing the levels of German money flowing into the country. “2019 was a special year in relations between Hungary and South Korea. The two countries celebrated the 30th anniversary of establishing formal diplomatic relations, and South Korea became the largest investor in Hungary, implementing projects to a value of HUF 2.5 billion, which is nearly half of the total investment portfolio. Trade also increased by one-third, compared to the previous year,” he said.

At the end of his speech, he said that this economic goal is also the reason behind the government’s cooperation with Budapest Airport, assuring the company’s management of Hungary’s support in the future. South Korea’s Ambassador to Hungary, Kyoo Sik Choe, added, “Korean Air’s new scheduled cargo flight and the direct Soul-Budapest passenger service to be launched in May further strengthen commercial and diplomatic ties between Hungary and South Korea,” he noted. “On behalf of the embassy, we will do everything we can to ensure that these new aerial connections should be successful, for both countries.” Afterwards, the new flight was inaugurated right on the tarmac at BUD Cargo City, where the Boeing 777F stood, via a ribbon cutting ceremony.

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Special Report What are the latest trends affecting the market for Hungary’s accountants and tax specialists?

Hungary’s Tax Morale Improved, but Average for the Region

13

Flat Corporate Income Tax Re-energizes Hungary’s Business Scene

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The Drive Toward (Partially) Automated Accounting

16

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Taxes and Accountancy

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Hungary’s Tax Morale Improves, but Still Average for the Region Hungary’s tax morale, the willingness of people to pay, was traditionally regarded as poor, which fits into the region’s communist-era history and culture. Recent government initiatives have led to a whitening of the economy and improved morale, but the country remains more or less average in CEE, experts tell the BBJ. CHRISTIAN KESZTHELYI

Research suggests that tax behavior is shaped partly by compulsive and partly voluntary motivations, collectively known as tax morale, an internal tax incentive. In countries with a better tax morale, coercion is less likely to be needed. Ironically, both excessive sanctioning and a lack of it can worsen morale, as taxpayers feel the system is unfair at either end of the spectrum.

tax morale or coercion plays a more important role regarding taxation (neither are there studies directly ranking countries in this regard), tax experts tend to agree that Hungary traditionally had poor tax morale. “The tax morale is clearly improving [in Hungary], but this is mostly due to the effective measures of tax regulation implemented in the recent years to combat the historically bad tax morale,” Balázs Kántor, tax advisor and lawyer at Lakatos, Köves and Partners Law Firm, tells the BBJ. The improvement in the Hungarian tax morale is a result of many ingredients. On the one hand, the introduction of electronic surveillance systems such as EKÁER in freight and online invoicing across many sectors, chiefly in retail, have provided a boost in this regard.

households are still hiding approximately 20% of their wealth. In Budapest,

10%

of household

income is concealed on average, while in rural areas this rate rises close to 25%,” Bajusz of EY says. Hence, the Hungarian government’s continuous fight for whitening the “gray economy” with different measures. But with such a high value added tax rate, VAT fraud is still quite a big issue in the country. “Since the general VAT rate is one of the highest in the world (27%), carousel and similar fraud schemes are still flourishing making advantages of nonborders among EU members. However, we have seen some positive developments recently,” Bajusz says.

Krisztina Kőmíves “It is important to note, therefore, that the tax system affects tax morale, and that the tax system and the tax authority’s behavior should feel fair to taxpayers. Further, the tax system should be as transparent as possible,” PwC Hungary tax director Krisztina Kőmíves, who used to work at the National Tax and Customs Authority, tells the Budapest Business Journal. Nevertheless, other variables can also affect the tax morale, such as individual characteristics, belonging to social groups, the use of taxes and social traditions. While research into Central and Eastern Europe does not clarify whether

measures), but they have probably not crossed a critical threshold yet, and have not had a very negative impact on tax morale,” PwC Hungary’s Kőmíves argues. Research has found a positive relationship between the tax burden and the gray economy. PwC and the World Bank Group’s annual study entitled “Paying Taxes” compares and ranks tax systems on a global scale, both from taxes and administrative burdens point of view.

Mind the Gap

“Between 2010-2018 approximately HUF 500 billion additional VAT budgetary income was generated thanks to these newly introduced initiatives. By 2019, the VAT gap had fallen to less than 10%, which is very favorable in comparison with other countries in our region or even on an EU average. However, we are still seeing many tax audits and criminal procedures being initiated due to VAT frauds,” Bajusz adds.

Dániel Bajusz The results show “that Hungary made a significant improvement regarding the tax burden; however, there is still room for improvement in the field of administrative burdens and overall Hungary does not have a leading role among the V4 countries,” Kőmíves adds. The Visegrád countries (also known as the V4, and comprising Hungary plus the Czech Republic, Poland and Slovakia) share many similarities in their tax systems. “Their tax rates are low (except for VAT) in comparison to Western European countries (with the prime example being the

9% CIT

Whiter Economy

On the other hand, corporate income tax (9%) and the personal income tax (15%) reaching low to moderate levels also help whiten the local economy. “As a result, the tax moral has significantly improved,” says Lajos Bagdi, head of tax advisory services at Niveus Consulting Group. “Hungary introduced and is still introducing different instruments to better the tax morale,” he adds. And good tax morale is important for the economy. “Despite being also a cultural heritage in Hungary, I think tax morale is closely related to the overall healthiness of the economy,” Kántor says. Dániel Bajusz, a senior manager and attorney at EY Law Hungary, agrees that the local environment is not only attractive for businesses, but also works for a better tax morale. “Nonetheless, tax evasion-related activity is still and issue at the level of households. According to the Convergence Program 2019-2023 the highest and lowest income

Special Report | 13

Lajos Bagdi It is possible that data tilting toward positive trends, however, is not a signal of a better tax morale yet. “The positive results in Hungary are likely to have been influenced by the introduction of coercive measures rather than improvements in tax morale (especially the introductions of real-time taxation

in Hungary, the lowest rate in Europe), which is related to their current level of economic development and a lower share of their governments’ expenditures in GDP,” EY’s Bajusz explains. VAT provides one of the most important sources of revenue for the state budget in all modern tax systems. “Most of the countries around the world, especially in Europe, have a VAT rate around 19-22%, although in Hungary the [general] 27% VAT rate is considered exceptionally high. Taxes in Hungary which are related to labor, such as PIT, are higher than the V4 average,” Bajusz says. It is extremely difficult to get an exact measure of tax morale, since it depends on too many variables. “Traditionally, due to historical and other reasons the tax morale of Southern and Eastern European countries’ is lower than that of Western Europe, especially those traditionally protestant countries. I think the Hungarian tax morale is more or less average in the region,” the EY expert adds.

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INSIDE VIEW

Introduction to the Hungary’s Private Foundation Act Dr. Eszter Kamocsay-Berta

Dr. Bálint Éberhardt

Managing Partner

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In the few months since Hungary’s Private Foundation Act came into force on March 29, 2019, it has already significantly grown in terms of financial importance. Highlights of the Private Foundation A private foundation is an atypical form of a foundation that is mainly established in order to prevent the fragmentation of private property and to ensure proper asset management. Private foundations are generally considered to be outstanding legal structures and asset management instruments for companies and high-net-worth individuals. Especially in the case of high-net-worth individuals, private foundations are created by founders who grant certain assets to realize the purpose of the foundations and determine how the assets shall be managed both while they are alive and after their deaths. Private foundations may have named beneficiaries and, as such, may prove to be a great tool against fragmentation of family estates through inheritance. A founder’s intention to provide for the integrity of his or her private wealth may, however, also prove to be legitimate during the founder’s lifetime, should the founder not want to be engaged in the operation of the assets to the extent he or she was before, but, for instance, allocate more time to other life time activities. In essence, a private foundation is a legal entity, separate from its founder and from its administrating officers, of which the founder may be a dominant member. It is also separate from the beneficiaries, who may receive various types of financial benefits from the private foundation in a regulated way as provided for by the founder. The right to revoke a foundation and to transfer the assets back to the founder as well as the founder’s capability to become a beneficiary are also ensured. Without reference to certain tax provisions with attractive benefits for founders and beneficiaries, the concept of the private foundation provides considerable incentives for funds to be transferred into the domestic economy. Capital Requirements and Capital Control Although the procedure to establish a private foundation is similar to that for the establishment of a non-private foundation, there are some differences. In Hungary, there is a minimum capital requirement of HUF 600 million (approximately EUR 1,775,000). These assets, which can be provided either in cash or in kind, have to be defined in the statutes in sufficient detail to enable their individual identification.

In order to provide the greatest safety for the founder’s assets, there are several control and monitoring mechanisms required by law, and further protective functions and procedures can be detailed in the statues. Most importantly, a Private Foundation must safeguard the assets provided by the founder. This provision ensures that the funds are preserved and managed so that their value does not fall under the level of the minimum capital; thus, providing appropriate protection by requiring the board of foundation to exercise due diligence during the administration of funds. Monitoring the Management of Assets An important aspect of the establishment of a private foundation is the obligation to draft an investment policy, describing the portfolio and its risk-management and decision-making mechanisms regarding envisaged investments in detail. This way, the founder can specify the way he or she wishes the assets to be managed and shape their future management. All in all, the investment policy ensures that the assets are guarded and used by the private foundation according to the will of the founder. Hungarian Private Foundation Act: Future Prospects Since the entry into force of the Hungarian Private Foundation Act, the private sector has shown considerable interest in this legal construct. The possibility of establishing a private foundation enables the safe and successful transfer of private wealth by lowering or eliminating the risk of fragmentation or the effects of mismanagement. The concept of private foundations is appropriate to fulfil their designated role by providing various safeguards. Even though the minimum capital requirement is considered slightly high, there is a strong intention on the legislator’s side to significantly reduce this amount, which would give an even greater boost to the success of this legal instrument.

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Flat Corporate Income Tax Re-energizes Hungary’s Business Scene The corporate tax rate, lowered to 9% in January 2017, is not only making the country look more attractive to business investors; it has also been warmly welcomed by enterprises already active in the Hungarian market. However, some industries are still burdened by sectoral taxes that can make that sentiment bittersweet.

CHRISTIAN KESZTHELYI

“Introducing the 9% corporate tax rate was a very positive step,” Ákos Burján, partner at PwC Hungary, tells the Budapest Business Journal. “We need to distinguish between two entities: the bigger ones, the Hungarian subsidiaries of multinational companies, for example, and the middle-sized Hungarian companies. Even before the reduction to 9%, the tax rate had been very preferential, such as 10% above a certain bracket. Therefore, this is not necessarily a massive step for all bigger companies. However, for mid-sized companies the new rate is a great step forward,” Burján adds. When Hungary unified its corporate tax at 9%, it made it the lowest in the European Union. “It definitely encourages investments coming from abroad. Also, it would make sense to increase the Hungarian tax base to optimize the tax position at the group level,” says Lajos Bagdi, head of tax advisory services at Niveus Consulting Group. “Hungarian companies have welcomed the

9%

tax rate.

As a result, the corporate income tax is not a significant tax burden anymore; rather, it is the employer social securities and the local business tax that are painful,” he explains. PwC Hungary’s Burján is also a board member of the American Chamber of Commerce in Hungary, which had long called for a bold step over corporate income tax. He agrees that the business sentiment is “great” and businesses welcomed the lowered rate. “The corporate income tax is the lowest in the EU, and even globally is among the lowest. This is a very competitive tax rate. Partly because of this, the Hungarian system has its specialties. To counter

it, for instance, the consumption-based taxes are very high [eg. the general value added tax VAT rate is at 27%]. There still are sectoral taxes, such as those imposed on the energy, pharmaceutical and telco industries, for example. [….] Altogether, profit taxes are still somewhat high for certain industries,” Burján adds.

“The 9% can look good and most companies do enjoy it, even if there are industries that have additional sectoral taxes where the burden is higher. Overall, the 9% is an excellent tool for luring over investment and FDI, however.” This environment is still a driver for foreign direct investment, however. “Due to Hungary’s attractive investment incentives and the tax benefits – the flat 9% CIT rate, which can be reduced even up to 1% by the incentives in connection with R&D activity, for example – an increasing number of foreign companies choose Hungary for their future investments,” says Dániel Bajusz, senior manager and attorney at EY Law Hungary. “Also, according to the calculations of Hungary’s EU Convergence Program 2019-2023, the investment activity of domestic households and companies also increased by 22% in 2018. The increasing investment activity is a result of the exceptionally low CIT rate and the various tax measures introduced in 2019 and 2020,” Bajusz adds.

3

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Budapest Business Journal | February 28 – March 12, 2020

higher. Overall, the 9% is an excellent tool for luring over investment and FDI, however,” he adds.

INSIDE VIEW

flat

Ákos Burján

Other Weapons

However, this improved environment comes with some downturns, too. “The low [corporate] rate seems good to the business at first glance; however, it is very telling, actually, that the economic policy does not have other weapons, since the fundamentals for which the high-added value business would come to Hungary are missing: top-class education, truly open market, flexible and helpful regulatory environment and authorities, just to name a few,” complains says Balázs Kántor, tax advisor and lawyer at Lakatos, Köves and Partners Law Firm. “One should also consider all potential tax-like payment liabilities from sectorial taxes to different authority fees,” he adds. Kántor also notes that, while businesses are obviously happy about the 9% CIT rate, it is only one of the costs element they need to deal with unless they are holding companies, for whom it is truly attractive. “The many sectoral taxes as well as the local business tax should be unified in the corporate income tax, at a possibly higher rate, and the many costly exemptions and allowances should be rationalized,” Kántor adds. PwC Hungary’s Burján also agrees that sectoral taxes spark uncertainties among those industry players that are burdened, many of whom still find these taxes unfair. “We do not only have the corporate income tax; we also have the so-called local business tax and innovation contribution, which is a

2.3%

turnover-based

tax altogether. With these taxes the effective tax rate, if you compare it to your profit, can be very significant: due to the special tax base calculation method it can easily reach 10-20% in certain sectors while in others the impact of the local business tax is marginal,” Burján says. “The 9% can look good and most companies do enjoy it, even if there are industries that have additional sectoral taxes where the burden is

15%,

as a result, dividend distribution to individual owners can be made with a reasonable tax burden,” he adds. “In my experience, whether the earnings are paid out or retained depends on the management, i.e. on the shareholders and their personal preference and plans in the end,” Kántor says. “Furthermore, since Hungarian business life is mainly dominated by foreign-owned entities, such decisions are not made in Hungary,” he adds.

Balázs Kántor The Hungarian tax system has undergone several important reforms recently. Online cash machines, linked directly to the national tax authority, were introduced; an electronic public road trade control system was launched; online and automatic invoice data transmission to the tax authority went live; a taxpayer qualification system (reliable, average and risky) was introduced; and the CIT was simplified with a flat rate of 9%. These changes are not only good for business but also point toward a healthier economy and better tax morale, in which, as described on page 13, Hungary did not always excel historically.

Photo by Photon.hu

Tamás Danku Trust & Estate Practitioner AIRON TRUST FIDUCIARY ASSET MANAGEMENT LLC

Nowadays, one of the hottest topics of the international financial world is the succession of the private companies funded and managed by Generation Xers. According to professionals, in the United States alone, approximately USD 50,000 billion in wealth will be inherited by Millennials and Post-millennials from Baby Boomers and Generation Xers in the next 5-20 years. Unlike many regions of the world, Hungary has a very high proportion of family-owned businesses, with only a few dozen companies listed on the stock exchange. Many successful businesses are still run by first-generation founders and their wealth is often managed by family executives. As these businesses are mature and already have economies of scale, there is an increasing need to organize and protect basic business assets and the personal wealth of families. Ownership of family-owned businesses will be an important part of inheritance, transfer of wealth between generations, and wealth diversification. In the years following the last crisis, family businesses have also achieved significant growth in Hungary through two cycles of EU funding. The global economic downturn forecast over the next few years and the outflow of EU funding will affect the investments and income-generating capacity of local family businesses. While the overall trend continues to be extremely positive, family firms are also increasingly focusing on protecting their assets and modernizing their asset management strategies. Long-term family wealth planning has not generally been on the agenda of Hungarian family businesses, as they primarily focus on continuous development. However, due to future political and economic challenges, successful founders and owners need to consider inheritance planning, meaning protecting financial and other assets is becoming an increasingly important issue. The growing interest in fiduciary asset management (trusts) and the concept of the “family office” are proof of the changing thinking process.

The introduction in 2014 and the recent tax changes of fiduciary asset management in Hungary and the concept of multi-family offices and private trust companies are excellent tools for preserving the wealth and assets created by successful Hungarian families and their businesses. Family office solutions are usually created by wealthy families with many members to manage their wealth. They are different from traditional wealth management solutions in that they offer a complete, generally outsourced solution to the financial, investment and other family affairs of a wealthy individual or family. Family office activities may include cost planning and management, insurance management, charitable management, family business management, divorce planning, inheritance planning and management, and tax services. One of the 2019 mid-year corporate tax changes exempted assets under management that were created by individuals, have only physical person beneficiaries and have only a financial type income. In practice, this means that, unless there is any other kind of return on assets under management, no corporation tax is payable on the proceeds from the disposal of dividends, exchange rate gains, interest received or receivables. A trust fund or trustee may enter into a long-term investment contract (so called TBSZ) only if both the settlor/founder individual and the beneficiaries are private individuals. If the terms and conditions of TBSZ are met, the yield from this contract is exempt. The payment of a yield from a fiduciary asset management or private wealth management foundation is, as a general rule, taxed at the same rate as dividends. Due to the new regulations, the role of fiduciary asset management in preserving, increasing and transferring the value of assets may be emphasized. AIRON TRUST, as a licensed trust company, provides full fiduciary asset management services. Our colleagues have decades of experience in international tax planning, where international trust agreements have great importance. The introduction of the Hungarian “trust” has opened a new dimension in the field of wealth management and estate planning, for which our company provides professional services to its clients.

www.airontrust.hu

NOTE: ALL ARTICLES MARKED INSIDE VIEW ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

Millennials vs. Gen Xers: Fiduciary Asset Management Mutually Fruitful Solution to Family Wealth Planning

Further Easing?

Bagdi of Niveus Consulting Group thinks that certain tax reliefs, such as the increased volume of R&D tax relief, or the tax incentive for energy saving investments, could be reconsidered for further easing. Roger Gordon in his 2019 Cambridge publication “The Role of the Corporate Tax”, argues that corporate tax rates lower than personal taxes favor corporate activity, as well as retaining earnings instead of payouts to employees and investors. “Exactly, it makes sense to invest by the entity itself and not to distribute the earnings to the owners,” Niveus’ Bagdi says. “However, the personal income tax rate is also on a moderate level in Hungary at a

Special Report | 15

16 | 3

Special Report

www.bbj.hu

Budapest Business Journal | February 28 – March 12, 2020

From the first forms of documentation in ancient city-states, to the double-ledger accounting system in Renaissance Florence, innovative ways of documenting and accounting for assets and liabilities have always benefitted the societies and institutions that adopted them. The Budapest Business Journal discovers the picture in Hungary. NICHOLAS PONGRATZ

How are Hungarian companies adapting to the appearance of online solutions, how is the government incentivizing them to do so, and how might automation further affect the accounting profession? Réka Märtel is a professional business consultant who specializes in automating accounting processes for large firms. I spoke with her and an academic colleague, who works with many smaller clients and who asked to remain anonymous for this article, about a recent survey that described how many accountants spend time on work that could easily be done by their clients though automated solutions online. Asked whether she thought accountants primarily spent their time performing recording tasks that didn’t necessarily require their expertise, Märtel made the point of distinguishing between accountants at larger corporations and those of smaller enterprises. “As a business advisor, I generally work for corporations supporting accountants within those corporations. I can also see how small accountants work, and I have some clients who are owners of small- or medium-size

Photo by Andrey Popov/Shutterstock.com

The Drive Toward (Partially) Automated Accounting

business entities, and I can see that those small enterprises really do not have an interest in digitalizing their transactions,” she explains. “They do not prefer using electronic invoicing, neither on the incoming and nor on the outgoing side. I’m also convinced that even this sector will change after a time. But what I’m sure of is that the corporate world is already changing, and the proportion of transactional work done by accountants there is decreasing day by day,” she says. “I’ve participated in many projects about automating and digitalizing the accounting flows of the corporations. And they are using incredible tools for accepting digital invoices, or even hard copy invoices which are scanned, and then transforming the data from those supplier invoices into electronic records, which are then, based on certain rules, automatically converted into accounting transactions,” Märtel says. Her colleague, who works primarily with smaller companies, said his experience was largely similar to what Märtel had described.

Complexity is Key

“I think it depends on the complexity of the business processes, on the one hand. And on the other hand it’s a matter of money. It’s the budget. So, smaller businesses just simply cannot afford to have all those digital systems. They don’t necessarily need them, that’s the truth,” he points out. In regard to his own personal experience as a professional accountant, he said he could relate to the results of the survey. “Well, I’ve never measured it, so I can’t say it’s exactly three-quarters, or if it’s

more or less, but most of my time I deal with reporting data, so putting data into the system, because the business documents are not digitized. This is a kind of manual digitalization process.” When asked whether he thought that any of his small company clients were leaning towards digitalizing their accounting processes, he brought up an impending change NAV has announced regarding invoice reporting. “Actually, the incentive was given to them by the government, to be more precise by the tax authority. As of July 1, you have to report the content of almost all your outgoing invoices to the tax authority. Until that day, we have this

HUF threshold, 100,000

but after that it’s gone,” he says. “These entities typically have smaller invoices with smaller amounts, but now they, too, will have to directly report to the tax authority. So, that could be done manually or automated. And, of course, it’s in the interest of everybody that it’s automated. That’s pushed them slightly towards digitalization.” Even in an environment where, as he earlier pointed out, budgets are smaller, cost need not be a barrier in this instance. “There are lots of free solutions to do that, so I don’t think that’s really a problem for them. Not to mention that it’s actually easier and quicker for themselves too to prepare those invoices using software instead of manually writing them. This is a rare case where the

interests of the government and those who want to obey the rules are the same.”

‘Lots of Estimates’

The academic accountant also had some thoughts about the ease or difficulty of automating certain aspects of accounting. “Larger companies used to employ many data recorders, whose only task was to record data from the business documents into the system. These are the positions that will disappear very soon. But the other part of accounting, when it comes to acting really professionally, I don’t think that could be digitized or automated in the near future. Accounting is actually not as precise as you might think. There are lots of estimates. So, lots of things that require professional judgement, and that can’t be automated, or would be difficult to automate.” One such example he provided included depreciation. “In order to account for the depreciation, you have to determine the useful life of the asset; that’s a matter of professional judgement. You have to determine it for yourself. And there is salvage or residual value; again, you have to make the estimate for yourself. Of course, it could be automated, we can use boilerplate solutions and claim that all computers are to be useful for three years, all computers are to have a residual

value of

10%

of their original purchase price, but it doesn’t necessarily result in useful information for decision makers,” he argues. Märtel points out that automation will, naturally, affect not just professions such as hers, but society at large. “Education will be of even higher importance for us, because all the simple work will be done by machines or automated somehow. So, what remains really needs educated people, who are able to think critically, who are able to think creatively, to be innovative and to find out, or create knowledge, which is not rule-based,” she argues. “Once, I heard someone say, someone who is talented can find some knowledge on their own that was created and recognized before, while someone who is a genius can find out something new. I think this also applies to automation. We will need more people who are close to genius, or who are very creative. Creativity and innovativeness will be of higher importance,” Märtel believes.

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Gyöngyi Ferencz Audit, M&A

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T +36 1 225 7575 - vgd.budapest@vgd.hu - www.vgd.eu

3

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Special Report | 17

Accounting Firms no. of full-time employees on januaRy 1, 2020 yeaR establisHed

oWneRsHip (%) HungaRian non-HungaRian

top loCal exeCutive Cfo maRketing diReCtoR

addRess pHone email

✓

305 1999

János Babos (50), Process Solutions International Kft. (50) –

jános babos, andrew majlath, andrás szalai – –

1134 Budapest, Váci út 33. (1) 451-7100 info-hu@ps-bpo.com

–

202 1994

– TMF Group B.V. (100)

eloi malta-bey Daniel Proychev Igor Dakic

1138 Budapest, Népfürdő utca 22. B épület 13. emelet (1) 461-3100 business.hungary@ tmf-group.com

Péter Bergmann (50), Péterné Bergmann (50) –

péter bergmann, péterné bergmann Sándor Soltész Krisztina Bergmann

1138 Budapest, Váci út 186. (1) 238-9000 bergmann@ bergmann.hu

HR Consulting

tRansfeR pRiCing

m&a

audit

management Consulting

tax Consulting

majoR Clients in 2019

finanCial Consulting

otHeR seRviCes

payRoll aCCounting

pRepaRation of montHly and annual RepoRts

pRepaRation of ifRs RepoRts and finanCial statements

aCCounting tRaining

aCCounting Consulting

pRepaRation of aCCounting poliCy

RevieW of bookkeeping WoRk peRfoRmed by a gRoup entity abRoad (ssC)

Company Website

speCial aCCounting seRviCes total net Revenue in 2019 (Huf mln)

net Revenue fRom aCCounting in 2019 (Huf mln)

Rank

Ranked by net revenue from accounting in 2019 (HUF mln)

pRoCess solutions kft. www.ps-bpo.com 1

3,108

6,177

✓

✓

✓

✓

✓

✓

Ÿ

✓

✓

–

–

–

✓

–

tmf magyaRoRszág kft. www.tmf-group.com

1,395

2

3,100

–

✓

✓

–

✓

✓

Ÿ

✓

–

–

–

–

–

–

Bergmann Könyvelő iRoda pénzügyi szolgáltató kft. www.bergmann.hu 3

4

Rsm HungaRy zRt. www.rsm.hu

1,248

1,267

✓

✓

✓

✓

✓

✓

Ÿ

✓

✓

✓

✓

✓

✓

✓

✓

125 1990

1,153

2,253

✓

✓

✓

✓

✓

✓

Ÿ

✓

✓

✓

–

✓

✓

✓

✓

128 2001

(100) –

zsolt kalocsai Klára Vaitz Szilvia Morvay

1139 Budapest, Váci út 99–105. (1) 886-3700 info@rsm.hu

Finacont Holding Befektetési Kft. (100) –

györgy pintér, ádám menich, gábor jankó, gábor kis, brigitta t. burián – –

1062 Budapest, Aradi utca 16. II. emelet 2. (1) 345-0092 finacont@ finacont.com

Libra Szoftver Fejlesztő Zrt. (100) –

kálmán faur Józsefné Kulifai –

1113 Budapest, Karolina út 65. (1) 460-7400 mlx@memolux.hu

finaCont szolgáltató és tanáCsadó kft. 5

6

www.finacont.com

memoluX Szervező, FejleSztő éS szolgáltató kft. www.memolux.hu

952

1,088

✓

✓

✓

–

✓

✓

Ÿ

✓

✓

✓

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–

–

✓

✓

115 2002

819

855

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✓

✓

✓

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Ÿ

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✓

✓

✓

–

✓

✓

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79 1989

TAILORIZED SERVICE | OWN SOFTWARE DEVELOPMENT | HIGHLY EXPERIENCED TEAM

Member of Libra Group

ACCOUNTANCY Lets see clearly

PAYROLL

Hungarian partner of ADP

Long-term reliable cooperation TAX CONSULTANCY Legal opportunities

www.memolux.hu

Wts klient kft. www.wtsklient.hu

molnáR és bányai kft. www.molnar-banyai.hu

762

670

792

1,064

–

–

✓

✓

✓

✓

–

✓

–

✓

no. of full-time employees on januaRy 1, 2020 yeaR establisHed

otHeR seRviCes

–

–

–

58 1998

Individuals (100) –

1143 Budapest, Stefánia út 101–103. (1) 887-3700 info@wtsklient.hu

✓

KWS Magyarország Kft., "Erbslöh Hungaria" Kft., GROSSHAUS Hungaria Kft., G&P Quality Management Kft., OPEN HOUSE Kft.

✓

✓

✓

✓

✓

✓

✓

✓

76 1998

Péter Bányai (50), Domol Invest Kft. (50) –

julianna varga – –

9022 Győr, Liszt F. utca 35. (96) 525-030 mbgyor@ molnar-banyai.hu

– LeitnerLeitner Österreich Wirtschaftsprüfungs GmbH (55), LeitnerLeitner International GmbH (45)

márta siklós – –

1027 Budapest, Kapás utca 6–12. (1) 209-2930 budapest.office@ leitnerleitner.hu

HR Consulting

–

tRansfeR pRiCing

–

m&a

–

audit

✓

management Consulting

✓

tax Consulting

Ÿ

finanCial Consulting

–

zoltán lambert, györgy Kőrösi, eszter balogh, andrea potássy Andrea Potássy Esther Lausek

majoR Clients in 2019

payRoll aCCounting

addRess pHone email

pRepaRation of montHly and annual RepoRts

pRepaRation of ifRs RepoRts and finanCial statements

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aCCounting Consulting

pRepaRation of aCCounting poliCy

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total net Revenue in 2019 (Huf mln)

speCial aCCounting seRviCes

top loCal exeCutive Cfo maRketing diReCtoR

8

Company Website

www.bbj.hu

Budapest Business Journal | February 28 – March 12, 2020

oWneRsHip (%) HungaRian non-HungaRian

7

Special Report net Revenue fRom aCCounting in 2019 (Huf mln)

Rank

18 | 3

leitneR + leitneR audit kft. 9

www.leitnerleitner.com

396

494

✓

✓

✓

✓

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Ÿ

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29 1994

345

530

–

✓

✓

–

✓

✓

Ÿ

✓

✓

✓

✓

–

✓

–

✓

35 1995

– Alessandro Farina (100)

alessandro farina – –

1054 Budapest, Váci utca 81. (1) 269-5679 info@itlgroup.hu

337

699

–

✓

✓

–

✓

✓

Ÿ

✓

✓

✓

–

✓

–

✓

✓

65 1996

István Nemecz (30) ACCACE BPO Holding (70)

istván nemecz Katalin Berényi Nemeczné Norbert Nagy

1132 Budapest, Váci út 30. (1) 412-3530 hungary@accace.com

✓

BARE, Kinnarps, TEDx Liberty Bridge Women, M7 Real Estate, Roma Education Fund

✓

47 2017

Individuals (Ÿ) Individuals (Ÿ)

tamás kovács, béla kakuk, judit gudman – –

1139 Budapest, Váci út 99. (70) 679-0279 hello@bpion.com

8 1995

Zsolt Ruszin (50), Veronika Antal Ruszinné (50) –

zsolt Ruszin – –

1097 Budapest, Könyves Kálmán körút 12–14. (1) 238-8023 fairconto@ fairconto.hu

itl gRoup kft. www.itlgroup.hu 10

11

aCCaCe HungaRy kft. www.accace.hu

bpion seRviCes kft. bpion.com

233

12

13

faiRConto zRt. www.fairconto.hu

229

332

Ÿ

✓

–

✓

✓

✓

✓

✓

✓

✓

–

✓

Ÿ

✓

✓

✓

✓

✓

✓

✓

–

–

–

✓

–

✓

–

–

vgd HungaRy kft. 200

443

✓

✓

✓

✓

✓

✓

Ÿ

✓

✓

✓

✓

–

✓

✓

✓

27 2001

Gyöngyi Ferencz (Ÿ), Andrea Kuntner (Ÿ), Erik Thurn (Ÿ) –

178

178

–

✓

✓

–

✓

✓

Ÿ

✓

–

✓

–

–

✓

✓

✓

15 1992

Andrea Butkovics (50), Tünde Gulyás (50) –

www.vgd.eu 14

Colling Könyvelő éS tanáCsadó kft. www.colling.hu 15

Source of friendly numbers

16

peRsCRiptoR Könyvelőiroda KFt.

17

balanCe adó- és ügyviteli kft.

www.precizkonyveles.hu

www.balancekft.hu

134

126

178

168

✓

–

✓

✓

✓

✓

–

–

–

–

gyöngyi ferencz, 1134 Budapest, andrea kuntner, Váci út 33. erik thurn (1) 225-7575 – vgd.budapest@vgd.hu Krisztina Csákics

andrea butkovics – Melinda Németh

1134 Budapest, Váci út 49. (1) 452-6900 office@colling.hu

A mi számaink az Ön barátai

✓

Ÿ

✓

✓

✓

✓

–

–

–

–

✓

Dunakeszi SZTK NpKft., Újpesti Egészségügyi NpKft., Dél-budai Egészségügyi NpKft., TEMI; Rustler Kft., R-Design Kft.

✓

✓

–

✓

–

–

–

–

Ÿ

Tibor Kmeczó (100) –

tibor kmeczó Fruzsina Mészáros-Szabó Nikolett Kmeczó

1087 Budapest, Könyves Kálmán körút 76. (1) 219-0991 info@perscriptor.hu

19 1990

József Dencsi (90), Tibor Dencsi (10) –

józsef dencsi, mária Csonka – –

1119 Budapest, Fehérvári út 44. (1) 209-6448 balance@ balancekft.hu

2010

3

www.bbj.hu

Budapest Business Journal | February 28 – March 12, 2020

speCial aCCounting seRviCes

Rank

Company Website

net Revenue fRom aCCounting in 2019 (Huf mln)

total net Revenue in 2019 (Huf mln)

RevieW of bookkeeping WoRk peRfoRmed by a gRoup entity abRoad (ssC)

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payRoll aCCounting

finanCial Consulting

tax Consulting

management Consulting

HR Consulting

no. of full-time employees on januaRy 1, 2020 yeaR establisHed

oWneRsHip (%) HungaRian non-HungaRian

top loCal exeCutive Cfo maRketing diReCtoR

m&a

tRansfeR pRiCing

addRess pHone email

audit

otHeR seRviCes

Special Report | 19

18

ÍRisz offiCe zRt.

118

124

–

✓

✓

✓

–

✓

Ÿ

✓

–

✓

✓

✓

–

–

–

4 2000

Individuals (100) –

tibor papp – –

1114 Budapest, Bartók Béla út 29. (1) 550-0510 iroda@iriszoffice.hu

19

eCoCReative zRt.

110

112

–

✓

✓

✓

–

✓

Ÿ

✓

✓

✓

✓

✓

–

–

–

1 2007

Individuals (100) –

tibor papp – –

1116 Budapest, Fegyvernek utca 8. (30) 238-1302 iroda@ecocreative.hu

105

105

–

✓

✓

–

✓

✓

Ÿ

✓

✓

✓

–

–

–

–

–

10 2003

Eszter eszter Danku-Szigecsán danku-szigecsán – (100) – –

✓

✓

✓

✓

–

–

–

–

8 2007

Individuals (100) –

beáta kincs – –

4026 Debrecen, Bem tér 14. (1) 279-1722 office@ audit.labtech.hu

www.iriszoffice.hu

www.ecocreative.hu

majoR Clients in 2019

aiRon Consulting kft. 20

www.airon.hu

1011 Budapest, Szilágyi Dezső tér 1. (1) 700-4141 hello@airon.hu

21

audit-labteCH kft.

76

76

–

✓

✓

–

✓

✓

Optimit Hungária Kft., Őrmester Vagyonvédelmi Nyrt., VB2MW Kft., Gammo Europe Kft., Gyulai Kft., MULTI MAG Debrecen Kft.

22

ConSider Könyvelő iRoda kft.

75

85

–

✓

✓

–

–

✓

Ÿ

✓

✓

✓

✓

–

–

–

–

6 2008

Éva Komonyi (100) –

éva komonyi – –

1139 Budapest, Váci út 95. (1) 788-7920 consider@consider.hu

64

71

–

✓

✓

✓

–

✓

Complexlab Kft.

✓

–

–

–

–

–

–

–

7 1990

Csaba Benedek (70), József Benedek (30) –

Klára erdő soósné – –

1033 Budapest, Laktanya utca 35. (1) 439-2300 csaba@benedek.hu

32

34

–

✓

✓

–

–

✓

Ÿ

✓

✓

✓

–

✓

–

–

–

6 1994

Individuals (100) –

péterné bónácz Anikó Vargáné Bónácz István Varga

1224 Budapest, III. utca 13. (1) 362-4748 info@caldera.hu

✓

✓

✓

✓

–

–

✓

–

29 2006

ARK INVEST Magyarország Kft. (87), individuals (13) –

zsolt ilyés, krisztina garas kovácsné Krisztina Garas Kovácsné –

1064 Budapest, Izabella utca 66. (70) 380-3970 garas.krisztina@ arkconsulting.hu

23

www.audit.labtech.hu

www.consider.hu

adószabászat Könyvelő, BérSzámFejtő, éS adótanáCsadó kft. www.adoszabaszat.hu

24

CaldeRa számviteli, pénzügyi és tanáCsadó kft. www.caldera.hu

aRkConsulting kft. NR www.arkconsulting.hu

Ÿ

304

–

✓

✓

–

✓

✓

Fraikin Magyarország, Poli Computer Kft., Fájdalom Ambulancia, WhiskyNet Kft.

Ÿ

3,800

–

✓

✓

✓

✓

✓

Ÿ

✓

✓

✓

✓

✓

✓

✓

✓

Ÿ

1989

(100) –

zoltán gerendy – –

1103 Budapest, Kőér utca 2/A (1) 235-3010 office@bdo.hu

Ÿ

Ÿ

–

✓

✓

–

–

✓

Ÿ

✓

–

✓

–

–

–

–

–

Ÿ

SASK Gazdasági Tanácsadó Kft. (100) –

Csaba molnár – –

2900 Komárom, Erdélyi utca 4. (34) 540-770 bilance@bilance.hu

Ÿ

(100) –

szilvia sarkadi-nagy, ildikó miszori, lászló killik – –

1146 Budapest, Zichy Géza utca 5. (1) 422-1339 info@bpokft.hu

bdo magyaRoRszág (könyvelés, béRszámfejtés) NR

NR

www.bdo.hu

bilanCe adótanáCsadó éS Könyvelő KFt. www.bilance.hu

1990

NR

bpo audit tax

Ÿ

Ÿ

–

✓

✓

✓

✓

✓

Ÿ

✓

✓

✓

✓

✓

✓

✓

–

NR

bRanko pénzügyi és számviteli kft.

Ÿ

319

–

✓

✓

–

–

✓

Ÿ

✓

–

✓

–

–

–

–

✓

Ÿ

1995

Branko Holding Zrt. (100) –

zoltán komora – –

1113 Budapest, Karolina út 65. (1) 889-6200 info@branko.hu

NR

CRoWe fst Consulting kft.

Ÿ

Ÿ

–

✓

✓

–

✓

✓

Ÿ

✓

✓

✓

–

–

–

✓

–

Ÿ

Individuals (100) –

ferenc kölber – –

1124 Budapest, Jagelló út 14. (1) 225-3490 info@crowe.hu

✓

Ÿ

1991

Attila Kollár (100) –

balázs szentirmai – –

1117 Budapest, Szerémi út 7/A (1) 464-4340 szentirmai.balazs@ econoserve.eu

Ÿ

Individuals (3) Mazars S.A. (97)

philippe michalak budzan – –

1123 Budapest, Nagyenyed utca 8–14. (1) 429-3010 mazars@mazars.hu

Ÿ

– Rödl International GmbH (100)

Roland felkai – –

1062 Budapest, Andrássy út 121. (1) 814-9800 budapest@roedl.com

www.mgi-bpo.hu

www.branko.hu

www.crowe.hu

eConoseRve gazdasági NR tanáCsadó kft. www.econoserve.eu

mazarS KönyvSzaKértő NR és tanáCsadói kft. www.mazars.hu

NR

Rödl & paRtneR magyaRoRszág www.roedl.hu

Ÿ= would not disclose, NR = not ranked, NA = not applicable

–

–

–

–

–

Ÿ

Ÿ

1,933 (2018)

–

–

✓

–

✓

✓

Ÿ

✓

✓

✓

–

✓

–

✓

–

Ÿ

1,511

✓

✓

✓

✓

✓

✓

Ÿ

✓

✓

✓

✓

✓

–

✓

–

✓

✓

✓

Ÿ

–

Ÿ

✓

✓

✓

✓

2001

2002

1991

1991

This list was compiled from responses to questionnaires received by February 26, 2020 and publicly available data. Data is based on companies’ own data revelations. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

20 | 3

Special Report

www.bbj.hu

Budapest Business Journal | February 28 – March 12, 2020

Tax Consultants industRy oR speCial taxes

adveRtising tax

exCise tax

auditing

aCCounting

payRoll aCCounting

finanCial Consulting

HR Consulting

Real estate Consulting

1,012

tax and finanCial due dilligenCe

1,050

tRansfeR pRiCing

1,090

CoRpoRate tax

1,090

otHeR seRviCes

pit and soCial seCuRity

26,282

tax Consulting Related seRviCes

vat

3,649

yeaR establisHed no. of full-time employees on JanuaRy 1, 2020

total net Revenue in 2019 (Huf mln)

Company Website

net Revenue fRom tax Consulting in 2019 (Huf mln)

Rank

Ranked by net revenue from tax consulting in 2019 (HUF mln)

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

Rezső Rózsai (Ÿ), István Henye (Ÿ) –

Rezső Rózsai, gábor beer William Curley Gabriella Liptay

1134 Budapest, Váci út 31. (1) 887-7100 info@kpmg.hu

2009 35

✓

✓

✓

✓

✓

✓

✓

✓

–

–

–

–

–

–

Individuals (100) –

Károly Radnai – Attila Götz

1124 Budapest, Csörsz utca 43. (1) 920-6800 info@orientax.hu

3,800

1989 17

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

(100) –

Zoltán Gerendy, Ilona Orbók – –

1103 Budapest, Kőér utca 2/A (1) 235-3010 office@bdo.hu

2,253

2001 128

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

–

(100) –

Zsolt Kalocsai Klára Vaitz Szilvia Morvay

1139 Budapest, Váci út 99–105. (1) 886-3700 info@rsm.hu

670

Ÿ

2006 24

✓

✓

✓

✓

✓

✓

✓

✓

–

–

✓

✓

✓

✓

– LeitnerLeitner International GmbH (100)

Márta Siklós, Judit Jancsa-Pék, Nóra Rácz – –

1027 Budapest, Kapás utca 6–12. (1) 279-2930 budapest.office@ leitnerleitner.com

oWneRsHip (%) HungaRian non-HungaRian

top loCal exeCutive Cfo maRketing diReCtoR

addRess pHone email

kpmg magyaRoRszág www.kpmg.hu 1

1989

Ÿ

oRientax adótanáCsadó zRt. 2

www.orientax.hu

bdo magyaRoRszág (adótanáCsadás) 3

4

www.bdo.hu

Rsm HungaRy zRt. www.rsm.hu

leitneR + leitneR tax kft. www.leitnerleitner.com 5

6

Wts klient adótanáCsadó kft.

485

520

1998 22

✓

✓

✓

✓

✓

✓

✓

✓

–

–

–

–

–

–

Individuals (100) –

Zoltán Lambert, Tamás Gyányi Andrea Potássy Esther Lausek

1143 Budapest, Stefánia út 101–103. (1) 887-3700 info@wtsklient.hu

7

Híd AdóSZAKéRTő éS pénzügyi tanáCsadó zRt.

255

255

2012 6

✓

✓

✓

✓

✓

✓

✓

✓

–

–

–

–

–

–

Tamás Verbai (67) individuals (33) –

Tamás Verbai Péter Juhász –

1138 Budapest, Váci út 186. (1) 700-1470 info@hidadoszakerto.hu

155

443

2001 27

✓

✓

✓

✓

✓

✓

✓

✓

–

✓

✓

✓

✓

✓

Gyöngyi Ferencz (Ÿ), Andrea Kuntner (Ÿ), Erik Thurn (Ÿ) –

Gyöngyi Ferencz, Andrea Kuntner, Erik Thurn – Krisztina Csákics

1134 Budapest, Váci út 33. (1) 225-7575 vgd.budapest@vgd.hu

144

257

1995 12

✓

✓

✓

✓

✓

✓

✓

✓

✓

–

–

–

–

–

Péter Bergmann (50), Péterné Bergmann (50) –

Péter Bergmann József Tamás Kiss, Sándor Soltész Mónika Tóth-Balog

1138 Budapest, Váci út 186. (20) 745-7100 bergmann@bergmann.hu

143

699

1996 65

✓

✓

✓

✓

✓

–

✓

✓

–

✓

✓

✓

✓

–

István Nemecz (30) ACCACE BPO Holding (70)

István Nemecz Katalin Berényi Nemeczné Norbert Nagy

1132 Budapest, Váci út 30. (1) 412-3530 hungary@accace.com

Finacont Holding Befektetési Kft. (100) –

György Pintér, Ádám Menich, Gábor Jankó, Gábor Kis, Brigitta T. Burián – –

1062 Budapest, Aradi utca 16. II. emelet 2. (1) 345-0092 finacont@finacont.com

www.wtsklient.hu

www.hidadoszakerto.hu

vgd HungaRy kft. www.vgd.eu 8

BERGMANN KöNyVSZAKéRTő és adótanáCsadó kft. www.bergmann.hu 9

10

aCCaCe HungaRy kft. www.accace.hu

finaCont szolgáltató és tanáCsadó kft. 11

www.finacont.com

136

1,088

2002 115

✓

✓

✓

✓

✓

✓

✓

✓

–

✓

✓

✓

✓

–

3

www.bbj.hu

CoRpoRate tax

tRansfeR pRiCing

tax and finanCial due dilligenCe

industRy oR speCial taxes

adveRtising tax

exCise tax

auditing

aCCounting

payRoll aCCounting

finanCial Consulting

HR Consulting

Real estate Consulting

pmx Consulting gRoup magyaRoRszág adótanáCsadó kft.

pit and soCial seCuRity

13

www.molnar-banyai.hu

vat

molnáR és bányai kft.

yeaR establisHed no. of full-time employees on JanuaRy 1, 2020

12

129

1,064

1998 76

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

Péter Bányai (50), Domol Invest Kft. (50) –

Julianna Varga – –

9022 Győr, Liszt F. utca 35. (96) 525-030 mbgyor@molnar-banyai.hu

91

91

1994 6

✓

✓

✓

✓

✓

✓

–

–

–

–

–

–

–

–

Individuals (100) –

János Szalai – –

1066 Budapest, Mozsár utca 16. (1) 272-7885 info@pmxconsulting.hu

✓

✓

✓

✓

✓

✓

–

–

✓

✓

–

✓

✓

–

Libra Szoftver Zrt. (98.60), Andrea Radocza Weszelovszkyné (1.40) –

György Kozma Józsefné Kulifai István Rajkai

1113 Budapest, Karolina út 65. (1) 460-7401 m-audit@m-audit.hu

✓

✓

✓

✓

✓

✓

✓

–

–

✓

✓

✓

–

–

Zsolt Ruszin (50), Veronika Antal Ruszinné (50) –

Zsolt Ruszin – –

1097 Budapest, Könyves Kálmán körút 12–14. (1) 238-8023 fairconto@fairconto.hu

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

–

Ÿ ✓

✓

✓

–

–

–

József Láng (Ÿ), ABT Treuhand Vagyonkezelő Zrt. (Ÿ) ABT Finanzgesellschaft AG (Ÿ)

József Láng – –

1037 Budapest, Montevideo utca 3/A (1) 430-3400 abt@abt.hu

✓

✓

✓

–

–

ARK INVEST Magyarország Kft. (87), individuals (13) –

Zsolt Ilyés, Krisztina Garas Kovácsné Krisztina Garas Kovácsné –

1064 Budapest, Izabella utca 66. (70) 380-3970 garas.krisztina@ arkconsulting.hu

Szilvia Sarkadi-Nagy, Ildikó Miszori, László Killik – –

1146 Budapest, Zichy Géza utca 5. (1) 422-1339 info@bpokft.hu

www.pmxconsulting.hu

m-audit könyvvizsgáló, FEJLESZTő éS SZOLGÁLTATó kft. www.m-audit.hu

71

103

1990 6

15

faiRConto zRt.

32

Ÿ

1995 8

NR

abt HungáRia tanáCsadó kft.

Ÿ

Ÿ

NR

aRkConsulting kft.

Ÿ

304

NR

bpo audit tax

14

www.fairconto.hu

www.abt.hu

www.arkconsulting.hu

www.mgi-bpo.hu

otHeR seRviCes

total net Revenue in 2019 (Huf mln)

Company Website

tax Consulting Related seRviCes

Special Report | 21

net Revenue fRom tax Consulting in 2019 (Huf mln)

Rank

Budapest Business Journal | February 28 – March 12, 2020

Ÿ

Ÿ

Ÿ

178

1993

Ÿ

2006 29

2001

✓

✓

✓

✓

–

–

–

–

–

oWneRsHip (%) HungaRian non-HungaRian

top loCal exeCutive Cfo maRketing diReCtoR

addRess pHone email

✓

✓

✓

✓

✓

–

–

–

✓

✓

✓

✓

–

–

(100) –

1992 18

✓

✓

✓

✓

✓

✓

✓

–

–

✓

✓

–

✓

–

Andrea Butkovics (50), Tünde Gulyás (50) –

Andrea Butkovics – Melinda Németh

1134 Budapest, Váci út 49. (1) 452-6900 office@colling.hu

Ÿ

COLLING KöNyVELő éS tanáCsadó kft. www.colling.hu NR

NR

CRoWe fst Consulting kft.

Ÿ

Ÿ

2002 44

✓

✓

✓

✓

✓

–

–

–

–

✓

✓

✓

–

–

Individuals (100) –

Ferenc Kölber – –

1124 Budapest, Jagelló út 14. (1) 225-3490 info@crowe.hu

NR

deloitte magyaRoRszág(1)

Ÿ

19,893(2)

1990(3) 765

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

– (100)

András Fülöp Gerard Lucey Csanád Bánhegyi

1068 Budapest, Dózsa György út 84/C (1) 428-6800 deloitteinhungary@ deloittece.com

NR

ey magyaRoRszág

Ÿ

Ÿ

1989

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

– Ernst & Young Center Cluster Limited (100)

Botond Rencz Csaba Horváth Ágnes Pellion

NR

foRbis adótanáCsadó kft.

Ÿ

Ÿ

2005

✓

–

–

–

–

–

–

–

–

–

–

–

–

–

Individuals (100) –

Gábor dénes, Ferencné Wessely Gábor Dénes –

1132 Budapest, Váci út 20. (1) 451-8100 mailbox.ey@hu.ey.com

NR

gRant tHoRnton HungaRy

Ÿ

1,800

Waltraud Körbler, János Kővágó, Ágoston Jakab – –

1134 Budapest, Dévia utca 26–28. (1) 455-2000 office@hu.gt.com

NR

MAZARS KöNyVSZAKéRTő és tanáCsadói kft.

Ÿ

1,933 (2018)

Ÿ

19,247(3)

Ÿ

1,511

Ÿ

Ÿ

www.crowe.hu

www.deloitte.hu

www.ey.hu

www.forbis.hu

www.grantthornton.hu

www.mazars.hu

Ÿ

Ÿ

1119 Budapest, Pajkos utca 24. (1) 382-0106 tax@forbis.hu

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

–

–

AAH Management Kft. (Ÿ), SmartCorpFin Pénzügyi Tanácsadó Kft. (Ÿ) IB Interbilanz Holding Wirtschaftsprüfung GmbH (Ÿ), GT Advisory s.r.o. (Ÿ)

1991

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

–

–

Individuals (3) Mazars S.A. (97)

Philippe Michalak Budzan – –

1123 Budapest, Nagyenyed utca 8–14. (1) 429-3010 mazars@mazars.hu

1989

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

– PwC CEE (100)

Tamás Lőcsei, László deák Tamás Pál Borbála Palotai

1055 Budapest, Bajcsy-Zsilinszky út 78. (1) 461-9100 info@hu.pwc.com

1991

✓

✓

✓

✓

✓

–

✓

–

✓

✓

✓

✓

–

✓

– Rödl International GmbH (100)

Roland Felkai – –

1062 Budapest, Andrássy út 121. (1) 814-9800 budapest@roedl.com

1959

✓

✓

✓

✓

✓

✓

✓

✓

–

✓

✓

–

–

–

Individuals (100) –

Ákos Balogh Enikő Kovács Dániel Burján

1135 Budapest, Mór utca 2–4. (1) 237-9810 vezig@saldo.hu

1991 100

Ÿ

pwC magyaRoRszág www.pwc.hu NR

Ÿ

Rödl & paRtneR magyaRoRszág NR

NR

www.roedl.hu

saldo pénzügyi tanáCsadó és infoRmatikai zRt. www.saldo.hu

Ÿ

Ÿ

NOTES: (1) Deloitte Zrt. provides tax services. (2) Data of business year July 1, 2018-June 30, 2019. (3) Establishment year of Deloitte Üzletviteli és Vezetési Tanácsadó Zrt.

4

www.bbj.hu

Budapest Business Journal | February 28 – March 12, 2020

Socialite Visiting the Buda Shrine to Harry Houdini It was beginning to get dark in Budapest’s Castle District as we tried to find the House of Houdini at 11 Dísz tér. Everyone we asked directions from told us it was five minutes away from where we were, but still we went round in circles. The irony of trying to find a museum dedicated to celebrating a legendary escapologist that was clearly hiding in plain sight didn’t escape us.

Magical Moments

DAVID HOLZER

I had no problem wandering the splendidly atmospheric streets of the Castle District. I did notice, though, that my Hungarian partner and her sister were shivering theatrically and casting longing look at the glorious illuminated front of the Hilton Budapest every time we passed. You wouldn’t have to be a mind reader to realize that my partner and her sister were somewhat disappointed when we finally found the House of Houdini, which claims to house the largest collection of

ground from a tall building, and a packing case that been lowered into water. He also surfaced after being buried alive. After having survived several dramatically close shaves, Harry Houdini died from peritonitis secondary to a ruptured appendix aged just 52. His appendix had been ruptured by several blows struck by a university student named Jocelyn Gordon Whitehead while Houdini was in his dressing room backstage at the Princess Theatre, Montreal. Although I knew the bare facts of Houdini’s death, I wasn’t aware of the backstory which was revealed to us by our guide. I won’t share the secret here. You’ll just have to go to the House of Houdini yourself. One thing the guide couldn’t explain was why Houdini never owned up to his Hungarian origin. He also claimed this was only discovered in the 1970s, which I find difficult to believe.

Houdini artefacts in the world. But I was determined to drag them inside. I was rather disappointed to discover that this wasn’t the actual House of Houdini, as in where he was born. But the short guided tour and magic show that followed were great fun. Even for my partner and her sister. The House of Houdini was created by an escapologist who had been a technical adviser on a movie about the life of the great man. To enter, our group of adults had to tell the fresh-faced guide, himself a magician, how many cards there are in a deck of cards excluding the jokers. None of us knew. Once were finally inside, we were shown magic tricks including handcuffs that had belonged to Houdini and a rather shredded straitjacket. Someone had been a hurry to get out of that. My partner was keen to test the “Sawing a woman in half” box but couldn’t work up the nerve to ask the guide if he’d like to demonstrate on her. As she’s not the tallest of women, I’m glad she didn’t raise her hand.

Hungarian Houdini

Because Houdini took his stage name from French magician Jean Eugéne RobertHoudun, you could be forgiven for not

knowing that he was Hungarian. (No-one is entirely sure where the “Harry” came from.) He was born Erik Weisz somewhere in Pest in 1874 but moved to the United States with his family in 1878. On arrival the family named changed to the German Weiss and Erik became Ehrich. They settled in Appleton, Wisconsin. After Weisz senior lost his job as a rabbi, the family moved to New York and became dreadfully poor. Aged nine, the future Houdini debuted as a trapeze artist. It’s to the benefit of the world that he didn’t apprentice as a delivery boy. In the beginning, Houdini didn’t make much of a splash as a magician. His big break came

in

1899

when a vaudeville impresario advised him to focus on escapology. Next year he was touring Europe. In London, he escaped from a pair of handcuffs at Scotland Yard and the resulting publicity meant his career really took off. Houdini went on to escape from a milk can, a “Chinese water torture cell”, a straitjacket suspended high above the

After the guided tour we were ushered into a tiny theater to watch a magic show. The whispering magician, whose name I later found out is László Tóth, manages to combine a hang dog demeanor with a mixture of relief and pop-eyed delight when he pulls off a trick. Tóth’s tricks were the usual parlor magician stuff. He made a girl’s ring disappear and reappear on a key chain inside his pocket. One of his routines updated a card trick for the age of technology and involved a card that only appeared in a photograph of the contents of his wallet, but which was otherwise invisible. Even though the tricks were hardly spellbinding, Tóth’s pleasure in his work was infectious and our party of adults who couldn’t count briefly became smiling children. By the end of his act, my partner and her sister were entranced along with the rest of us. He told me that he’s been practicing magic since he

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and is happy to make his living performing at the House of Houdini. On a good day, he does four or five shows. After thanking Tóth, we emerged onto a street that was just a little more mysterious than it had been before. We headed off to the Hilton, which my partner and her sister managed to find without any difficulty. From the Hilton bar, we looked out across what had been the cloisters and courtyard of a 13th century Dominican monastery to where the lights of Pest shimmered and sparkled. Somewhere in the mean streets far beyond the river, Harry Houdini was born humble Erik Weisz. And we’ll never know why he concealed that fact in his lifetime.

Find out more at www. houseofhoudinibudapest.com. Take the hyperbole with a pinch of paprika but, rest assured, it’s really worth a visit.

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Furmint Finding Fame, but Hungary has Much More to its Game As we wave goodbye to this year’s “Furmint February” and the ever-growing list of tastings related to Hungary’s flagship grape, frenzy for the wine is unabated. A tasting at the Lodge. Zoltán Horváth of Planina is pouring the wine.

ROBERT SMYTH

It appears that the country’s great white wine hope is gaining further traction beyond Hungary in the wake of the London-leg of Furmint February, which was attended by a veritable Who’s Who of the British wine-writing scene. On the back of the tasting held at Merchant Taylor’s Hall on January 29, Furmint even made the Financial Times, where Jancis Robinson MW was upbeat in her commentary entitled “Try Hungary’s Tokaji, but keep it dry”, a reference to the lack of interest in the region’s awesome botrytized sweets wines, which she seriously rates.

Of course, there’s far more to Tokaj (and Hungarian) wine than Furmint, and when it’s good, Hárslevelű, thought to be an offspring grape, can even usurp it. The Kikelet Winery and its French winemaker/owner Stéphanie Berecz set the benchmark for this variety. She also observed that the effects of climate change have made it more difficult to produce Tokaji Aszú. On tasting lots of 2018 dry wines from Tokaj at the Furmint February Grand Tasting in Budapest, I also found that the hot temperatures that year has even made it harder to make dry wine, with the normally high and invigorating acidity of Furmint tempered a little too much in some cases.

Incidentally, everything appeared to turn out well in 2019 for both dry and sweets (with abundant botrytis occurring) from all accounts and from the few dry wines I’ve tried from last year’s vintage. Despite the vagaries of the weather, I have certainly felt that the dry Furmint quality bar has been raised significantly in recent vintages, especially as winemakers become savvier and less heavy handed in oak use, or even eschew it altogether, allowing Furmint’s subtle charms to seduce the palate. Funnily enough, I find myself buying more and more of the stuff. While I would have never have described myself as a skeptic, I did feel that, as a whole, Furmint often lacked focus and flattered to deceive with a lot of fairly average offerings doing the rounds. For those who missed out on Furmint February, there will be plenty more samples of the wine poured at the Tokaji Március Grand Tasting at the Corinthia Hotel Budapest on March 23 (more than 60% of Tokaj’s vineyards are planted with the grape).

Benchmark

Of course, there’s far more to Tokaj (and Hungarian) wine than Furmint, and when it’s good, Hárslevelű, thought to be an offspring grape, can even usurp it. The Kikelet Winery and its French winemaker/ owner Stéphanie Berecz set the benchmark for this variety. It is without question that Hárslevelű (along with Bouvier) is a parent of the Kabar variety – from which it is also permitted in the making of Tokaj wine. Although it was originally crossed for its propensity to become botrytized more easily than Hárslevelű, this relatively recent addition to the Tokaj fold is also making some exciting dry wines, for example from Tarcal-based winery Füleky, which will be one of 41 Tokaj wineries present at Tokaji Március, which is organized by Winelovers. There are plenty of other Hungarian grapes to tempt curious palates and

I came across a few really interesting ones at Borjour Magnum, a bumper event held at Millináris on February 15; so big, indeed, that it paid to have a tasting strategy. I used it to taste wines from off the beaten track and found several good value and/ or distinctive wines made from other indigenous grapes. The southern town of Mohács is famous for a historic battle and its Busójárás farsang, a colorful and lively carnival in which revelers dress up in scary animal costumes (as was done in the past to chase off invading Turks and/or the evil spirits of winter), which happened last week. Mohács is less well-known for its wine, although it is part of the Pécs wine region – itself somewhat obscure to outsiders. At Borjour, it was nice to try the wines of Planina Borház and meet its owner/ winemaker Zoltán Horváth, who makes wine from five hectares. Planina’s Királyleányka 2019 (HUF 1,780) is fruity, a touch floral, clean and correct, with zesty acidity, and saves the best to last as it delivers a long, stony finish. It comes from loess

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soil, although there is limestone lurking deep underneath the topsoil.

Underestimated

Királyleányka is an underestimated varietal that is a natural crossing of Leányka and Grasă that hails from Transylvania. In Romania, it is known as Fetească Regală and is that country’s most planted grape variety. Much less known is Csomorika, a grape thought to originate from Hungary, which has been used mainly for making sparkling wine (Pécs has a considerable sparkling wine past). The experimental Horváth of Planina has made a still, dry version in 2019, which has a forwardly floral note that the winemaker himself rightly compares to the Glera grape (the main grape used for Prosecco), followed by a yeasty palate that rather recalls a traditional method sparkler (with the second fermentation carried out in the bottle, albeit without the complexity. This is a wine of contrasts. Planina also works with the Nero and Cirfandli (Austria’s Zierflandler) varieties. Planina wines are available in Budapest from the Lodge, an exciting new workshop come wine tasting venue and store at Kőfaragó utca 10 in District XIII, which stocks an array of upcoming producers selected by László Folkmann. He originates from Szekszárd and succeeded in getting some small producers from his own region and others into popular District VII bars such as Fekete Kutya and Kisüzem. While Kékfrankos may be the most planted grape in Hungary, the region of Tolna (close to Szekszárd) is not on most people’s radar when it comes to this red-wine grape. Tolna’s Grál cellar grabbed our attention a few years back when the 2012 came top in a blind tasting organized by Borászportál in 2015, to be named Hungary’s best Kékfrankos. The 2017 vintage of Pelzberg (HUF 5,600 from www.liberpack.hu), the steep east-facing vineyard from which 90% of the grapes for the wine are grown, is another beauty, with distinctive herbal and cassis notes, a warm and concentrated palate, yet with a lively acidity that cuts through the intensity to deliver a wine of impressive length. Photo by DeZet/Shutterstock.com

www.bbj.hu

Budapest Business Journal | February 28 – March 12, 2020

Wine cellar in Tokaj.

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