Budapest Business Journal 24/02

4Special

BBJ

SPECIAL REPORT:

Report

higher taxes More rules, if not

nting Taxes and accou

Electronic tills the mandatory electronic The reach of which cash registers directly till system, in businesses are for all kinds of tax authority, has been connected to the since it began in 2014. expanding steadily every sale is instantly The system means authority, and it makes tax reported to the on VAT. it harder to cheat originally introduced, When it was that most cash-heavy the law required in Hungary install businesses operating in the fall of 2014. run up tills by the deadline to do so could Fines for failure After a long and rocky to HUF 500,000. upwards of 190,000 end of start to the program, installed by the e-tills had been operation throughout in 2014, and were last year. Hungarian the November, In plans to expand tills to government announced use of electronic the mandatory taxis, laundries ANIKO FENYVESI include auto mechanics,offices. had and currency exchange end of 2014, NAV with their taxes on earnings Already by the cases As companies file most should find that thousands of year, encountered companies last the in made fined several huge differences shortfalls and following a series there are not the new regulations, for failing to complyNAV also noted a by amount owed under experts interviewed of targeted audits. in VAT revenue of according to tax increase Journal. keep tabs on trucks. Business of the subsequent end authorities the Budapest help the billion by regulations enforcement measures come nearly HUF 200 according more EKAER Still, stricter in the years to tills’ operation, some firms pay most to have higher burdenslose their tax losses first year of the may mean that that the measure previous tax will before. And Mihály to reports. It appears because they of tax losses in Antretter. than they did probably already great deal benefit from this from previous years,” explains are able reduce what Economy Ministereconomy” to able have be that amount periods would “shadow companies was changed calls Hungary’s increase in the Conversely, companies experienced an involved in reporting measure, but the legislation Antretter of of the new gross Varga success. Erzsébet to take advantage lower income tax is a resounding of administration the right amount on last year,” explains credits will have Accace Hungary. adds. The income and paying Hungary tax the more difficult tax consultants year, Antretter monitoring systems, with this tax credit other electronic burdens tax idea, time. Complying Like many to carry forward downside is that the grosswith before- Increased burden is a good pay administrative allows businesses to businesses declarations of elsewhere as those who missed VAT several losses by postponing expectation that only applies exceeding that of previous While experts say that the experts say, punctually for the majority on the tax profit far will not have to still represent accurately and benefits. those losses, further profitable in coming years. “Such companies on the portion payments can enjoy some this could be hardwould be more from years in a row income tax of unpaid taxes, proposed interviewed are about they The firm could deduct a loss the The experts through filing pay corporate times higher than reduced years. invoicing generalizations on its current profit that is five pressed to make should expect to pay several years ago year, to reduce their of the Antretter explains, introduction of online corporate measure in previous years,” in fast growing linked directly to NAV. This to follow whether companies for a very profitable companies that to income. the authority more or less. to five adding are the most likely would allow business. For example taxable as it does with limitations – down will sectors, such as IT, “It depends on the benefit from tax loss in real time, just “Now there are growth. – so companies to for invoicing see such exponential had a tax years from 2015 if someone used tills. be advantageous yet companies that “Changes may for example freight electronic on the measure have not of carry forward, Details in other forms specific sectors, confirmed, but tax companies operating in VAT been electronic monitoring by the forwarders or by a decrease closer place. sectors affected ADVERTISEMENT Lunczer of VGD authorities are already in might rates,” notes Katalin 1, the tax authority Kft. “Companies As of January software Ferencz & Partner new tax base and taxnew invoicing introduced a the government benefit from the income tax items, requirement that will help more credits reducing corporate a business’ activityadd-on donations and tax and scrutinize software including easier cultural purposes local closely. The new to as for sport and function referred as a growth as well includes a built-in audit, tax &y for tax inspection” tax credits for includes tax allowances the “supplying of data installed by all accountanc business tax that that must be with a VAT number. on R&D costs.” electronic- feature of business all more Hungarianon the new requirement, Given the introduction requirements, a “Based Partner should have tills, new software additional VGD Ferencz & partner returns, and invoicing software that allows the frequent VAT believes that, even data export function your strategic to request is paperwork, Antretter authority burden tax tax nominal query if a taxpayer’s less than Hungarian to perform a data even slightly up taxpayers invoicing-related information no higher or they will end says VAT Kuntner Andrea on their concerning Thurn Erik in previous years, Adótanácsadás data structure,” Ferencz Gyöngyi income or profit Könyvelés, könyvvizsgálat in a pre-defined Vékási. “If M&A Könyvvizsgálat, including more their payable taxes expert and EY Partner Tamás returns and therefore www.vgd.eu are likely to increase.

tax The corporate bite for last year’s be not earnings should dramatically different from the year before, for most companies ative but the administr to burden will continue to local grow, according experts.

ACCOUNTANTS, TAX CONSULTANTS

BUSINESS JOURNAL BUDAPEST

VOL. 24. NUMBER 02

HUF 1,250  | €5 | $6 | £3.5

JAN 29, 2016 – FEB 11, 2016

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

Leading the way

SPECIAL REPORT

Regulations change, tax bills might not Tax experts explain the changes in the laws that will impact businesses. For the most part, analysts say, companies have to comply with more regulations, but that doesn’t mean the tax burden is higher. 18

NEWS

‘Son of Saul’: Vindication for Vajna Andrew Vajna, the Hollywood producer who became Hungary’s film commissioner, was criticized for how he supports local movie makers. But an Oscar nomination is an argument in his favor. 6

NEWS

Photo: Marianna Sárközy

Central bank may break conventions With the base lending rate and prices both about as low as they can go, experts are saying that the National Bank of Hungary is likely to use unconventional tools to ensure loose money. 3

The second annual BBJ Expat CEO Gala offered a chance to note the contributions of corporate leaders like BP Airport’s Jost Lammers. 13

SPECIAL REPORT

BBJ_2402_news.indd 1

SOCIALITE

BUSINESS

Accounting software best customized

Kékfrankos gets Bull’s Blood pumping

Volume of property investment rises

While there are free, out-of-the-box solutions, even cash-conscious SMEs may find that they really need systems tailored to their specific situation when it comes to keeping track of their income and expenses. 22

This popular Hungarian grape proves to be an essential ingredient when it comes to pulling together Eger’s hearty red blends – and the recent crops are impressive, according to our wine expert. 29

Yet another report on Hungry’s real estate market brings good news: Investment volume in 2015 was up 42% on the previous year and seems likely to keep growing, according to the latest research from CBRE . 11

2016. 01. 27. 20:14

www.bbj.hu

Budapest Business Journal | Jan 29 – Feb 11, 2016

4Special

BBJ

SPECIAL REPORT:

Report

Taxes and accounting

More rules, if not

higher taxes

Electronic tills the mandatory electronic The reach of which cash registers directly till system, in businesses are for all kinds of tax authority, has been connected to the since it began in 2014. expanding steadily every sale is instantly The system means authority, and it makes tax reported to the on VAT. it harder to cheat originally introduced, When it was that most cash-heavy the law required in Hungary install businesses operating in the fall of 2014. run up tills by the deadline to do so could Fines for failure After a long and rocky to HUF 500,000. upwards of 190,000 end of start to the program, installed by the e-tills had been operation throughout in 2014, and were last year. Hungarian the November, In plans to expand tills to government announced use of electronic the mandatory taxis, laundries ANIKO FENYVESI include auto mechanics,offices. had and currency exchange end of 2014, NAV with their taxes on earnings Already by the of cases As companies file most should find that encountered thousands in the made last year, fined several companies huge differences shortfalls and following a series there are not the new regulations, for failing to complyNAV also noted a by amount owed under experts interviewed of targeted audits. in VAT revenue of according to tax tabs on trucks. Journal. of the subsequent increase authorities keep the Budapest Business billion by the end regulations help enforcement measures come nearly HUF 200 according more EKAER Still, stricter in the years to tills’ operation, some firms pay most to have higher burdenslose their tax losses first year of the may mean that that the measure previous tax before. And they will to reports. It appears of tax losses in Minister Mihály this because than they did explains Antretter. probably already great deal to benefit from what Economy from previous years,” that are able reduce amount periods would be able “shadow economy” companies have was changed increase in the calls Hungary’s Conversely, companies experienced an involved in reporting measure, but the legislation Antretter of of the new gross Varga success. Erzsébet to take advantage lower income tax is a resounding of administration the right amount on last year,” explains will have Hungary. difficult tax consultants Accacesystems, Hungary tax credits year, Antretter adds. The income and paying with the more tax electronic monitoring burdens this tax credit idea, time. Complying Like many other to carry forward downside is that the grosswith before- Increased burden is a good pay administrative allows businesses to businesses declarations of elsewhere as those who missed VAT several losses by postponing expectation that only applies exceeding that of previous While experts say that the experts say, punctually for the majority on the tax profit far will not have to still represent accurately and benefits. those losses, further profitable in coming years. “Such companies on the portion payments can enjoy some this could be hardwould be more from years in a row income tax of unpaid taxes, proposed interviewed are about they The firm could deduct a loss the The experts through filing pay corporate times higher than reduced years. invoicing generalizations on its current profit that is five pressed to make should expect to pay several years ago year, to reduce their of the Antretter explains, introduction of online corporate measure in previous years,” in fast growing linked directly to NAV. This to follow whether companies for a very profitable that companies to income. the authority more or less. to five adding are the most likely would allow business. For example taxable as it does with limitations – down will sectors, such as IT, “It depends on the benefit from tax loss in real time, just “Now there are growth. – so companies to for invoicing see such exponential had a tax years from 2015 if someone used tills. be advantageous yet companies that “Changes may for example freight electronic on the measure have not of carry forward, Details in other forms specific sectors, confirmed, but tax companies operating in VAT been electronic monitoring by the forwarders or by a decrease closer place. sectors affected ADVERTISEMENT Lunczer of VGD authorities are already in might rates,” notes Katalin 1, the tax authority Kft. “Companies As of January software Ferencz & Partner new tax base and taxnew invoicing introduced a the government benefit from the income tax items, requirement that will help more credits reducing corporate a business’ activityadd-on donations and tax and scrutinize software including easier cultural purposes local closely. The new to as for sport and function referred as a growth as well includes a built-in audit, tax & for tax inspection” tax credits for includes tax allowances the “supplying of data installed by all accountancy be business tax that feature that must with a VAT number. on R&D costs.” of electronicbusiness all more Hungarianon the new requirement, Given the introduction requirements, a “Based Partner should have tills, new software additional VGD Ferencz & partner returns, and invoicing software that allows the frequent VAT believes that, even data export function your strategic to request is paperwork, Antretter tax authority nominal tax burden query if a taxpayer’s less than Hungarian to perform a data even slightly up taxpayers invoicing-related information no higher or they will end says VAT Kuntner Andrea on their concerning Thurn Erik in previous years, Adótanácsadás data structure,” Ferencz Gyöngyi income or profit Könyvelés, könyvvizsgálat in a pre-defined Vékási. “If M&A Könyvvizsgálat, including more their payable taxes expert and EY Partner Tamás returns and therefore www.vgd.eu are likely to increase.

tax The corporate bite for last year’s be not earnings should dramatically different before from the year for most companies, but the administrativeto burden will continue to local grow, according experts.

ACCOUNTANTS, TAX CONSULTANTS

BUSINESS JOURNAL BUDAPEST

VOL. 24. NUMBER 02

JAN 29, 2016 – FEB 11, 2016

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

HUF 1,250 | €5 | $6 | £3.5

Leading the way

SPECIAL REPORT

Regulations change, tax bills might not Tax experts explain the changes in the laws that will impact businesses. For the most part, analysts say, companies have to comply with more regulations, but that doesn’t mean the tax burden is higher. 18

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NEWS

‘Son of Saul’: Vindication for Vajna Andrew Vajna, the Hollywood producer who became Hungary’s film commissioner, was criticized for how he supports local movie makers. But an Oscar nomination is an argument in his favor. 6

NEWS

Photo: Marianna Sárközy

Central bank may break conventions With the base lending rate and prices both about as low as they can go, experts are saying that the Hungarian National Bank is likely to use unconventional tools to ensure loose money. 3

The second annual BBJ Expat CEO Gala offered a chance to note the contributions of corporate leaders like BP Airport’s Jost Lammers. 13

SPECIAL REPORT

SOCIALITE

BUSINESS

Accounting software best customized

Kékfrankos gets Bull’s Blood pumping

Volume of property investment rises

While there are free, out-of-the-box solutions, even cash-conscious SMEs find that they really need systems tailored to their specific situation when it comes to keeping track of their income and expenses. 22

This popular Hungarian grape proves to be an essential ingredient when it comes to pulling together Eger’s hearty red blends – and the recent crops are impressive, according to our wine expert. 29

Yet another report on Hungry’s real estate market brings good news: Investment volume in 2015 was up 42% on the previous year and seems likely to keep growing, according to the latest research from CBRE . 11

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EDITOR-IN-CHIEF: Tom Popper ASSOCIATE EDITOR: Robin Marshall DEPUTY EDITOR: Aniko Fenyvesi NEWS EDITOR: Christian Keszthelyi EDITORIAL STAFF:

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THE EDITOR SAYS

‘Terror-threat’ law would create threat of abuse While there has been no credible evidence of any kind of terrorist activities in Hungary, the government says it needs the ability to call a special “terror-threat” state of emergency. Officials are ready to amend the constitution in the coming weeks in order to create this law. It should not be passed. Under the proposal, if the government perceives a terrorist threat, it can essentially ignore a host of existing laws that protect the rights of businesses and individuals. The guidelines for determining that there is a threat, and for deciding how many of our rights can be put on hold, are much too vague. Even if this measure is undertaken with the best of intentions, the potential for abuse is massive. Among the actions the government could take are: Issuing decrees that supersede existing laws; limiting ownership rights; requiring extraordinary payments to facilitate financing of the government; assuming control of the mass media; suspending postal and electronic communication; mobilizing the army for domestic law enforcement; imposing curfews; searching individuals and their homes; and cancelling the right to public assembly. The draft of the law says that a “terror-threat” emergency could be called for as long as 60 days and could be extended by a two-thirds vote of “the present members of Parliament” according to a translation. In the past, this government seems to have acted arbitrarily in imposing special sectoral taxes and in nationalizing private pension funds, even without being granted emergency powers. Under a “terrorthreat” emergency, the government’s ability to require extraordinary payments and to limit ownership rights sounds like a license to appropriate property.

This government has also already made heavyhanded efforts to influence the press, both through policy controlling the public media and through political moves and special taxes aimed at the private media market. But this law appears to give authorities the right to assume total control of the media in the case of a “terror threat”. If the sitting government decided to announce a threat 60 days before a general election, they could silence any critical news reports and stir up the kind of fear that makes voters tend to favor the incumbents. Another problem with the proposed law is the apparent leeway it would give the government for announcing a “terror-threat”. In November, Hungary’s secret service and counter-terrorism unit (TEK) mistakenly said that some collectors of World War II memorabilia were terrorists planning a bomb attack on Hungarian soil. In December, the Hungarian government claimed that the terrorists who had attacked Paris the month before were recruited from among asylum seekers in Budapest, although this later proved untrue. Mistaken claims happen, but if they are used to trigger a 60-day suspension of civil rights, will we even be able to find out that someone made a mistake? Amending the constitution to allow this measure requires a two-thirds parliamentary majority, so that the ruling Fidesz party would need opposition support to make the proposal a law. Unfortunately, the far-right Jobbik party, which has shown a proclivity for whipping up fear against outsiders, has said it broadly supports the law. Given the potential for abuse by even the bestintentioned leadership, this law should not be passed.

Then and now

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Above is a square in District VIII during the 1956 uprising, when the location was known as Népköztársaság tér (People’s Republic Square). In the early 1990s, the name was changed to Republic Square, and since 2005, February 1 has been celebrated in Hungary as the Day of the Republic. Today the square is named after Pope John Paul II (II. János Pál pápa tér), shown at left, and the country is no longer called the Republic of Hungary, but simply Hungary.

2016. 01. 27. 20:14

1 News BBJ

macroscope

NEWS

‘Son of Saul’ makes new film fund look good

6

NEWS

Companies urged to create codes of ethics

7

Central bank may open unconventional toolbox With the base lending rate at a lowly 1.35% but inflation still sluggish, the MNB may consider other means for loosening money supply. ZSÓFIA CZIFRA

The Monetary Council has kept the base lending rate on hold at its record low of 1.35%, where it has been since the bank signaled an end to the monetary easing cycle at a policy meeting in July 2015. “The council constantly monitors whether the resulting looser monetary conditions ensure the sustainable achievement of the inflation target,” said the central bank in a statement released after its latest ratesetting meeting. MNB targets inflation at a midpoint of 3%. Hungary’s headline inflation rose to a 2015-high of 0.9% in December, up from 0.5% in November, while core inflation was steady at 1.4%. While the central bank’s own measures of underlying inflation “continue to indicate moderate inflationary pressures in the economy”, the recent fall in oil prices could lead to lower than expected inflation in the short-term, the MNB said. The base rate has a decreasing role in practice; instead, the central bank is focusing on transforming its monetary tools for the future, as seen in the third phase of its self-financing program (introduced on January 12), analysts say. “In our view, non-conventional tools will continue to play a major role in the shortterm, and the central bank has several reasons to avoid further rate cuts,” Equilor analysts highlighted in a note reacting to the MNB’s statement. According to Equilor analysts, it is quite likely that the MNB will modify its 1.7% CPI expectations for 2016 downwards in its March inflation report, due to the still plummeting oil prices. (In December, the central bank calculated with an oil price of $45 per barrel, however, it plunged under the $30 per barrel mark recently). In spite of corrections in the inflation path, it is not likely that the central bank will further cut the base rate in order to liven up inflation, Equilor analysts said. In their opinion, the MNB will take a wait-andsee attitude until its March inflation report is published and the rate-setting meeting of the European Central Bank (also scheduled for March) has taken place. If the ECB announces further monetary loosening actions, and oil prices do not bounce back significantly from the current level, the MNB will have greater room to manoeuver and can start deploying its non-conventional loosening tools, the Equilor note predicts.

BBJ_2402_news.indd 3

Hungary’s core inflation rate 4.0 3.5 2.5 2.0 1.5 1.0 0.5 0.0

SOURCE: Hungarian National Bank

“Even though we see inflationary pressure building up within the economy, the subdued oil prices are likely to continue to hide these developments and prevent any pushing of the headline CPI to an uncomfortable level.” London analyst sees dovish stance Analyst William Jackson at Londonbased Capital Economics also thinks that the MNB will retain its “extremely dovish stance and perhaps hint at looser monetary policy”. “For one thing, the latest fall in oil prices means that inflation is likely to be weaker than in the National Bank’s latest forecasts, which were published in December. What’s more, despite the introduction of unconventional tools earlier this month, these appear to have had little impact; local currency government bond yields have held steady,” the analyst said, adding that the MNB is one of the harder central banks to predict. “But regardless of its next step, the big picture is that monetary conditions are set to stay extremely accommodative over the next 12-18 months,” Jackson said.

The Monetary Policy Council (MPC) is in no hurry to change the key rate, in either direction, say Erste Bank analysts Vivien Barczel and Gergely Ürmössy. “Even though we see inflationary pressure building up within the economy, the subdued oil prices are likely to continue to hide these developments and prevent any pushing of the headline CPI to an uncomfortable level,” they added. “In our baseline scenario, we see the key rate unchanged at 1.35% until the end of 2017, as the inflation dynamics are unlikely to accelerate to the extent that would trigger a hawkish response from the MPC. In our alternative risk scenario, the MPC may reveal a dovish bias later, after international market sentiment has normalized. This scenario may prevail at the earliest in 2Q16, after the ECB announces further easing measures, and additional light is shed on the steepness of the Fed’s policy rate trajectory in March. In this case, we see room for 30-40bp worth of cuts. Therefore, the base rate can be cut to 0.95-1.05% in 3-4 steps,” portfolio.hu cited the Erste Bank analysts as saying. J.P. Morgan analysts say that while the MNB’s focus is likely to be on current unconventional tools, they believe that several other actions could also be part of an additional monetary easing. Firstly, they mention the possibility of introducing new regulatory measures requesting commercial banks to hold more government paper. Also, it is possible that the central bank will make interest rates swap (IRS) pricing more attractive if demand for long-term papers is limited. J.P. Morgan also said that it is possible

Unconventional tools introduced thus far Earlier this month the central bank announced it would phase out the two-week deposit facility by the end of April as part of a strategy to reduce reliance on foreign funding and to cut the government’s borrowing cost by encouraging commercial banks to buy state debt. The measure was to ease monetary conditions and provide an additional boost to the SelfFinancing Program, a scheme that aims to draw banking sector liquidity out of central bank facilities and into government securities. The MNB also introduced interest rates swap (IRS) tenders in 2014, in order to boost banks’ incentives to buy government securities. At the beginning of January, the central bank said it would raise the amount by one-fifth at its IRS tenders.

that the central bank will cap the amount placed in the three months’ deposit, and thus force banks to place more in the overnight deposit facility and/or buy more government paper. Analysts with the London-based institutions do not exclude that the MNB will further cut the base rate by another 35 basis point in small, 10-15 basis point steps. “We believe the first cut is likely in March when the new inflation report is published,” they said.

2016. 01. 27. 20:14

www.bbj.hu

04 News

Budapest Business Journal | Jan 29 – Feb 11, 2016

NEWS IN BRIEF Varga orders investigation of NAV following OLAF report National Economy Minister Mihály Varga ordered an investigation of the National Tax and Customs Authority (NAV) as to why it did not inform NAV leader András Tállai of an inquiry being launched in the case brought up by OLAF, which said it suspects officials of embezzling anti-corruption funds, Hungarian online daily index. hu reported on January 25. The office in charge of coordinating with OLAF operates within NAV, and yet Tállai was not informed about the investigation under the jurisdiction of Chief Prosecutor Péter Polt, a press statement issued by the ministry says. The online daily said Varga has called for an immediate and expedient investigation of the issue. During its four-year investigation, OLAF said the office found fraudulent invoices and cash payments made by a consultant subcontracting for the former national development agency NFÜ, hvg.hu reported on Sunday. OLAF said the EU provided the money that was allegedly mishandled to monitor whether public procurement procedures were carried out in a legal manner. According to OLAF, the case may involve top Hungarian officials responsible for handling EU funds.

Report: 6,000 state employees could lose their jobs The government’s planned reorganization or phasing out of more than 70 statesupported institutions and centrally financed agencies in “the spirit of reducing bureaucracy” could lead to 20% layoffs this year and another 10% next year, affecting approximately 6,000 individuals employed by the state, according to a draft proposal index.hu acquired from unnamed sources. Cabinet Chief János Lázár announced on January 21 that the government is considering terminating some 72-73 institutions and not providing a legal successor. According to index. hu, although the final decision was to be made by Hungary’s Prime Minister Viktor Orbán, Lázár has already come up with a strict proposal that would give him more leverage during negotiations. The first governmental meeting on the topic is scheduled for February 10, index. hu reported. According to the daily, by the end of February at the latest, the decision regarding all institutions will be reached. Although ministers involved in the fate of the 73 institutions were surprised when Lázár mentioned the planned move last week, top officials

BBJ_2402_news.indd 4

were convinced not all institutions mentioned by Lázár would be closed, index.hu reported, citing unnamed sources. The daily added that many of these institutions are expected to be reorganized and will see layoffs.

Banking Association appeals fine for cartel activity The Hungarian Banking Association filed a court appeal against the HUF 4 billion fine the country’s Competition Office (GVH) issued the association on charges of cartel activity, Levente Kovács, chief secretary of the professional body, said on January 25, according to Hungarian news agency MTI. The association is asking the court to change the competition office’s decision and to declare that no infringement of rules and regulations took place. The association also asked the court to suspend the payment of the fine. The competition office fined the Hungarian Banking Association HUF 4 bln and the International Banker Training Center a further HUF 15 million for charges of cartel activity on January 12. The competition office fined the association for a database it operated with the involvement of the training center, allowing banks to share business secrets for a period of 12 years, which GVH considers provided too much information, and violated both Hungarian and European Union competition rules. When the competition office’s decision was published, the association said it would appeal, “using all available domestic and international legal recourse”, MTI reported on January 26. The association called the decision “legally and professionally incomprehensible” and said it was based on “mistaken assumptions and conclusions that disregard the operation of market competition”, MTI reported.

National Chamber of Agriculture, Croatian Chamber of Economy sign agreement

The Hungarian National Chamber of Agriculture (NAK) and the Croatian Chamber of Economy (CCE) signed a cooperation agreement on January 21, NAK said. The agreement aims to strengthen Hungarian-Croatian trade and economic ties and further develop the bilateral relationship in the areas of agriculture, food industry and forestry. The agreement covers organizing business forums and providing recommendations for fairs, exhibitions, conferences, seminars and other events.

1,000 demonstrate against ‘state of terror emergency’ law Former Economics Minister Lajos Bokros speaks as approximately 1,000 people demonstrate on January 24 against the government’s plan to change the fundamental law so that it can declare a special ‘state of terror emergency’. Bokros and his Movement for a Modern Hungary (MoMa) opposition party organized the demonstration. The party said it believes that this new state of emergency law is dangerous in that it could authorize the government to introduce curfews, takeover the media, limit ownership rights and suspend other laws, according to reports. Hungary’s governing Fidesz party held negotiations with other parties in the Parliament on January 12 about the proposed changes. Although the opposition Socialists did not attend the negotiations, green party LMP said it objected to the proposal raised by Fidesz, while the far-right radical Jobbik said it agreed with some parts of the proposal. (Photo: MTI/Zsolt Szigetváry)

Official: Russia’s financial problems will not impact Paks deal Russia’s financial difficulties, which are expected to result in the country cancelling new loans according to reports, will not affect its deal with Hungary on the upgrade of the country’s sole nuclear power plant in Paks, government commissioner for the upgrade Attila Aszódi said on January 21, Hungarian news agency MTI reported. During an interview on state-owned allnews channel M1, Aszódi reportedly said that Russia’s finance ministry issued a statement, saying that funding for the project had already been set-aside in 2014. Aszódi noted that the Russian general contractor for the project would choose the sub-contractors, adding that the sides had agreed that 40% would comprise companies already active in Hungary, MTI reported. “The budget is strained, more than strained. I think we are in a situation where we are forced to take a break from issuing new loans,” Deputy Finance Minister Sergei

Storchak was quoted by Russian news agency Interfax as saying on January 18. This statement, coupled with the recent announcement that Hungary’s Prime Minister Viktor Orbán has been invited to meet Russia’s President Vladimir Putin in Moscow next month, and the news that American firm GE was asked if it could be involved in the project, led some to suggest that the current plan may be in jeopardy. Under a deal announced about two years ago, while Orbán was in Moscow, Russian nuclear firm Rosatom was to build two new reactors at the Paks plant for €12.5 billion, with €10 bln in financing provided by the Russian state. That deal was awarded without an open bidding process. The European Commission is currently investigating the deal with Rosatom over questions about its competitiveness. EC officials have said that, since it might not be profitable from a market standpoint, the Paks deal could amount to state aid. Hungarian officials have denied this charge.

2016. 01. 27. 20:14

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www.bbj.hu

Budapest Business Journal | Jan 29 – Feb 11, 2016

Hungary could introduce national alcohol stores The government could begin drafting a new law by spring that would entail the introduction of national alcohol stores, similar to those used for the sale of tobacco in Hungary, Hungarian weekly Figyelő wrote, citing unnamed sources. Figyelő anticipates the potential reorganization of the country’s alcohol market would cause one of the largest political conflicts of the coming months. The change is also likely to stir the waters within the governing Fidesz party, the weekly writes. Hungarian online daily index.hu said the website of the Hungarian Parliament revealed that the government is scheduled to amend laws on excise duty by June, and given that there is an excise duty on alcoholic beverages, this announcement could provide further evidence to support Figyelőʼs claim. The Hungarian press has already spoken about the possibility of the Hungarian government introducing a nationalized store structure for alcoholic beverages as it did for tobacco last year; the government, however, has denied such claims.

Orbán: Mandatory military service will not be reinstated Commenting on recent discussions about Hungary’s mandatory military service, Prime Minister Viktor Orbán said conscription would not be reinstated in Hungary, Hungarian news agency MTI reported on January 18. In response to a query by stateowned all-news channel M1, the prime minister said that the reintroduction of mandatory military service is not on the parliament’s agenda and it is not willing to readdress the issue, MTI reported. According to House Speaker László Kövér, however, abolishing mandatory military service in Hungary was a “catastrophic mistake”, online daily index.hu reported, citing an interview the speaker made with local daily Új Néplap. Kövér reportedly said that due to terrorism and “illegal migration” it is possible that military service will be reinstated in the “not too distant future”. In response to the channel’s question on whether there was a disagreement within the party on the issue, Orbán said there was no such disagreement, as he believes Kövér “was not speaking about this matter”. Hungary does not need to reinstate conscription, György Bakondi, chief security advisor to the Prime Minister, said on January 11, commenting on news that the Swedish Interior Minister was planning such measures.

Budapest’s taxi demo ends as government promises changes

Taxi drivers demonstrating against the Hungarian operations of U.S.-based ride-sharing service Uber concluded January 21, after State Secretary for Public Administration Gábor Czepek and State Secretary for Public Transport László Tasó met with representatives to negotiate on the issue, according to reports. “At the end of the talks, the organizers made a promise to end their protests, which have caused traffic restrictions,” MTI reported, citing

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a statement issued by the National Development Ministry. The ministry reportedly stressed that the government stands on the side of tax paying taxi drivers who abide by the relevant rules, and taxi services may be provided only according to identical conditions laid down in a government decree. The ministry invited taxi drivers to send proposals for the possible changes, and it is scheduled to continue talks next week, MTI reported, although it noted that the government had earlier said that it would not negotiate with Uber on the issue. Hungary’s Prime Minister Viktor Orbán said in his fortnightly interview on state-owned Kossuth radio that “the debate of taxi drivers and Uber is extraordinarily exciting”, as it is interesting to see how modern technology affects traditional business models. The prime minister said people rightfully expect the government to create regulations that apply to everyone, noting that taxi drivers have stricter regulations than any other transport service. He promised that lawmakers would make changes to regulations that will apply to all players in the market, Hungarian online daily origo.hu reported. Taxi drivers demonstrated for four days in Budapest’s busiest junctions, demanding that the government shut down Uber, as the protestors claim the service is illegal and considerably fewer regulations apply to Uber drivers than to taxi drivers, enabling Uber to offer lower prices.

Budapest court says Fonyó does not own TV2 The registry court has declined a request by Megapolis Media Zrt. – a company owned by Károly Fonyó – to approve its acquisition of TV2 Media Group Holdings Kft., confirming Yvonne Dederick and Zsolt Simon as the rightful owners at the time they sold TV2, Hungary’s second largest commercial channel, to Andrew G. Vajna, government commissioner for the film industry, according to reports. In a press statement issued on January 25, Dederick and Simon said Budapest’s registry court declined Fonyóʼs request to register his ownership of the company in the first instance, and announced that Magyar Broadcasting Co. Kft., owned by Vajna, is the official owner of the channel. Since Vajna announced his purchase of the channel in mid-October, Fonyó, who is a partner of media mogul Lajos Simicska, has claimed to be the legal owner. He continued to fight last year’s decision by the Competition Authority to clear Vajna’s purchase. Fonyóʼs partner Simicska owns a media empire with several outlets, which provided the government with friendly news coverage up until last year. In February 2015, Simicska had a public falling out with his long-time ally, Prime Minister Viktor Orbán, and since then, Simicska has been losing very lucrative contracts with officialdom. Vajna, who has established a secure position for himself in the government and subsequently won exclusive tenders to run casinos in Hungary, is expected to run more government friendly news coverage, although he insists that his station will stress interesting content over political loyalty.

PM visits Mongolia Mongolian President Tsakhiagiin Elbegdorj, right, speaks to Hungarian Prime Minister Viktor Orbán in Ulanbaatar, Mongolia, on January 26. Hungarian and Mongolian businesses have signed contracts valued at approximately $40 million during a visit by Prime Minister Orbán to Mongolia, Hungarian Minister of Foreign Affairs and Trade Péter Szijjártó said on January 25, according to Hungarian news agency MTI. Speaking to journalists in Ulaanbaatar, Szijjártó said Hungarian companies will renovate the countryʼs largest biopharma firm, which produces veterinary vaccines and was built by Hungarian companies several decades earlier, MTI reported. Orbán said at the business forum that both Hungary and Mongolia are among the “successful nations of the world” and the two countries are “facing prosperous futures”, MTI reported. Mongolia’s Prime Minister Chimed Saikhanbileg said his country is rich in mineral resources and Hungary has the necessary technologies, therefore the cooperation of the two countries could be beneficial, MTI added.

BP municipal council votes for Olympics sites

The municipal council of Budapest on January 26 voted to support the preliminary site choices presented in the application to host the summer Olympic Games in the capital in 2024, Hungarian news agency MTI reported on January 27. The event would be spread across the capital at seven key sites from Óbuda Island in the north of the city to the area near the foot of Rákóczi Bridge on the Pest side, in southern Budapest, MTI added. It was reported in September that Budapest will compete against Hamburg, Los Angeles, Paris and Rome to host the 2024 Olympic Games. A referendum was initiated to halt Budapest’s 2024 Olympics bid, which was challenged by an unnamed person who appealed to block the referendum. This appeal was accepted by the Supreme Court of Hungary (Curia).

Hungary could tax big retailers based on Polish model The Hungarian government is planning to levy a tax on big retailers, as an attempt to spread the public burden more evenly among businesses, Government Commissioner for Trade Policy Kristóf Szatmáry said in late January. During an interview with Hungarian daily Magyar Idők, the commissioner said that if the outcome of the Polish model of the retail tax is favorable, Hungary could choose to follow the same principle and introduce a new tax or fee on big retailers that would help level the playing field, Hungarian news agency MTI reported on January 27. Polandʼs finance ministry has proposed a progressive tax on retailers with monthly sales of more than PLN 1.5 million, or a little more than HUF 100 mln, MTI said. Szatmáry said that the Hungarian government is currently waiting for Brusselʼs reaction to Polish tax, following

the rolling back on an increase in the supermarket oversight fee in Hungary after the European Commission expressed its objections. Commenting on the progressive rate structure of the oversight fee, between 0-6%, the EC said it “provides companies with a low turnover a selective advantage over their competitors, in breach of EU state aid rules.”

EC: Fiscal stress in Hungary limited, but some risks in medium-term Hungary is not likely to experience significant fiscal stress in the short-term, but there could be medium risks in the medium-term, according to the “2015 Fiscal Sustainability Report” published by the European Commission on January 26. The EC report made note of net public debt as well as the net international investment position as posing potential short-term challenges. It also noted that the share of debt denominated in foreign currency, the share of debt owned by foreign investors and the share of non-performing loans in the banking sector could cause vulnerability in the short-term. These risks and currency fluctuations, however, could be mitigated by the conversion of FX retail loans into forint loans among other factors, the report added. “Medium risks appear, on the contrary, in the mediumterm from a debt sustainability analysis due to the still moderately high stock of debt at the end of projections (2026), and the sensitivity to possible shocks to nominal growth, interest rates and the government primary balance,” according to the EC. Projections regarding low medium-term risks were caused in large part by positive projected developments on aging. “Overall, Hungary appears to face medium fiscal sustainability risks in the medium-term,” the report noted, adding that there appeared to be no sustainability risks for Hungary in the long-term.

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Budapest Business Journal | Jan 29 – Feb 11, 2016

‘Son of Saul‘ seen as vindication for film fund Five years after Andrew Vajna took over the job of supporting Hungary’s film industry, an Oscar nomination silences many critics. ANIKO FENYVESI

When “Son of Saul” was named a candidate for a foreign film Oscar on January 14, it became the first Hungarian film nominated for an Academy Award since 1988, and it is in the running to be the first to win the prize since István Szabó’s “Mephisto” in 1981. The nomination was also a major victory, and vindication of sorts, for the Hungarian National Film Fund, which was launched in 2011 under the direction of film commissioner Andrew Vajna, a Hungarian who made his name in the United States as the producer of “Terminator”, “Rambo” and scores of other Hollywood films. Critics in the industry have complained that the fund mostly gives financial support to Hungarian films that are commercial in nature, and that it interferes with the creative process. “Son of Saul”, the feature debut of Hungarian writer/director László Nemes, co-written by French screenwriter Clara Royer, can already be considered a success, having accumulated an impressive number of awards since its release last year, including the Grand Prix at Cannes and just recently a Golden Globe for best foreign language film. The Hungarian National Film Fund can even silence claims of being overly commercial, as “Son of Saul” is more of an art-house film. In fact, this feature about the horrors of the Holocaust has defied the norms of the art-house genre, compounded by cultural and language barriers, to become a box office success. From the very first scene, the film challenges the viewer with its unconventional visual style, ambiguous narrative and less than likeable protagonist Saul, a Jewish Sonderkommando responsible for escorting his fellow prisoners to the gas chambers and then disposing of their bodies. Given its heavy subject matter, it’s a wonder the film fund gave unanimous support to the project in the first place. The film’s fresh approach to storytelling, however, and its universal subject matter certainly helped. “It was a very strong script,” said Ágnes Havas, CEO of the Hungarian National Film Fund. “All members of the committee voted for it because we saw the potential of it becoming a very original art house film.”

Claims of creative interference

As the main funder for anyone making a film in Hungary, the Hungarian National Film Fund has massive bargaining power in controlling the creative process. All

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A scene from ‘Son of Saul‘.

“I can’t complain, but the industry should be able to vote for who sits on the jury. The bigger issue, however, is how do you define an industry that doesn’t really have a unified voice?” contracts with the fund stipulate that it has a right to dictate the final cut, and it has been known to get involved in the creative process, as in the case of Hungarian filmmaker György Pálfi who criticized its practices in an interview with index.hu in July 2014. After saying it would award funding to his big-budget project “Toldi”, which had reached the pre-production phase, the National Film Fund reportedly attempted to interfere with the direction of particular scenes and wanted to assign its own director – changes that Pálfi refused. According to Pálfi, after a lengthy negotiation and almost a year of no communication between the two parties, funding for “Toldi” was withdrawn. The reason stated on the film fund’s website in October 2014 was that it could not support such a high-budget production amid concerns that an artistic film of this nature would not be able to reach a wide enough audience. Havas denied claims of creative interference, saying: “We work closely with the creators of each project but we never tell them they should do things differently, otherwise they won’t get support. They choose. It’s their decision if they want to take our advice or not.” Fortunately for the creative team of “Son of Saul”, the film fund was content with its submission and they were able

to work together relatively seamlessly. “The development committee made its comments, some of which were taken, while others were not, but I think it was a balanced discussion,” according to the film’s producer, Gábor Sipos.

From Cannes to commercial success

At its premier during the Cannes Film Festival last year, “Son of Saul” drew the attention of international distributors. “After the film was sold, it won the Grand Prix at Cannes, and we believe that Sony Pictures Classics was the best match to lead us into the U.S. market,” said Sipos. This fortunate turn of events would set the wheels of international acclaim in motion. The film’s initial theatrical run in Hungarian cinemas from June 2015 was short, but with Sony on board, it received a wide release in the United States in mid-December and then returned to Hungarian cinemas after winning the Golden Globe for best foreign language film in early January. “The film was sold to 80 territories for theatrical release, which means that an art house film has become the most successful project supported by the film fund to date,” said Havas. Poised for success, the international box office for “Son of Saul” is currently estimated to be €1.9 million, already exceeding the film’s meager €1.5 mln budget. But along with making money, the film is considered sufficiently unusual and artistic to allow the National Film Fund to sidestep critics who say that it does not support artistic films not tailored for big box-office. Havas maintained that the film fund had already proved in its first two years of operation that it does, in fact, support the tradition of Hungarian films.

Tarr: Diversity suffers

Renowned Hungarian film director Béla Tarr, who is the president of the Hungarian Film Artists Association (Magyar Filmművészek Szövetség) shared a very different view on the association’s website in September 2012, a year after the Hungarian Film Fund was created. Tarr, who worked with and mentored “Son of Saul” director Nemes, said at the time that the fund is destined to kill the diversity of Hungarian films and that the structure of the previous funding body, the Hungarian Motion Picture Foundation (MMKA) was more suited to such plurality. Sadly, however, the mismanagement and massive debt incurred by the MMKA, to the tune of more than HUF 6 billion, had to be resolved somehow. The industry was up in arms when the ruling Fidesz party put commercial producer Vajna in charge of preserving the cultural heritage of the nation’s film industry. Critics have complained that Vajna’s approach was to give more funds to a smaller number of movies, and that the five-person jury making the decisions was picked without consulting the industry that it was chosen to support. For nearly two years following the funds inception, very few films were made. Even Sipos, who said “I think the Hungarian National Film fund is a much more modern, more active system than MMKA,” expressed his concerns on the matter: “My one criticism about the film fund is that the industry needs to be better represented. It’s not because the jury is not good enough – in the case of “Son of Saul”, they all voted yes, so I can’t complain, but the industry should be able to vote for who sits on the jury. The bigger issue, however, is how do you define an industry that doesn’t really have a unified voice?”

2016. 01. 27. 20:14

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www.bbj.hu

Budapest Business Journal | Jan 29 – Feb 11, 2016

Ethical breaches common

A study by EY and the Hungarian Chamber of Commerce and Industry suggests that companies need a code of ethics. CHRISTIAN KESZTHELYI

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“The majority of Hungarian companies are unaware how much serious harm can be caused through abuse of power, or that the consequent application of some simple tools can provide greater security, which leads to money savings.”

Embezzlement and other dishonest practices by employees are more common than Hungarian business leaders think, according to a study published on January 26 and conducted by EY and the be caused through abuse of power, or that Institute for Economic and Enterprise the consequent application of some simple Research of the Hungarian Chamber of tools can provide greater security, which Commerce and Industry. leads to money savings,” Lívia Fábián, “Many corporate leaders believe that senior manager, fraud investigation and their businesses are not effected by dispute services at EY said. corruption or ethical offences, so not Approximately 13% of Hungarian many of them would opt for extra expense companies make an effort to identify for preventing this problem,” Ferenc and control activities and positions Biró, partner for fraud investigation and accompanied by high corruption risks, dispute services at EY Hungary said. which is a drop compared to last year, The findings of the research, entitled when one-quarter of respondents said they “Integrity and Corruption Risks in the make such efforts, the research showed. Hungarian Corporate Sector 2015”, reveal One-third of the leaders queried that 70% of Hungarian SME leaders reportedly said that controlling whether believe that preventing and remedying their employees have interests in other employee misconduct is unnecessary, businesses is unnecessary, as their because they have a small number of colleagues have no interests outside the workers and because they claim to trust company. their colleagues. According to the survey results Less than one-fifth of SMEs said they reported, 39% of company managers think feel the need to prevent ethical offences, that the risk of their employees giving and less than one-tenth of them have a out confidential corporate information code of ethics. Less than one-fifth of the to third parties is greater than the risk of SMEs queried said they found misconduct external data theft. Conversely, compared to be endangering their businesses. to last year’s findings, twice as many While many SME managers and owners respondents said they were afraid of believe that no offenses have happened external invaders stealing data from the on their watch, EY maintained that, based company, and fewer thought there was a on international experience, this attitude risk of departing employees doing harm is not realistic. to the company. The international research of The research also found that 70% of Association of Certified Fraud Hungarian companies have no code of Examiners (ACFE) found that, despite ethics, which means that Hungary is the perceptions of Hungarian SMEs, it lagging behind the international average, is the smaller companies that see the where more than three-quarters of highest rate of misconduct and abuse of companies have such ethical guidelines, power. Twice as many cases of stealing, EY said, citing the findings of ACFE. embezzlement, forgery and abuse of “Though the presence of a code of power in the case of payroll calculation ethics is not the complete answer, when happen at SMEs as compared to larger accompanied by appropriate controlling companies, EY said. mechanisms it can be a useful tool “The majority of Hungarian companies for fighting against abuse of power,” a are unaware of how much serious harm can statement by EY said.

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2Business BBJ

COMPANY

NEWS OTP Bank raises capital of Ukrainian unit

OTP Bank said on January 25 that it had raised the registered capital of its Ukrainian unit to UAH 6.186 billion, about €228 million or HUF 72.1 bln, Hungarian news agency MTI reported. The registered capital increased from UAH 3.668 bln in May 2015, OTP told MTI. The Ukrainian company court had registered the capital increase, the bank said. OTP Bank Ukraine had negative shareholders’ equity of HUF 44.5 bln at the end of September 2015, OTP Bank’s unaudited report showed. It registered after-tax losses of HUF 27.1 bln in the first nine months of last year.

NNG, Renault ink another partnership

French car manufacturer Renault and Hungarian navigation software developer NNG signed a partnership in which the Hungarian company will provide support for some of the automaker’s premium models through its iGo Navigation GPS software, NNG announced on January 25. Renault models using the software include Espace, Kadjar, the new Megan and Talisman. The entirely Android-based software gives a priority to monitoring the safety of the driver, for example through its OSP sensor, which lets drivers know if they are above the speed limit. Cars fitted with the software have been made available to the European market and feedback reveals that users are satisfied, the company said. NNG’s cooperation with Renault began in 2011, when the navigation company started installing its software in Dacia models produced by Renault in Romania.

BATM acquires Green Lab Hungary Israel-based technology firm BATM Advanced Communications Ltd. announced that it would acquire all of the share capital of Green Lab Hungary Engineering Ltd., a Hungarian firm that develops and distributes analytical instruments, for $3.8 million to be paid in installments over three years, online portal Jewish Business News reported on January 25. The move signals BATM’s expansion in Hungary, where it currently owns sterilization units, the daily reported. According to the news portal, the company hopes the acquisition will strengthen its

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product networks and foster growth at its local ECO Unit, which focuses on agri-business applications, as well as on the Romanian market. Green Lab’s Founder and CEO Judit Jeney will be joining the management team at BATM following the acquisition.

Wallis Group buys Hungarian Praktiker stores The Hungarian units of hardware store chain Praktiker were taken over by Wallis Group on January 18, following the insolvency of the German parent in 2013; however, the move has not affected the operation of the Hungarian stores, according to reports. According to a press release issued on January 22, the buyers agreed to operate Praktiker as a joint company, in which Wallis Group will become the majority owner. This stage of the transaction is still subject to approval from Hungary’s Competition Office (GVH), and the parties anticipate a green light in the first quarter of the year, according to reports. The Hungarian office of Dentons advised on the transaction. “We are very proud to have had the opportunity to support Wallis Group in this landmark transaction,” commented Dentons Partner Andreas Köhler, legacy co-head of the firm’s global German practice. The transaction secured approximately 1,100 jobs in 19 Hungarian Praktiker stores, Köhler added.

KPMG Hungarian unit’s net revenue up 6% in 2015 Consultancy firm KPMGʼs Hungarian unit had HUF 16.96 billion total net revenue in 2015 according to IFRS standards, up more than 6% compared to 2014, KPMG said on January 22. KPMG Hungaria CEO Robert Stollinger expects revenue to expand in the future, assisted by innovative solutions and growth in the company’s service portfolio. “We are receiving more important commissions from the infrastructural and the government sector. Demand is also up from companies switching to IFRS standards or for services helping private company development,” said Stollinger, adding that KPMGʼs administrative office in Budapest provides services to multinational companies in 35 countries. KPMG has more than 800 employees in Hungary.

Lego to double size of Hungarian plant, raise headcount Jesper Hassellund Mikkelsen, Lego’s plant manager in Nyíregyháza, at a January 15 press conference in which the Danish toymaker announced that it will invest HUF 30 billion at its Hungarian plant. The investment would more than double the size of the factory, news agency MTI reported. Hungary’s Minister of Foreign Affairs and Trade Péter Szijjártó said the investment is being supported with a grant of HUF 4.4 bln from the government. Hassellund Mikkelsen said headcount at the plant is likely to rise by 1,600 as a result of the investment. The plant will increase from 120,000 sqm to 250,000 sqm, more than 700 machines will be installed, and packaging capacity will also be expanded, MTI reported. Mikkelsen said the company believes in Hungary and that Nyíregyháza is a good city for such expansion and development, as European markets are near, the workforce needs of the company are being met and the authorities are helpful, according to MTI. (Photo: MTI/Tibor Illyés)

Richter buys out Chinese partner Medicine manufacturer Gedeon Richter acquired Chinese Rxmidas Pharmaceuticals Holdings Ltd.’s 50% stake in Gedeon Richter Rxmidas Joint Venture Co. Ltd., becoming the sole owner of the Chinese joint venture, according to a press release issued on January 22. The financial terms of the agreement were not disclosed. Hungary’s Richter set up the firm with an initial 50% share of equity in December 2010. “Subsequent to the present acquisition, Richter now holds 100% of Gedeon Richter Rxmidas Joint Venture Co. Ltd., consequently it will be in full charge of its contraceptive and OTC business in China”, the announcement noted. Richter considers the transaction

an important step in underlining the company’s commitment to expanding its business operations in China, which the company dubbed one of the fastest growing pharmaceutical markets, the announcement added.

Audi to produce Q3 model in Hungary

German car manufacturer Audi is planning to relocate production of its Q3 compact crossover SUV model to its Hungarian plant in Győr, from Martorell, Spain, where the model is currently being produced, the company announced on January 20. The company attributed the decision to changes in its global production network, news agency MTI

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2 Business

Budapest Business Journal | Jan 29 – Feb 11, 2016

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reported, however, the timeframe for the launch of Audi Q3 production has not yet been revealed. As the Audi plant in Brussels prepares for the launch of the first fully electric SUV in 2018, Audi A1 model production is being relocated from Brussels to Martorell, MTI said. Audi Hungaria Motor managing director Peter Kössler said the decision was the latest confirmation of Audi Hungariaʼs competence and efficiency, as well as Hungary’s competitiveness as a production base, MTI said. The German manufacturer turns out TT Coupe models, TT Roadsters, Audi A3 Limousines and Audi A3 Cabriolets in Győr, the news agency noted.

Uber has 80,000 users in Budapest Roughly 80,000 people use Uber in Budapest, eight times more than a year ago, the San Francisco-based ridesharing service told news agency MTI on January 14. Most Uber passengers are local residents, but a large number of foreigners also use the service. Uber celebrated the first anniversary of its operations in Budapest on November 12 of last year but its short presence in the capital has not been without protests from local taxi drivers and challenging legislation imposed by the Hungarian government. Uber, however, has continued to serve local clients. There were approximately 1,200 Uber drivers in Budapest at the end of last year, up from 200 at the start of the year. The average waiting time for an Uber car was reduced from about seven minutes to four minutes and 40 seconds during the period.

Magyarmet winds up HUF 592 mln investment

Magyarmet Finomöntöde has completed a HUF 592 million technology upgrade and capacity expansion at its base in Bicske, near Budapest, Hungarian news agency MTI reported on January 22. Magyarmet won a HUF 296 mln European Union and state grant for the investment, which has created 35 jobs. Headcount at the company currently averages 215. Magyarmet has also added BMW to its business partners as a result of the technology developments. The company had net revenue of HUF 3.5 billion last year. About HUF 2.5 bln was derived from exports.

PwC Hungary welcomes new executive director

Advisory group PwC Hungary has appointed Dr. Csaba Polacsek executive director, taking effect on January 11, after he joined the firm at the beginning of the month, according to a press statement issued by the company on January 19. Polacsek is expected to focus on expanding PwC Hungary’s financial and transaction advisory services, using his experience in the financial services industries, the statement noted. Having spent approximately 20 years in the financial services and banking sectors, Polacsek worked for more than five years in the public sector as deputy CEO of National Asset Management Inc. and then as Deputy State Secretary in charge of national financial services and postal matters in the Prime Minister’s Office.

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IBM acquires UStream U.S.-based IBM on January 21 announced the acquisition of Hungarian-founded video streaming service UStream, Inc., according to a press statement issued by the American company. Shown are the offices of the local company, near the top of the Párizsi Nagyáruház on Andrássy út. The financial terms of the deal were not disclosed, although Fortune said the acquisition was expected to be valued at approximately ‘$130 million in cash, plus possible earn-outs and employee retention packages’. IBM said the acquisition would extend the IBM Cloud platform to help enterprise clients unlock the value of video, a rapidly evolving digital media and data asset. ‘Video has become a first-class data type in business that requires accelerated performance and powerful analytics that allows clients to extract meaningful insights,’ said Robert LeBlanc, senior vice president, IBM Cloud. ‘Aligning our expansive video and cloud innovations into an integrated unit will create opportunities for clients to take advantage of this medium in the most strategic way possible,’ he added. ‘Video is the most powerful and emotional medium,’ said Brad Hunstable, CEO of Ustream, commenting on the acquisition. ‘Increasingly it is becoming the favored form of communication, not just for entertainment, but also for business. We’ve built a video platform that is easyto-use, yet incredibly scalable, secure and powerful and it is these qualities that made us an ideal addition to IBM’s portfolio.’ (Photo: MTI/János Marjai)

Wabererʼs postpones decision on IPO The shareholders of road haulage company Wabererʼs have decided to postpone a decision on an initial public offering (IPO), the company said on January 18. Wabererʼs listed its shares on the Budapest Stock Exchange last October, but in November its board proposed cancelling the IPO in light of current market conditions. At an extraordinary general meeting on January 14, shareholders made the decision to hold off on the IPO in light of the board’s withdrawal of a proposal to transform the company back to a private company limited by shares (Zrt.) from a public company limited by shares (Nyrt.). The Budapest Stock Exchange said late in December that it would extend the deadline for Wabererʼs shares to start trading on the bourse to June 30, 2016, at the issuer’s request.

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Casino Sopron renews concession for ten years After renewing its expired concession contract for an additional ten years, Casino Sopron reopened for business on January 15, following a twoweek closure, managing director Erik Holcsek told news agency MTI. The casino signed the contract with Hungary’s National Economy Ministry. Casino Sopron, the country’s oldest casino, had approximately 120,000 visitors last year, with the number of Hungarian guests rising recently, to reach approximately 40% of total visitors, the managing director said. The casino saw an after-tax profit of HUF 688 million on revenue of HUF 2.8 billion in 2014, MTI reported, adding that it foresees a year-on-year revenue increase in 2015.

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REAL ESTATE NEWS

evosoft Hungary Kft. succeeds through agile development Dr. Péter Várady CEO evosoft Hungary Kft.

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EXPERT OPINION

In an effort to improve efficiency, flexibility and better engagement of its staff, evosoft Hungary Kft. has been creating software with an agile development approach. Agile development is a method that involves step-by-step development and short feedback cycles, as a way of allowing for rapid adjustment to meet actual needs. In an iteration of four to six weeks, the evosoft team can produce development results that are visible for end users. The best-known part of the method is the so-called “standup” ceremony – a daily status update during which each team member tells others about their progress. The advantages of the agile development methodology include continuous feedback, high efficiency through motivation, transparency and regular assessment. Péter Várady, CEO of evosoft Hungary Kft., tells the Budapest Business Journal how agile development is implemented in one of the biggest software development companies in the country. Owned by evosoft GmbH, which is a research company owned by Siemens, evosoft Hungary Kft. is the place where agile theory turns into practice, the CEO says. He adds that this gives the company global significance, beyond the wellknown automotive factories in the country.

lines of this system. Agile methodology has been invented for smaller groups of seven-to-12 people, but real projects are much bigger than this, so we needed to figure out how hundreds of people can work through the agile methodology. We are one of those few companies around the world who can implement agile development in such size, and we practice this on a daily basis. How big is evosoft Hungary’s influence in the country? Our operations are located in Budapest, Miskolc and Szeged, and we also cooperate with the most important IT education institutions, not only in the capital but also in Eger, Dunaújváros, Miskolc and Szeged, even outside the country. In some institutions our lecturers are responsible for the subject of automatization technology, and we have also been invited for university courses to tell students how to cope with hardships when implementing agile development on a daily basis. This is a two-way cooperation, as we also offer internships for students. Currently we have 50 interns working at our company, and they have the possibility of an international career if they stay with us after graduating from the university.

Prologis launches 8,000 sqm development in Hungary

Prologis launched the development of an 8,000 sqm build-to-suit facility (called DC2) at Hungary’s Prologis Park Hegyeshalom (pictured) for Fiege, one of Europe’s leading logistics providers, the real estate developer said in a January 19 press release. Fiege signed a lease renewal for its existing 11,400 sqm space in DC1 at the same park, the press release said. The What kind of development do you company already leases 126,000 sqm in five undertake for Siemens? Prologis parks across Europe, Prologis said, In Hungary, when people think about adding that the new 8,000 sqm facility will Siemens, they picture the Combino include 100 sqm of state-of-the-art office tram and washing machines, though the space. “Fiege specializes in integrated brand’s other products have a bigger supply chain solutions for many different industries, and the complex services we influence on our everyday lives. If one provide generate business opportunities. investigates the operations of Siemens, We are pleased with our existing facility they can see that it offers a wide range at Prologis Park Hegyeshalom, and to of products along the line of digitalization. accommodate our business growth we How many people are employed at In the sectors of industry, we are talking have decided to renew our current lease about automatization, drive technology, agreement and expand into another highevosoft in Hungary? Approximately 1,000 people work with production control, energetics, transport quality build-to-suit facility that will fulfill the specific requirements of our daily the firm in the country. The majority of techniques, and medical diagnostics, as operations,” said Gergely Hepp, Fiege our employees work full-time, though well as electric cars. We develop software managing director. “With the Hungarian we have temporary workers, students for these Siemens products, therefore market consolidating, we see increased and interns as well. No other company there is a great likelihood that, when demand to expand partnerships with our in Hungary has this kind of versatile, people use Siemens products, they meet existing customer base, and we are pleased technical software development with software developed by Hungarians. to develop a new build-to-suit facility knowledge. This programming power is Obviously, Siemens has developers from for Fiege,” said László Kemenes, senior vice president and country manager of supported with nominal administration, all over the world. Prologis Hungary. “Hegyeshalom, our following the basic principles of lean only development in Hungary outside operations and agility. Is all the development work you do for the greater Budapest area, has been fully Siemens? occupied in the past few years and is Why is agility so important for the firm? Yes. We contribute to almost all the becoming an important strategic hub For evosoft Hungary Kft., agile software phases of development for many Siemens for Fiege’s regional logistics activity development is crucial, and we have products, including system integration with its reach to Austria, Hungary and Slovakia,” Kemenes added. Prologis Park been dealing with it for six years now. and testing. What is more, we are in Hegyeshalom currently comprises a 24,100 Internationally speaking, there are only contact with end users too. Our objective sqm facility that is fully leased to Fiege and a few companies who carry out so many is to contribute to the manufacturing of SMR. It offers 120,000 sqm of additional projects in agile development, while the products that meet the expectations of development potential. The park is located bigger and gradually growing part of users, and software has played an ever- in western Hungary in close proximity to Vienna, Bratislava and Győr, allowing for evosoft Hungary Kft. is working along the more important role in that work.

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easy access to all three markets via the M1 and M15 motorways.

Vacancy rate in Budapest industrial property market falls to 10.6% The vacancy rate on Budapestʼs industrial and logistics property market fell to 10.6% in the fourth quarter of 2015, down five percentage points from 12 months earlier, the Budapest Property Consultants Coordination Forum (BIEF) said on January 22. The vacancy rate has now reached its lowest level since 2007. There were 1,881,650 sqm of industrial and logistics space in the capital at the end of the period. Take-up in the fourth quarter was 81,190 sqm, around 30% higher than in the third quarter. BIEFʼs members are CB Richard Ellis, Colliers International, Cushman and Wakefield, DTZ, Eston International, Robertson Hungary and JLL.

HB Reavis closes successful year in Hungary, eyes new investment The Hungarian operations of HB Reavis for 2015 have been deemed successful, after Váci Corner Offices – its first Hungarian project opened in 2014 – reached a rental ratio of 96%, according to a press release issued on January 21. The company noted that the renting of the 21,150 sqm building has been progressing at an “extraordinarily fast pace”, and this success was boosted by contracts signed in December, which involved the renting of the last vacant floors of the building. New tenants in the building include Magyar Földgáztároló Zrt. and Magyar Földgázkereskedő Zrt., who signed a contract for 2,500 sqm of space on floors five and six for five years, HB Reavis said. The company noted that it is working on a new project of more than 100,000 sqm on the corner of the office corridor at Váci út and Róbert Károly körút, which HB Reavis expects to be the start of a new era.

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REAL ESTATE NEWS

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Significant growth seen in investment volume The key obstacle to development of the retail investment market in Budapest is the lack of quality shopping centers Investment volume for 2015 is up 42% available for purchase, as owners are year-on-year and is set to rise in 2016 as holding on to stock and no pipeline investors are showing increasing interest projects have been announced. in making investments in Hungary Looking ahead for CEE, Romania and according to CBRE. Slovakia are earmarked for success with This is on a similar level to Romania increased interest being shown from but well below the two dominant CEE investors. Larger deals are expected investment destinations, Poland and in Serbia, Croatia, and Slovenia with Czech Republic, both of which put investors looking to have a presence in these markets. in a particularly strong performance, “This year we have seen strong recording investment volumes of investment into the region as investors €2.7 billion and €4 bln respectively. from within Europe are looking to take Investment into CEE (excluding Russia) Source: CBRE advantage of relatively high yields and for 2015 reached a historic high level the strength of available stock on the at over €9.5 bln, representing a 19% increase y.o.y. Hungary back on the CEE investment able to enter the market. We have seen market,” concluded Gijs Klomp, head CBRE sees Poland’s performance as a map,” Gábor Borbély, head of research & compression in prime yield and expect of CEE investment at CBRE. “In 2016 testament to the country’s outstanding valuation at CBRE Hungary, commented this trend to continue towards 7% in the we expect this to continue as the stage macroeconomic growth and stability. on the figures. “The high interest is case of offices.” is set for strong economic growth in For Czech Republic, growth came on sustainable and we expect further CEE, relatively high yields compared to the back of two large investment deals growth in investment volume this Hungry for retail Western Europe and increasing interest signed in 2015 according to CBRE. year; we could get close to the €1 bln The appetite for quality retail products from banks to finance in the region. In Poland is four times the size of Hungary mark. An increasing pool of investors translated into strong numbers in 2015. addition, another major factor that will with several large regional cities; Czech is making arguments in favor of For the first time, retail accounts for contribute to higher interest is the strong Republic, however, is a similar size and acquisitions in Budapest with reference 43% of the total investment volume for expansion seen in the retailers’ reported Hungary should, in theory, be returning to strong occupational fundamentals. CEE. This y.o.y. increase is based on a sales across the region. We also expect investment figures on par with that state. On the other hand, the low development number of big-ticket investment deals to see an increasingly diverse investor “We saw a remarkable 60% growth in pipeline is making some investors done for prime, dominant shopping profile as Asian investors aim to increase investment volume last year, putting nervous with regard to whether they are centers in Czech Republic and Poland. their presence within the area.” GARY J. MORELL

Investment market (€ millions)

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EXPERT OPINION

E2 Hungary: may the energy be with you Gábor Hiezl Commercial Director E2 HUNGARY

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

Being among the top 3 integrated gas and electricity traders and striving for a leading role in customer satisfaction: these are the ambitions of E2 Hungary, a joint company of MET and Magyar Telekom launched in January 2016. The 50-50 joint venture utility company supplies natural gas and electricity to more than 4,000 business customers on the Hungarian market. Such a portfolio already puts E2 Hungary among the five most dominant players in the power and gas market, but ambitions do not stop there. The company’s one-year plan is to record a positive year and, looking further ahead, to reach a 10% growth in the next three years, both in gas and power trade – thus arriving to the top 3 position. The partnership is based on a strategic agreement between Magyar Telekom and MOL (which owns 40% of MET), signed in 2013. However, E2 Hungary is a company with its own business objectives and sales strategy, it operates independently from its parent companies.

Magyar Telekom is the number one telecom company in Hungary, providing a full range of telecommunications and infocommunications services. It is majority owned by Deutsche Telekom AG. E2 Hungary’s plan is to be profitable in the very first year of its existence. The secret lies in customer satisfaction. In practice, this means a live, direct relation with customers who all have their own, dedicated contact person at E2 Hungary. If the company understands what clients want, it is able to provide tailormade professional services, customized to the specific needs of its partners. E2 Hungary puts a special emphasis on product innovation, breaking away from fixed price energy products and focusing on specific solutions. New value-added services may also be introduced in the future. As both parent companies – MET Group and Deutsche Telekom – have a strong international presence, E2 Hungary considers expanding its operations to other Central and Eastern European countries over the medium term. For the time being, the new energy trader deals only with business customers, but it does not exclude turning to the domestic market one day – if it proves to be a rational, economically justified decision.

But what is the idea behind the joint venture? MET contributes its energy business expertise, Telekom its experiences in customer service to the high-quality services provided by E2 Hungary. As a result, clients benefit from the company’s efficiency and from its flexible, customizable offers.

The establishment of E2 Hungary has changed the operations of the two owners as well. Magyar Telekom has transferred its complete industrial utility business into the new company, which will also supply most of MET’s current commercial clients.

Even if E2 Hungary is an autonomous business unit, it is proud of its origins and would like to build on the values represented by the parent companies. MET Group is a leading European energy trader established in Hungary in 2007, currently active in ten countries through subsidiaries. MET is trading in the gas markets of 19 countries, listed in the top 3 traders in Austria’s VTP gas exchange, the biggest gas exchange in Central Europe.

Since MET has kept its largest customers from energy-intensive industries and from the energy wholesale market, it may now serve them even more efficiently. The cooperation with large industrial clients is based on complex, tailormade products. MET’s comprehensive knowledge of the energy industry has always played a key role, and this expertise contributes to E2 Hungary’s success too.

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U.S. ambassador, Hungarian counterpart stress ties The two spoke before an AmCham Hungary business forum. ROBIN MARSHALL

American Ambassador to Hungary Colleen Bell brought up her familiar complaint about corruption in Hungary at a January 20 address to AmCham, but she also spoke of the special HungarianAmerican relationship with Hungary in a gathering that also featured her counterpart, Réka Szemerkényi. The two ambassadors both talked up the predominately positive aspects, particularly when it comes to trade, of bilateral relations at the AmCham Hungary business forum in the Budapest Marriott Hotel. Ambassador Bell talked of “my good friend”, while Ambassador Szemerkényi spoke of a “good friend and partner”, and an “exceptional counterpart”. AmCham hosted a similar joint event last year, now the two women were reflecting on their first 12 months in post, a period the

“It is abundantly clear that the United States and Hungary have a robust commercial relationship.” American described as “a pleasurable whirlwind”. And the diplomats agreed the relationship was in rude health. “It is abundantly clear that the United States and Hungary have a robust commercial relationship,” said Ambassador Bell. “One of my goals during my second year is to see that [expansion] happen…. I want to make sure the relationship continues to expand for many years to come: I am committed to that.” Her Hungarian counterpart described AmCham as part of the “bedrock of the relationship” and described its member companies as “one of the most important bridges” connecting the two nations. The United States is the largest non-European investor in Hungary, she said, with investments totaling $9 billion to date; the 1,700 U.S. companies in Hungary provide jobs for some 90,000 Hungarians, making for “very profound and healthy economic links,” Szemerkényi noted. But she pointed out that bilateral connections were not based on trade alone. “Economic ties have never been stronger than today, but these do not exist in a vacuum, they are imbedded in, and part of, a deeper friendship and alliance that is indispensable.” The two countries are “strategic partners, allies and friends”, she said.

Hungarian Ambassador to the United States Réka Szemerkényi, left, shakes hands with American Ambassador to Hungary Colleen Bell at the AmCham meeting on January 20. (Photo: MTI ) The ambassadors also agreed on the importance of the on-going Transatlantic Trade and Investment Partnership (T-TIP) free trade talks between Europe and America. Bell acknowledged there were hurdles to overcome, but said there were also huge gains on offer for all, saying such mechanisms have “lifted millions out of poverty since World War Two”. She added that the United States very much appreciates the public support for T-TIP offered by Hungary’s prime minister and foreign and trade minister. For her part, Szemerkényi said T-TIP was not just about simplifying and harmonizing a few rules, helpful though that might be. “It is a strategic agreement for us.” The Hungarian Ambassador made specific mention of the importance of NATO given the multiple challenges of Ukraine, the Middle East, growing terrorist threats and the on-going migrant crisis. “We need friends, and the best friends can be found among those with which we share values,” she said. Her American colleague commented: “We continue to believe this relationship is significant and can improve if we remove impediments and disincentives.” She went on to mention an issue she has raised several times, corruption, which she said, “remains a serious problem in this region. In Hungary, businesses have identified favoritism and dispersal of public funds as major concerns. We will continue to work with the Hungarian government, civil society and business leaders to promote transparency, accountability, and business practices that increase opportunities for commerce and prosperity for all of its citizens.” Bell said the embassy and the U.S. Commercial Service offered “matchmaking” facilities to introduce Hungarian companies to potential business partners in America, and she hopes to lead Hungarian delegations to trade fairs in Europe and the States. “This year I would like to concentrate on the younger generation of entrepreneurs. I would like to take a small group to Silicon Valley,” she said, adding that she has good contacts there.

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3Focus BBJ

Thanks for the help!

HIPA CEO Róbert Ésik, left, congratulates Suzuki CEO Naoyuki Takeuchi, one of the corporate leaders honored for their contribution to Hungary at the Expat CEO of the Year awards gala.

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A day to recognize expat CEOs BBJ and HIPA team up again for the second annual Expat CEO of the Year awards Gala BBJ STAFF

From left: Minstry of Foreign Affairs Secretary of State Dr. László Szabó, Expat CEO runner-up Lee Sang Il of Hankook Tire Hungary Ltd., Expat CEO of the Year Jost Lammers of Budapest Airport, German-Hungarian Chamber President Dale Martin, Expat CEO runner-up Tanja Vainio of ABB, and Expat CEO runner-up Jesper Hassellund Mikkelsen of Lego Manufacturing Kft.

Impacting hundreds of thousands

LUXURY BUDAPEST 2014

In seeking to promote foreign investment in Hungary, Ésik said, his office works with many expat CEOs, whose decisions “ultimately affect hundreds of thousands of individuals” by creating jobs in this country. He added that, for his agency, “2014 was a record year, with 60 positive investment decisions. We managed to surpass that and concluded 67 projects in the last year.” Among those working with Ésik this year was Takeuchi, who received the HIPA Local Partnership award. Appointed CEO of Magyar Suzuki earlier this year, Takeuchi has overseen the production and sales of the new Vitara, which quickly became one of the most popular cars in its class in Hungary. According to Takeuchi, Suzuki has successful partnerships with roughly 80 local suppliers, who “employ a total number of 30,000 families. Without these suppliers, Suzuki would not have become the company it is today.” The Expat CEO of the Year award was chosen by a jury consisting of Dr. László Szabó, deputy minister and parliamentary secretary of state at the Hungarian Ministry of Foreign Affairs and Trade; Írisz Lippai-Nagy, CEO of the American Chamber of Commerce in Hungary; Dale A. Martin, president of the German-Hungarian Chamber of Industry and Commerce, and CEO of Siemens, Hungary; Javier González Pareja, CEO of Bosch Hungary and winner of the Expat CEO of the Year 2015; and Balázs Román, publisher of the BBJ. “As always, choosing the best from among the impressive group of expat CEOs in Hungary is difficult,” Román said. “We are very fortunate to have this kind of talent serving our economy.” Runners-up for the Expat CEO of the Year for this year included an impressive group: Tanja Vainio of ABB Hungary, Jesper Hassellund Mikkelsen of Lego Manufacturing Kft., and Lee Sang Il of Hankook Tire Hungary Ltd.

CORINTHIA HOTEL BUDAPEST 2014 Yearbook

CORINTHIA HOTEL BUDAPEST 2014 YEARBOOK

When the Budapest Business Journal and the Hungarian Investment Promotion Agency (HIPA) chose to recognize the contributions that foreign business leaders make to the Hungarian economy, they singled out two names from an exemplary group: Jost Lammers, who has helped pilot Budapest Airport to new heights in both traffic and services, and Naoyuki Takeuchi, who helped drive Suzuki’s Vitara to the front of the pack in sales and production. Lammers, CEO of Budapest Airport, was named the Expat CEO of the Year at a January 22 gala, which was organized by the BBJ in cooperation with HIPA, and hosted by the Corinthia Hotel Budapest. Takeuchi, the CEO of Suzuki Hungary, received the HIPA Local Partnership award, in recognition of his efforts to work with Hungarian suppliers. This was the second annual presentation of the awards, which were created by the BBJ in partnership with HIPA. Audi, PwC, and PrimeTime Communications, along with the Corinthia, also sponsor of the awards and gala. “We believe that expat CEOs, with their international experience, their skills, their knowledge and perhaps more than anything their leadership, have helped make Hungary an immeasurably better place in which to do business. We think that should be applauded, honored and encouraged, and that is why we launched this award a year ago,” Robin Marshall, the BBJ’s associate editor and master of ceremonies for the evening, told the audience of nearly 150 business leaders and officials. “In HIPA we have found an organization equally keen to promote excellence and improve competitiveness.” This year’s Expat CEO winner, Lammers, has overseen a complete remodeling of the Budapest Airport, helping it to earn international recognition while also setting passenger records. Upon receiving his award, Lammers thanked his staff for helping bring increasing numbers of people to Budapest, a city that he said he loves. “I believe this award is not so much the acknowledgement of my personal achievement,” Lammers said. “It is much more for all the people working at Budapest Airport, doing an excellent job every day for this wonderful gateway to Hungary.” Earlier in the evening, HIPA CEO Róbert Ésik presented the special HIPA Local Partnership award, created by his organization to recognize foreign firms who make use of local suppliers. EVENT SPONSORS:

S H O P P I N G

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D I N I N G

S I G H T S E E I N G

A R T S

N I G H T L I F E

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From left: BBJ Publisher Tamás Botka, HIPA CEO Róbert Ésik, BBJ CEO Balázs Román, AmCham CEO Írisz Lippai-Nagy, Budapest Airport CEO Jost Lammers, German-Hungarian Chamber President Dale Martin, Minstry of Foreign Affairs Secretary of State Dr. László Szabó and Bosch Magyarország CEO Javier González Pareja.

Suzuki CEO Naoyuki Takeuchi, HIPA Local Partnership award winner, left, makes a point to TAKATA Hungary CEO Kersten Bachman, right, who won the partnership award last year. ALL PHOTOS ON THESE PAGES: MARIANNA SÁRKÖZY

Above right, Commerzbank Zrt. CEO Klaus Windheuser and companion; above left, HIPA CEO Róbert Ésik; immediately left, BBJ Associate Editor Robin Marshall; far left, Corinthia Hotel General Manager Jean Pierre Mifsud (center) entertains guests.

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An award-winning CEO’s guide t Jost Lammers, CEO of Budapest Airport, was named the Budapest Business Journal Expat CEO of the Year for 2016 on January 20. After receiving the award, he spoke to us about working and living in Budapest – and the challenges and rewards of operating an airport.

“We have in the last 12 months alone welcomed Air Transat, Emirates and Air China, which will be complemented by a new Air Canada Rouge service to Toronto from this summer.” outperforming most of Europe and this has presented disposable income for Hungarians in the last five years alone. The number of Hungarians traveling has grown by 10% and now accounts for 52% of total travelers, which ironically is much higher than when Malév existed as it carried many foreign transfer passengers through the airport. With these dynamics, airlines are adding Budapest to their networks, especially as kerosene prices remain very low.

BBJ STAFF

Q

When you arrived here in 2007, was it your first visit, or had you seen much of the country, and Budapest, before that? A: No, I had been here earlier; if I recall correctly, I was here in 1990 and again in 1996 for one or two weeks each time with my friends and immensely enjoyed it.

Q

Q

What are some of the biggest challenges to doing business here, as opposed to doing business in Germany? A: We Germans are sometimes called bureaucratic by other nations but in this sense we can share this position with Hungary. Just to throw some light on why I say this: It took more time to get all the necessary permits and papers from dozens of authorities and institutions to build Jost Lammers, CEO of Budapest Airport, at the Expat CEO gala. SkyCourt here at the airport back in 20092010 than to actually build it, though it travelers and thankfully many airlines was a €100 million complex construction. In early 2012, well after took up the opportunity. Looking at the In my view red tape is slowing down the you took over at the airport, Malév Airlines economy and despite some breakthroughs passenger numbers now, we can be very folded, potentially dealing a blow to being made, much more could be done. proud of the team at Budapest Airport passenger traffic. How did you react for meeting this significant challenge. to that event? Has the absence of a What are some of the benefits of doing business in national carrier actually given you What have been the major the freedom you needed to increase Hungary? factors to achieving the spectacular growth in A: As an airport operator, we passenger numbers or was it a passenger numbers at the airport? are benefiting from the growing setback you had to overcome? attractiveness of Budapest as a travel A: It was the most severe blow that A: There might be several parallel destination for the inbound traffic. an airport can suffer, believe me. We answers for the growth. Hungary The City of Budapest, the national anticipated this in a way, but never and Budapest have become a very tourism organization, Budapest Airport thought it would happen so quickly attractive tourist destination for all and many other stakeholders have and with such devastating effect. We age and income groups. There are a developed over the last few years an not only lost approximately 36% of our variety of activities one can do when excellent cooperation in marketing passenger traffic, but almost 50% of visiting Budapest, including cultural and promoting Budapest in European Budapest Airport’s revenues in 2012 activities such as the opera, classical and overseas markets, for example the since Malév was based here with offices, concerts at the Palace of Arts or MÜPA, strong demand for river cruises is a joint hangars, storage facilities, aircraft, crew and visiting the numerous museums success story. Major events like Formula rooms etc. We had to react immediately whilst you can also enjoy a rich and 1, Red Bull Air race, Sziget Festival and and had to introduce extremely strict eclectic night life in many of the now all the cultural and upcoming sports financial measures in order to survive, world famous ruin pubs or festivals. events are also very important elements including downsizing our staff by more Not to mention the year-round spa helping airlines launch new routes or than 200 people due to a lack of work for bath capabilities. When underpinned increase flight frequency to Budapest them. In parallel we put maximum effort with the forint representing great each year. and resources on our marketing and value when compared to other EU With regard to the outbound sales activities in order to recover traffic. currencies, it is one of the best city passenger and cargo segments, We were talking to airlines all over the break destinations in the world. Also, they too are benefiting from the world to convince them that Budapest the Hungarian economy has come out positive development of Hungarian and Hungary are perfect leisure and of the European financial crisis much business destinations for all kinds of stronger than others, with local GDP macroeconomics in recent years.

Q

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Q

What is the impact on the local economy of higher airport numbers? A: There are several ways of measuring it, but one thing is sure – higher passenger numbers and more flights and more destinations create more jobs both in aviation and at the airport and also in tourism and within the business community. Our joint study with University of Szeged economists found that every extra one million passengers at the airport will create around 1,300 new jobs in Hungary, not to mention the billions of forints in taxes created for the economy by not just the visiting tourists and business travelers but also from contributions from the additional employees too. This is what really matters. We should also mention that just last year we had approximately 6% increase in air cargo. One would be surprised to learn that since we have Air China flying the Beijing-Budapest route, the 12 ton cargo capacity of the aircraft is very much used by Hungarian companies from the automotive, pharmaceutical or electronic industries exporting their goods to China.

Q

Other major developments in your tenure included the closing of Terminal 1 and the expansion of Terminal 2. What was the impetus for this work? What were the challenges? A: Every major investment is a challenge in itself but the extra burdens created for an operating airport are considerably higher than a greenfield site for that matter. An example would be to think about the security aspect of a major construction site at the airport where building materials need to be transported between daily flights through the apron or across runways. This requires meticulous planning and coordination. Whilst building SkyCourt, an exciting moment came when the developers assembled 70-ton steel beams of 70-meter spans designed to hold the curved ceiling of the building

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e to running an airport Suzuki CEO Naoyuki Takeuchi.

Local sourcing builds Suzuki The winner of the HIPA Local Partnership award talks about his satisfaction with Hungrian suppliers. At the Expat CEO gala on January 22, Suzuki CEO Naoyuki Takeuchi received the HIPA Local Partnership award, which recognizes his efforts to use Hungarian suppliers. Formerly in charge of purchasing for Suzuki Hungary – the country’s oldest automotive factory – Takeuchi is clearly in tune with the Hungarian market. During his acceptance speech at the awards gala, he spoke about his company, and his experiences with working in Hungary. The following is an excerpt from his speech that night:

A plane departs from the recently remodled Budapest Airport.

“The greatest achievement is still in my view the delivery of over €360 million of investment, and further to that delivering SkyCourt on-time and strictly within the planned budget.”

monument: we use it for events, concerts, conferences and also for film-shooting, so contrary to what people believe, it is still used in some capacity.

expect to be ready with details of our next major investment program for the period 2016-2020 by Q2 this year.

Q

This is not the first award recognizing your efforts: We’ve heard about plans for You won the Entrepreneur a new hotel and expansions at Terminal 2: What are some of the Year in 2014, for example. You have also overseen enviable growth of the more exciting changes coming in the volume of business you handle. to Budapest Airport? A: With the pace of traffic growth we What tips can you offer CEOs looking already have to think about the future. to succeed – especially those looking The present airport facilities can handle to succeed in this market? and as they were lifted into place, it was up to approximately 12-13 million A: There are lots of talented young similar to watching an orchestra being passengers and we may reach this target people in Hungary, well-trained and finely directed by the conductor. Such in about three years’ time. In anticipation eager to deliver at lots of companies. of this, with a target start date of Q4 this I think here at Budapest Airport, by memories are priceless... The greatest achievement is still year, we will start the construction of a being transparent about our vision in my view the delivery of more than new pier expanding the size of Terminal and with our open leadership style, we €360 mln of investment, and further to 2B with 7-10 aircraft stands, some of have invested in trusting these young that delivering SkyCourt on-time and which will be designed to cope with the managers and they have helped us in strictly within the planned budget. This growth of long-haul wide-body aircraft, return by delivering the targets. rarely happens with investments of this since we have in the last 12 months alone size; just think about Vienna, where welcomed Air Transat, Emirates and Air Is there anything else you costs were doubled, apparently, and China, which will be complemented by a would like to add? A: I believe it is a very exciting delivery was two years behind schedule. new Air Canada Rouge service to Toronto Or Berlin-Brandenburg Airport which is from this summer. Of course, we would moment in time to live and work in still not open! still like to connect with destinations in Hungary. Budapest is a beautiful and Closing down Terminal 1 after the the United States, Japan and Korea as fantastic city, continuously developing Malév collapse was a logical operational priorities, which is why our work and and changing. I have no doubt that we and an economic decision. It is very coordination with the Hungarian Tourism will see growing tourism and more foreign expensive for all market players to keep Office and foreign ministry continues to business people, more FDI and more international companies discovering double operations in two terminals. be high on our agenda this year. Moreover, the building structure became We also invest into modernizing all these positive developments in increasingly challenging for modern airport infrastructure, which cannot Hungary. Therefore I believe the best airport needs, especially in the areas of be seen but is essential for safe for the capital city and the airport is yet security screening. There was simply not operations like state-of-the-art new to come! As expats living in Hungary, enough room for the efficient and extra ILS (Instrumental Landing System), all of us can contribute to this by being security scanners of today in a building new ground lighting, or energy-saving an ambassadors in our home countries and sending out the message that many from the early 1950s with national boilers for the whole airport. heritage protection. We have found As an umbrella to all of these planned things are moving in the right direction other uses for the wonderful old building works, as well as highlighting some in Hungary, making it a very attractive that we have to preserve as a historic exciting additional developments, we place with lots of opportunities.

Q

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“It is an honor for me to receive this award! “The Hungarian plant of Suzuki, in Esztergom, was built 25 years ago and has turned out more than 2.5 million cars since then. The plant is the third largest Suzuki factory in the world, employing a staff of 3,100. The plant is 25% supplied by Hungarian firms. If you measure by the value of parts supplied, almost 50% are from a Hungarian source, which makes Suzuki the top company among Hungarian car manufacturers when it comes to sourcing locally. “Approximately 80 Hungarian suppliers employ a total of 30,000 families, and without these suppliers, Suzuki would not have become the company it is today, turning out Swift, Swift Sport, S-Cross and Vitara. “As a Japanese manufacturer, reliability and precision are very important for us, and we experience this with our Hungarian colleagues and partners every day. Our products are being developed and manufactured along this philosophy. “A great example of this is the Vitara, which has the biggest Hungarian added-value, both in terms of manufacturing and development: The prototype was almost entirely put together in this country. “Suzuki sold 7,500 cars due to Vitara’s popularity and growing fleet numbers, raising its market share to almost 10% in the Hungarian personal car market.”

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4Special Report BBJ

Taxes and accounting

More rules, if not higher taxes Electronic tills

The corporate tax bite for last year’s earnings should not be dramatically different from the year before for most companies, but the administrative burden will continue to grow, according to local experts. ANIKO FENYVESI

As companies file their taxes on earnings made last year, most should find that there are not huge differences in the amount owed under the new regulations, according to tax experts interviewed by the Budapest Business Journal. Still, stricter enforcement measures may mean that some firms pay more than they did before. And most companies have probably already experienced an increase in the amount of administration involved in reporting income and paying the right amount on time. Complying with the more difficult administrative burden is a good idea, the experts say, as those who pay accurately and punctually for several years in a row can enjoy some benefits. The experts interviewed are hardpressed to make generalizations about whether companies should expect to pay more or less. “It depends on the business. For example if someone used to benefit from tax loss carry forward, companies that had a

EKAER regulations help authorities keep tabs on trucks. great deal of tax losses in previous tax periods would be able to benefit from this measure, but the legislation was changed last year,” explains Erzsébet Antretter of tax consultants Accace Hungary. Like many other tax systems, Hungary allows businesses to carry forward losses by postponing declarations of those losses, on the expectation that they would be more profitable in coming years. The firm could deduct a loss from several years ago on its current filing for a very profitable year, to reduce their taxable income. “Now there are limitations – down to five tax years from 2015 – so companies will

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have higher burdens in the years to come because they will lose their tax losses from previous years,” explains Antretter. Conversely, companies that are able to take advantage of the new gross tax credits will have lower income tax burdens this year, Antretter adds. The downside is that the gross tax credit only applies to businesses with beforetax profit far exceeding that of previous years. “Such companies will not have to pay corporate income tax on the portion of the profit that is five times higher than in previous years,” Antretter explains, adding that companies in fast growing sectors, such as IT, are the most likely to see such exponential growth. “Changes may be advantageous for specific sectors, for example freight forwarders or companies operating in sectors affected by a decrease in VAT rates,” notes Katalin Lunczer of VGD Ferencz & Partner Kft. “Companies might benefit from the new tax base and taxreducing corporate income tax items, including easier donations and tax credits for sport and cultural purposes and tax credits for growth as well as a local business tax that includes tax allowances on R&D costs.” Given the introduction of electronictills, new software requirements, more frequent VAT returns, and additional paperwork, Antretter believes that, even if a taxpayer’s nominal tax burden is no higher or even slightly less than in previous years, they will end up including more income or profit on their returns and therefore their payable taxes are likely to increase.

The reach of the mandatory electronic till system, in which cash registers for all kinds of businesses are directly connected to the tax authority, has been expanding steadily since it began in 2014. The system means every sale is instantly reported to the tax authority, and it makes it harder to cheat on VAT. When it was originally introduced, the law required that most cash-heavy businesses operating in Hungary install tills by the deadline in the fall of 2014. Fines for failure to do so could run up to HUF 500,000. After a long and rocky start to the program, upwards of 190,000 e-tills had been installed by the end of 2014, and were in operation throughout last year. In November, the Hungarian government announced plans to expand the mandatory use of electronic tills to include auto mechanics, taxis, laundries and currency exchange offices. Already by the end of 2014, NAV had encountered thousands of cases with shortfalls and fined several companies for failing to comply following a series of targeted audits. NAV also noted a subsequent increase in VAT revenue of nearly HUF 200 billion by the end of the first year of the tills’ operation, according to reports. It appears that the measure to reduce what Economy Minister Mihály Varga calls Hungary’s “shadow economy” is a resounding success.

Increased electronic monitoring elsewhere

While experts say that missed VAT payments still represent the majority of unpaid taxes, this could be further reduced through the proposed introduction of online corporate invoicing linked directly to NAV. This measure would allow the authority to follow invoicing in real time, just as it does with electronic tills. Details on the measure have not yet been confirmed, but other forms of closer electronic monitoring by the tax authorities are already in place. As of January 1, the tax authority introduced a new invoicing software requirement that will help the government scrutinize a business’ activity more closely. The new software add-on includes a built-in function referred to as the “supplying of data for tax inspection” feature that must be installed by all Hungarian business with a VAT number. “Based on the new requirement, all invoicing software should have a data export function that allows the Hungarian tax authority to request taxpayers to perform a data query concerning invoicing-related information in a pre-defined data structure,” says VAT expert and EY Partner Tamás Vékási. “If

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Budapest Business Journal | Jan 29 – Feb 11, 2016

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treatment including reduced length of “The government’s aim is essentially tax audits, which could otherwise cause to learn about all the transactions they liquidity issues, and a reduction in were unable to previously and prevent maximum penalties to 50% of standard companies from hiding their taxable rates, payable in installments without transactions and income. Ultimately additional charges. Reliable taxpayers this will have an impact on taxpayers’ will also be entitled to reclaim VAT behavior this year,” says Antretter. in less than the standard 75 days in upcoming tax years. Additionally, if Income received abroad a reliable taxpayer omits information For sole proprietors or individuals from their return or provides erroneous who receive income from abroad, the information, they will be given a warning situation can be complex and a tax expert rather than a penalty in the first instance. can more easily determine one’s tax “The main advantage of being a reliable residency. “This is based on a four-stage taxpayer is that the timeframe of tax rule,” explains Tamás Gyányi of WTS Electronic tills catch income at the source. audits is limited for these taxpayers. Klient Tax Advisory Ltd. “First we have Namely, the timeframe of audits should to review your permanent address, then the invoicing software fails to perform that buy or sell goods carried by land. not exceed 180 days. This rule is very we look at your center of vital interest the data export function in compliance Under EKAER regulations, road favorable, as the timeframe was often – where you have your family ties, hold with the requirements, the tax authority haulage companies will need to register much longer than this,” says Szabolcs a bank account etc. Sometimes we are may levy a default penalty (up to HUF shipments for each truck with contents Vámosi-Nagy, a tax expert at EY. unable to determine the tax residency 500,000) per occasion and order that weighing more than 3.5 tonnes and the Unreliable taxpayers such as those and have to jump to the third stage the taxpayer implement the data export sender and recipient of the shipment on the public list of taxpayers with tax based on the 183-day rule. So, if you function to its invoicing software by a both have to sign for the load and pay a shortages or outstanding tax liabilities spend more than 183 days in Hungary usage-proportional road toll when using as well as companies with unreported you may qualify as a Hungarian tax fixed deadline.” “For most taxpayers, this will result in highways and other roads defined by the personnel, will face longer VAT recovery resident,” Gyányi adds. “Then we move costly software developments, otherwise law. Shipments of high-risk items and periods, longer tax audits, markedly on to income tax and review whether they will be unable to meet this food will have lower weight thresholds higher late payment penalties, late you receive an entrepreneur’s fee, a mandatory requirement,” Antretter adds. for registration (500 kilos and 200 kilos, payment interest and stricter penalties regular salary from a company or Additionally, unlike in previous years, respectively). for non-compliance. royalty fees etc.” new taxpayers are now required to file VAT “Taxpayers or their representative – returns not quarterly but monthly,” says typically shipment companies – must EXPERT OPINION Antretter, speaking of companies who report all important data of the transport: were either established this year or have The name and tax number of sender and applied for VAT registration this year. recipient, the start date of the transport, The payment schedule of VAT was the license plate of the vehicle, the affected by another development: weight of the product and the address of Changes in transactions with periodic the loading and destination,” explains The condition of the changeover is an audit Márta settlement. “This is a new provision Antretter, adding that “if the EKAER report. which proves that the company Siklós entered into force with regard to all requirements are not met, the penalty is is prepared for the IFRS implementation. taxpayers, according to which the 40% of the value of the goods.” She said Auditor | This certifies that the company has IFRS supply date is the last day of the period that those companies that are able to do Tax Advisor | Partner qualified employees (or outsourced concerned by the settlement or payment,” so are now organizing their shipments service providers) for the accounting and Leitner+Leitner to circumvent the rule. Others that says Vékási. Audit Kft. According to Antretter, officials said do not have that option are faced with preparation of the financial statements, this new rule was introduced to facilitate masses of paperwork and heavy EKAER maintains an accounting policy under IFRS, Certain Hungarian enterprises harmonization with EU rules but deposits that could cause liquidity issues possesses its balance sheets according may already opt for bookkeeping Hungarian taxpayers were reluctant to with their companies. to IFRS for the year before changeover. according to IFRS (International accept it at first and it wasn’t implemented The changeover must be reported to the until July 1, 2015, and then only for Financial Reporting Standards) from Reliable vs. risky Hungarian tax and financial authorities at companies dealing with accounting, tax 2016, while the number of IFRS One of the most talked about least 90 days before the transition to IFRS advisory and audit services. The rule was transitions is expected to increase extended to all taxpayers as of January 1. modifications to the tax law is the with the auditor’s report attached. significantly as of 2017 onwards. The introduction of the new regulation category of reliable vs. risky taxpayers. Therefore, preparations cannot begin Although the classification won’t be among a group of taxpayers who are the early enough, and during such a long The local IFRS implementation definitely most skilled in tax law, i.e. the providers finalized until April of this year, it and complex process, professional simplifies the life of corporations that of accounting, audit and tax consulting will use information garnered from a taxpayer’s behavior from past years, so accompaniment and consultation will services, was apparently intended to operate in an international environment; it is certainly not too early to be paying be needed. Providing IFRS qualified introduce the profession to the new law, provide better market potentials and also attention to this important change. employees may cause the biggest problem thereby facilitating the introduction of easier administration. As of 2017, every In the new system taxpayers will be these settlement rules for all taxpayers as for many companies. The involvement of company that is obliged to statutory audit categorized into three groups: Reliable, of January 1. an experienced outsourced contractual average and risky and this categorization or as part of an international group where partner, such as LeitnerLeitner’s team will automatically be carried out by its parent consolidates according to IFRS EKAER transport reporting may provide for a solution in this. We can the tax office on a quarterly basis and may introduce IFRS accounting as well. taxpayers will only be notified if their help in the preparation phase and in the requirements This is expected to be the biggest group of Another controversial change that went status changes, however, taxpayers accounting under IFRS as well. IFRS appliers. into effect last year and should have deemed risky will remain so for the rest Given the fact that migrating an accounting an impact as companies file their taxes of the tax year but can improve their With Austrian headquarter LeitnerLeitner is system is a serious task, it is worth is the introduction of the real-time status for the following year by resolving one of the market leading advisory firms in electronic shipping registration system all issues that resulted in the designation. preparing the expected effects in advance. the field of taxation, accounting and audit Businesses which have been in known as EKAER, which was launched It is already advisable to start IFRS services in Central Europe. on January 1 of last year. The system continuous operation for at least three bookkeeping in the pre-launch period, is designed to eliminate VAT fraud on years with a clear track record of paying especially because the financial figures of road shipments and is being criticized their returns and liabilities on time the two preceding years must be presented as an administrative burden not only for and not under investigation by the according to IFRS as well. shipping companies but also for firms tax authority will receive preferential

IFRS – it is worth starting preparation in time

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

“The government’s aim is essentially to learn about all the transactions they were unable to previously and prevent companies from hiding their taxable transactions and income. Ultimately this will have an impact on taxpayers’ behavior this year.”

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Tax tips from the experts We asked representatives of local accounting firms and tax consultants to suggest ways to save on taxes. These are the answeres we received. Judit Jancsa-Pék partner and tax advisor, Leitner+Leitner For most foreigners, the highly administrative nature of the Hungarian tax system, with its strict and mechanically formal requirements, is the largest and most unpleasant surprise. To fulfil all of these – invoice and invoicing program requirements, Electronic Public Road Trade Control System (EKAER) reporting, transfer pricing documentation, accounting policies, etc. – requires significant efforts in time and costs; especially in consideration of the huge penalties for potential non-compliance. Consequently, I believe it is very important to choose a tax and accounting services provider who proactively assists the company with these requirements of the Hungarian business sphere, so the company may eliminate unexpected surprises and, more importantly, can save on penalties. From another point of view, the Hungarian tax system could be very attractive due to the favourable main tax categories (e.g. low income taxes, relatively good employment taxation). Especially good news is that companies may enforce several corporate income tax allowances and EU funding opportunities, which may – with good optimization – even counteract the relatively high social security contributions and sectoral taxes.

Ernő Varga director of operations, Colling Accounting and Consulting In our practice, we have found it is key to involve the accountant and tax advisor before starting with a business activity – even before the legal procedures. Business people can develop a proper business model, but it can only work smoothly and effectively over the long-term if it is financially and administratively optimal. An accountant and a tax advisor can ensure that the established structure is the optimal and most effective, with the least risk possible. Different means of tax optimization provide opportunities that can be taken into account relatively easily before starting a business activity. Once operation begins, however, the company and the accountant should always keep their eyes open for possible risks – to reduce or correct them – as well as unused sources of benefits for taxation. The key here is to find the right provider who can provide assistance with this kind of professional attitude, working together with the client as a reliable partner, and not as a robotic administrator who puts the handling of tax matters on autopilot.

Tamás Gyányi partner, WTS Klient Tax Advisory First of all, entrepreneurs should make a decision to choose the best taxation type for keeping their tax burden at an optimum level. As mentioned in the EU Commission country report for Hungary, the Hungarian corporate tax system still features a multitude of tax regimes (including simplified tax schemes). In order to decide on the best taxation type, the nature, volume and specialties of the activity and the costs have to be analyzed first. A 10% flat rate for a tax base of up to a HUF 500 million (TAO) can be attractive, but the administration costs can be higher compared to running the business by using simplified tax types like KIVA or EVA. It is good to know that there are additional legal options to decrease the tax burden if someone opts to set up a company and pay TAO. As an example, if a small- or mediumsized company is owned by private persons, the tax base can be decreased by the capitalized value of certain assets. Since the issue is quite complex, it is worth involving a good tax advisor in the planning phase.

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Zsolt Ruszin managing director, FairConto I recommend that Hungarian companies try to implement KATA. This low-tax-payment scheme is good for all independent work that is performed on a freelance work schedule. These two requirement are enough to choose the KATA regime, but if an employer needs further reasons, they can go for the other requirements – though this is not a “must”. KATA is a wide ranging tax scheme used by approximately 200,000 taxpayers, and it can also be used by any EU citizen who would like to work in any EU country. To learn more about the tax efficiency of KATA, you can use the Ministry for National Economy’s calculator here: http://static.kormany.hu/kata_kalkulator/

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István Nemecz managing director, Accace Hungary There are several ways to reduce a company’s tax burden in Hungary. From a payroll tax perspective, a company can implement the cafeteria system. As part of this, employers can offer certain benefits to their employees with favorable tax rates compared to a simple salary tax. If it is implemented correctly, the cafeteria system also gives employees the opportunity to set up their own benefit structure within the system, which could serve as a motivating factor for them. From an income tax perspective, at 10% the Hungarian corporate income tax is rather low compared to many other European countries, so that is already a positive factor. However, the 2% local business tax is not a very friendly rate, because its tax base is the company’s gross profit. Both of these taxes can be reduced by locating research and development activities in Hungary, which results in tax benefits. So that is one way to utilize the tax regulations to a company’s benefit.

Daniel Sztankó head of indirect tax services, RSM Hungary Adótanácsadó és Pénzügyi Szolgáltató There are many ways to reduce the tax burden, but the applicability of such advice depends on the sector, specific business model and the specific facts of each case. As such, no advice would be simple and general enough to summarize here. It is worth mentioning that the easiest way to reduce a tax burden is to set up and run smooth and compliant tax processes within the company, pay attention to deadlines, keep necessary records, get the ERP system to communicate with invoicing and reporting, and more generally take tax obligations seriously. To avoid tax penalties and thus reduce its tax burden, a company should invest into developing its internal tax or accounting team with a sound understanding of taxes, or rely on external bookkeepers or – in more complex cases – on external tax advisors. This advice may seem so obvious that it is not even worth mentioning, yet we see that many companies get the basic tax matters wrong.

András Szalai partner, managing director, Process Solutions In our practice, we have found it is foreign companies which decide to obtain tax registrations, set-up representative offices, local branches or companies when starting up business in Hungary. Each legal form may have different tax implications, so careful up-front analysis is recommended. Depending on the size, when setting up a company in Hungary it is worth considering putting different business units into separate legal entities to benefit from the lower corporate tax rate of 10%, applicable up to the tax base of HUF 500 million. When deciding on how to fund the Hungarian company, the loanto-equity ratio should be properly determined and maintained in order to benefit from potential interest expense deduction. Please pay attention to existing special sector taxes and government communication about plans to levy taxes on certain industries.

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Gyöngyi Ferencz partner, VGD Ferencz & Partner Each stage of a business’ life cycle is equally important, and the issues associated with starting, operating, restructuring/ transforming or exiting a business are no exception. While Hungarian tax regulations are exceptionally multidimensional compared to other countries in Europe, they are designed to provide a constructive tax environment for both local and international businesses in any stage of their life cycle. It is imperative that the owners of a business can prepare for the next stage and have access to all the legal and financial information that helps decision making. Of course, no “general approach” exists to find one optimum solution that fits all. It is therefore all the more important that the owners understand the rules that have relevance to and affect both their in-border and cross-border trading and organizational structure. In order for both management and owners to find the optimal legal and tax solutions whatever stage their business is in, they need a comprehensive, yet carefully customized analysis, complete with solution recommendations that can be used to develop a strategic plan which will be able to serve the particular interests of the business long-term. VGD’s very own “Wealth Management ModelTM” is an unrivalled tool that brings us, advisers, together with businesses to join forces in a genuine strategic partnership with VGD for their sustainable success.

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» By providing a comprehensive business consultancy service, we bring international and Hungarian companies closer together. » With the expertise at our disposal, we even out the differences that arise from different ways of thinking. » Our quality services provide vital and understandable data and information to allow clients to make their business decisions. » We provide reliable and forward-looking advice.

WTS Klient. The Bridge. www.klient.hu The WTS Klient Group won the Hungarian Quality Product Award in 2014 regarding cross border accounting and tax services.

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Tax software could aid compliance

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Budapest Business Journal | Jan 29 – Feb 11, 2016

Accounting software: Customization is key

Unlike many developed market economies, Hungary has virtually no specialized tax software – though it could contribute to more efficient and accurate tax payments. Using software to optimize the corporate tax bill is more than widespread in developed market economies. Whereas general accounting software packages are used to keep track of business activities such as daily sales, inventories or payroll, all the final balances of profits, costs and the sort are normally transferred to tax account software. Such specialized products then help calculate the most ideal tax scenario. According to a recent World Bank Group report, such tools even tend to be overused in some parts of the world; in Hungary, however, they are virtually unknown. “There is no such thing in the sense as applied in the West. You have accounting and payroll solutions that help keep track of overhead costs or prepare returns. But the actual tax optimizing does not take place in an automated fashion. They engage human expertise instead for that purpose,” the CEO of a company that has been on the software development market for more than two decades, but who asked to remain unnamed, told the Budapest Business Journal. “Executives prefer to consult their accountants or tax advisors when they need tips as to how to save on taxes. Their involvement seems to be overwhelmingly predominant and there’s no sign whatsoever that things might move into the direction of automation any time soon,” the company executive said YEARNING FOR STABILITY The reason why no market has developed for specialized tax software lies mainly in the fact that, like it or not, Hungary has never been famous for a stable and transparent tax framework. “With rules changing all the time, you can’t expect software firms to invest into developing such products, and clients wouldn’t look for them for the same reason,” the expert pointed out. Small- and mid-sized firms are reluctant to pay for any software in the first place and if they do, they opt for material specializing in accounting. “They want to make sure that in the case of a tax inspection they have a button to press which then provides them with the data requested by the authority. But that’s where their interest ends.” The popularity of tax software elsewhere would suggest that reducing the amount of manual work or human engagement in tax accounting should benefit businesses. Tax compliance in Hungary could definitely use an upgrade through the widespread introduction of specialized tax software. In order to encourage firms to move into that direction, a predictable legal environment must come into play. –Levente Hörömpöli-Tóth

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Richárd Varga of VT-SOFT Software Kft.

Free accounting software is no competition for leading softwaredeveloping firms. Accounting software developers aspire to customize their products to serve clients better and save them costs. LEVENTE HÖRÖMPÖLI-TÓTH

Around one year ago, an announcement from Számviteli Innovációs Iroda Kft. caused a huge uproar by promising to disrupt the accounting industry. With the help of massive EU funds, the company came up with an online platform that offered corporate clients not only the use of accounting software, but also related accounting services free-of-charge. True enough, local SMEs are notoriously price-sensitive. However, according to Ida Szabó, software consultant at Kulcs-Soft Számítástechnika Nyrt., if a company thinks long-term and counts on ballooning turnover, free-of-charge services will soon reach their limits. “Enterprises would like to make sure that their confidential business data is in the best hands. Stable, permanently up-todate and reliable operations and support are key aspects; it is not necessarily the cheapest solution that is sought,” she told the Budapest Business Journal.

The value of a solid track record

Money-for-value rules on the Hungarian market: “Clients strive to get the cheapest solutions that best suit their needs,” Szabó noted. “Young firms tend to have little insight of how their register-related tasks would evolve in the future and the overall ‘business administration culture’ is far from perfect. All this drives companies wishing to develop to find a partner that supports them with advisory and support services. And that is where a developer partner firm with a solid track record can help enormously with its decades-long expertise.” As Szilárd Ocskay, managing director of NEXON, the market leader in the segment, pointed out: “In the area of HR management, free software does not pose competition since it is typically used by micro companies. Tax regulations are extremely complex, they can change many

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Ida Szabó of Kulcs-Soft Számítástechnika Nyrt.

“Special software needs to be developed from scratch if those standardized packages don’t satisfy customer needs. That is rather typical for larger corporations.” times over the year and failure to meet deadlines results in heavy fines. We’ve got 50 colleagues that continuously work on updating and making software compliant with the effective laws.” Ocskay thinks that in order to acquire and keep customers, it won’t do if software simply complies with the law. The bar is set a lot higher; expectations include userfriendly, intuitive platforms or innovative technology. “We are keeping up with the latest trends. As a result, a self-helpbased e-HR system has been developed that allows employers and employees to manage their own HR-related matters,” Ocskay said.

Customized innovative solutions

Fast working and efficient customer service also plays a key role in earning long-term trust, according to Richárd Varga, senior sales manager at VT-SOFT Software Kft., a subsidiary of UNIT4, a global leader in offering business software. But tailor-making products for customer needs is equally important. “UNIT4 is unique in its effort to develop software where changes can be configured which ensures in the mid-term the best TCO for its partners. Customized configurations substantially boost efficiency, employee cooperation and satisfaction,” Varga said. “By using our financial solutions, clients can adapt to business changes on their own; they can, for instance, add new processes or controlling analytics without any additional development.” Customizing software may require cooperation on the part of clients as well, though. “It may occur that companies’ own management processes can or must be simplified,” Szabó pointed out. “In such cases standardized package solutions available on the market are perfectly fine to start with, as they can then be tailormade to a great extent. On other occasions, special software needs to be developed from scratch if those standardized packages don’t satisfy customer needs. That is rather typical for larger corporations.”

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Economy ministry pulls tax authority closer The reorganization is intended to improve efficiency and assist cooperation with businesses. CHRISTIAN KESZTHELYI

To hear National Economy Minister Mihály Varga tell it, reorganizing the tax authority will improve efficiency and collection in Hungary and increase competitiveness. A tax consultant interviewed by the Budapest Business Journal agreed: “These structural changes will have less impact on the daily operations of the tax authority. Basically the procedures should remain the same,” said Tamás Gyányi, a partner at WTS Tax Legal Consulting Hungary. Under the reorganization, Hungary’s National Tax and Customs Authority (NAV), once a more independent body, is coming under the aegis of the National Economy Ministry. The ministry says these changes should be largely invisible to taxpayers, and that the restructuring would make it possible for the authority to simplify and speed up processes inside the office and to contribute to the development of Hungary’s economy. The National Economy Ministry said in a statement that the tax authority’s 79 organizational units will be reduced to 39, the number of departments will also be cut, from 35 to 29, and the number of top managers from 154 to 79. According to Gyányi, this change will simplify the administration in the shortterm, while in the long run the government expects tax inspections and deadlines to become shorter because the effectiveness of the tax authority will improve. Beyond the decreased number of organizational units and top managers,

New tax chief András Tállai announces staff cuts at a January 22 press conference. (Photo: MTI/Tibor Illyés) András Tállai, secretary of state for Parliamentary Affairs and Taxation and deputy minister of national economy, announced on January 22 that the authority is expected to cut staff by 5%, from 22,442 to 21,320. Structurally speaking, the reorganization of NAV involves two major changes, according to Gyányi. “First of all, NAV is no longer governed by its own president, but the Secretary of State [Tállai] is in charge, which means direct control by the state government of the tax authority rather than just supervision,” Gyányi said. “The second important change is the elimination of the regional directorates. Formerly the 19 county general directorates were managed by seven regional general directorates, but the separate central government body also existed.” In practice these changes mean that the local authority directorates are expected be supervised and managed by this central government directly, leaving out a layer of administration, Gyányi said. More changes are expected as Economy Minister Varga is required to draft a proposal by March 31, according

to reports, and these could be enacted by the end of April. Varga said that these changes had to come, because the Hungarian tax system has reached a turning point. The minister maintained that the newly reorganized NAV will support businesses and individuals as partners, to ensure them of being able to pay taxes in a simpler and faster fashion. He also said that the new system will carry less

administration for businesses and individuals, creating a client-friendly environment. According to Gyányi the changes might not affect the everyday lives of businesses and individuals, staying invisible for taxpayers, “they rather have influence on the insider work-flow of the tax authority”. Due to the reorganization, he said, “the collection of the state revenues will be more effective and this is actually one of the aims”.

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Varga orders investigation of NAV following OLAF report National Economy Minister Mihály Varga ordered an investigation of the National Tax and Customs Authority (NAV) as to why it did not inform NAV leader András Tállai of an inquiry being launched in a case brought up by the EU’s anti-fraud office OLAF, which said it suspects officials of embezzling anti-corruption funds, Hungarian online daily index.hu reported on January 25. The office in charge of coordinating with OLAF operates within NAV, and yet Tállai was not informed about the investigation under the jurisdiction of Chief Prosecutor Péter Polt, a press statement issued by the ministry says, according to index.hu. The online daily said Varga has called for an immediate and expedient investigation of the issue. During its four-year investigation, OLAF said the office found fraudulent invoices and cash payments made by a consultant subcontracting for the former national development agency NFÜ, hvg.hu reported. OLAF said the money that was allegedly mishandled was provided by the EU to monitor whether public procurement procedures were carried out in a legal manner. According to OLAF, the case may involve top Hungarian officials responsible for handling EU funds.

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CEU BUSINESS SCHOOL

Hungary’s tax system misses the mark Dr. Mária Findrik Professor Central European University Business School

The types of indirect taxes are high in number, ratio and amount. Hungary levies more than 60 different types of taxes, while in the majority of developed Western countries the number is less than 30-40 on average.

annoyance – one that never seems to benefit the taxpayer. Regardless of how we feel, paying When it comes to taxes is necessary, as: a) the government uses this tool to redistribute incomes encouraging growth and encourage cohesion among and improving income members of society; and, b) the amount of taxes taken away have a serious distribution, the motivating (or demotivating) factor on country’s tax regime performance. A good tax system takes revenue in a fashion that does not harm seems inadequate. the motivating factor of wages. (The Taxation is a common criterion, and also challenges of a good tax system, which a determinate regulatory tool, for multi- seeks to redistribute wealth with the faceted economies. There are countries lowest social costs possible, should and cultures where the necessity of not be confused with the challenge of paying taxes is not questioned, as it is efficiency facing Hungary’s current tax considered the natural accompaniment system.) of social existence, while in other places So how does Hungary’s system fare? taxes are looked on as a tribute and an At first blush, it is music to our ears

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

EXPERT OPINION

Globalizing world requires interdisciplinary solutions Judit JancsaPék Tax Advisor | Partner Leitner+Leitner Tax Kft.

In the age of globalization there is an increasing need for specialized advice on the taxation of “world citizens”. According to an extremely exciting example, there is an executive officer, citizen of three countries, lives in a fourth state with his family, performs work relating to the executive management of the Hungarian company in Hungary and in Austria in the frame of a secondment ordered by the Austrian company. The one million dollar question here is: Where does he have to pay taxes and social security contributions, under which country’s law? The tax residency – based on which worldwide income is taxed – shall always be the first factor to be checked for individuals taking a cross-border engagement, as the length of the engagement, the family shift surrounding the new career may affect even the basis of personal income tax relations. Moreover, in a cross-border situation not only the domestic law of the sending and the receiving countries but also their

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bilateral relations, i.e. the relevant treaties concluded between all the affected countries, should be investigated. The social security coverage should also be scrutinized in details on separate grounds different from the taxation. The tax expert team of LeitnerLeitner undertake to coordinate the regulations of all countries and solve such complicated situations. Moreover, our welcome package includes carrying out of all reporting obligations to the labour law and tax authorities, preparation of the payroll and tax advance calculations as well as treatment of special benefits, bonuses, stock grants and options. At the end of the year we prepare the tax return and take care of the documents necessary for the social security exemption. We harmonize the Hungarian and the foreign tax obligations. The experts of LeitnerLeitner can remove all burdens of administration and tax calculation in cross-border situations from our client’s shoulders. We may assist you in individual cases, and also serve your company in all fields of taxation with full scope tax and accounting advisory, representation to the tax and financial authorities, even for special procedures.

that the rate of personal income tax, and also the tax on interest, is dropping from 16% to 15%, while tax allowances for families expand. The government has also decided to decrease extraordinary banking taxes as well: In the highest bracket, taxes on the rateable tax base of more than HUF 50 billion drop from 0.53% to 0.31% in 2016, and to 0.21% in 2017-2018. For those banks that increase their lending activities as compared to 2009, the amount of extraordinary taxes can be decreased further. The abovementioned factors encourage decision makers to expect wages per individual to grow, along with the growth of consumption and GDP. This growth is expected to boost business activities and credit discipline – and increase demand, thereby increasing tax revenue. The declared purpose of changes, in both personal tax and banking tax, is to boost employment, and secure the dynamics of economic growth, the two weak points of the Hungarian economy.

Decrease merely symbolic

in the majority of developed Western countries the number is less than 30-40 on average. The typical citizen is unaware of the impact of indirect taxes, due to their large number and confusing nature. In many cases, indirect taxes are created by the state to fill in unforeseen gaps in the budget. The transparency of the tax system is further eroded by the possibility of applying for individual exceptions in the case of indirect taxes. Professionals say that the Dutch and British tax systems are the most effective in Europe, because of their high transparency and accountability. The Hungarian tax system also compares poorly with others because taxes on consumption are relatively high. In Hungary, the rate of taxes on capital is below the European average, but the taxes on consumption are higher than average. When choosing this structure, decision makers act as if Hungary had a stable, strong and high-capital-income entrepreneurial sector. Last but not least, a few thoughts about whether the tax system successfully strengthens social cohesion through the redistribution of wages – assuming this is an aim. Given the wage structure, many people have said that a flat tax for the personal income tax system is only beneficial for those who earn more. In fact, charging the same percentage of personal income tax regardless of wages contributes to expanding the wage gap. That is why, in socially sensitive countries, personal income taxes are bracketed. Hungary’s family tax allowances are dependent on the level of earnings, and therefore they end up being more beneficial for those who earn more. Support offered per child has not been increased significantly since 2008. The government’s new home-purchase subsidy scheme for families (CSOK) directly excludes those who are not married or have had no employment for a certain amount of time. Fostered workers –those who are given employment by the government because they could not find jobs in the private sector – are not included in this scheme. All in all, we do not see a determined willingness to solve the structural problems of the Hungarian tax system, so it is more than likely that their undesirable effects on employment and social cohesion will continue. It is cold comfort that the majority of Eastern European countries are trapped in the same cycle.

Unfortunately, the symbolic decrease in personal income taxes will not solve the structural problems of the Hungarian tax system. One of the big issues is the high amount of overall taxes that must be paid, as compared to the typical European practices: There is a big difference between net wages, as compared to gross wages, and the huge tax bite is definitely demotivating. While in most developed countries taxpayers generally receive 75% of their wages, Hungarians receive less than 65% of their wages. That means that the Hungarian government is taking away more from salaries that are already below the international average. The high levels of taxes on employment – especially the social security contribution, which is well above the international average – has a double negative effect: It not only obstructs the growth of employment, it also pushes a part of employment into the gray or black economy. Unlike most European countries, there is no maximum social security contribution that a Hungarian worker must make – the payment increases with the size of a worker’s This column is part of a continuing salary, to potentially infinite levels. series of opinion columns from experts Another structural problem with the at the Central European University Hungarian tax system is that the types Business School in Budapest. The of indirect taxes are high in number, opinions stated here do not necessarily ratio and amount. Hungary levies more reflect those of the Budapest Business than 60 different types of taxes, while Journal.

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Tax consultants Ranked by net revenue from tax consulting in 2015 (HUF mln)

RSM HUNGARY ADÓTANÁCSADÓ ÉS PÉNZÜGYI SZOLGÁLTATÓ ZRT.

633

✓

✓

✓

–

✓

PROPERTY CONSULTING

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

–

–

2001 74

(100) –

1959 68

(100) –

Márta Sibinger Gábor Imre Ágnes Kramer

1135 Budapest, Mór utca 2–4. (1) 237-9800 (1) 237-9861 kovacs.eniko@saldo.hu

OTHER

HR CONSULTING

FINANCIAL CONSULTING

PAYROLL ACCOUNTING

ACCOUNTING

AUDITING

TOTAL NET REVENUE IN 2015 (HUF MLN) 1,248

YEAR ESTABLISHED NO. OF FULL-TIME EMPLOYEES ON JAN. 1, 2016

1

COMPANY WEBSITE

NET REVENUE FROM TAX CONSULTING IN 2015 (HUF MLN)

RANK

SERVICES

www.rsm.hu

2

SALDO ZRT. www.saldo.hu

ADDRESS PHONE FAX EMAIL

Zsolt Kalocsai Klára Vaitz Edina Váradi

1138 Budapest, Faludi utca 3. (1) 886-3700 (1) 886-3729 info@rsm.hu

513

930

–

–

–

✓

✓

–

Tax, social security, labor law, accounting consulting, representation in front of tax office, labor due dilligence, corporate due dillgence, preparation of self-supervision and transfer price registration

500

519

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Tax advisory in all tax types, representation in tax audits, transfer pricing

2006 20

– Leitner+Leitner International GmbH (100)

Márta Siklós, Judit Jancsa-Pék – –

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

323

323

–

–

–

–

–

–

–

2011 16

Individuals (100) –

Zoltán Lambert, Tamás Gyányi Andrea Potássy Judit Balogh

1143 Budapest, Stefánia út 101–103. (1) 887-3700 (1) 887-3799 klient@klient.hu

✓

IT consulting, finance sector temp agency

1989 14

Zoltán Gerendy (100) –

Zoltán Gerendy – –

1103 Budapest, Kőér utca 2/A (1) 235-3010 (1) 266-6438 office@bdo.hu

2001 15

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

Gyöngyi Ferencz, Andrea Kuntner, Erik Thurn – –

1134 Budapest, Váci út 33. (1) 225-7575 (1) 225-7574 vgd.budapest@vgd.hu

LEITNER + LEITNER TAX KFT. www.leitnerleitner.com 3

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

WTS KLIENT ADÓTANÁCSADÓ KFT. www.klient.hu 4

BDO HUNGARY (TAX CONSULTING) 5

www.bdo.hu

290

2,100

✓

✓

✓

✓

✓

VGD FERENCZ & PARTNER KFT. www.vgd.eu 6

7

PMX CONSULTING GROUP MAGYARORSZÁG ADÓTANÁCSADÓ KFT.

120

278

–

✓

✓

✓

–

✓

Transferprice documentation, tax representation, financial and tax diligence

102

102

–

–

–

–

–

–

Company valuation services

1994 6

János Szalai (97.78) Péter György Natkay (2.22)

János Szalai – –

1061 Budapest, Andrássy út 3. (1) 450-1111 (1) 450-1113 info@pmxconsulting.hu

International VAT refund

2005 8

Individuals (100) –

Gábor Dénes, Ferencné Wessely – –

–

–

2001 48

(100) –

Szilvia Sarkadi-Nagy, Ildikó Miszori, László Killik, Ágnes Kása-Forgács Csilla Bögre –

1118 Budapest, Alsóhegy utca 27. (1) 382-0106 (1) 382-0106 gdenes@forbis.hu 1146 Budapest, Zichy Géza utca 5. (1) 422-1339 (1) 688-4869 info@bpokft.hu

1989 46

(100) –

István Rajkai Józsefné Kulifai –

1142 Budapest, Erzsébet királyné útja 125. (1) 460-7412 (1) 460-7490 mlx@memolux.hu

www.pmxconsulting.hu

8

FORBIS ADÓTANÁCSADÓ KFT.

9

BPO AUDIT TAX

10

www.forbis.hu

www.mgi-bpo.hu

MEMOLUX SZERVEZŐ, FEJLESZTŐ ÉS SZOLGÁLTATÓ KFT.

101

98

101

546

–

✓

–

✓

–

✓

–

✓

–

✓

–

70

495

–

✓

✓

–

✓

–

Company valuation, transfer price supervision, documentation, labor issues

57

160

✓

–

–

–

–

–

Tax planning, management consulting, M&A, due dilligence

1995 9

Individuals (100) –

Péter Bergmann Sándor Soltész Dóra Krén

1138 Budapest, Váci út 186. (1) 238-9000 (1) 238-9010 bergmann@bergmann.hu

–

Business management, reporting and controlling, financial administration, HR administration and recruitment

2002 70

– Oriolo Holdings Ltd. (100)

György Pintér, Ádám Menich, Gábor Ádám Gábor Kis –

1062 Budapest, Aradi utca 16. II. emelet 2. (1) 345-0092 (1) 345-0093 finacont@finacont.com

www.memolux.hu

BERGMANN KÖNYVSZAKÉRTŐ KFT. www.bergmann.hu 11

FINACONT SZOLGÁLTATÓ ÉS TANÁCSADÓ KFT. 11

www.finacont.com

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57

640

–

✓

✓

✓

✓

2016. 01. 27. 20:15

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YEAR ESTABLISHED NO. OF FULL-TIME EMPLOYEES ON JAN. 1, 2016

OTHER

PROPERTY CONSULTING

HR CONSULTING

FINANCIAL CONSULTING

PAYROLL ACCOUNTING

ACCOUNTING

AUDITING

COMPANY WEBSITE

TOTAL NET REVENUE IN 2015 (HUF MLN)

NET REVENUE FROM TAX CONSULTING IN 2015 (HUF MLN)

RANK

SERVICES

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

1995 9

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

Zsolt Ruszin – –

1097 Budapest, Könyves Kálmán körút 12–14. (1) 238-8023 (1) 238-8024 fairconto@fairconto.hu

Ágnes Vilmányi (98) Gabriella Szinay Roszkopfné (2) –

Ágnes Vilmányi – –

1051 Budapest, Hercegprímás utca 21. (1) 312-2222 (1) 354-0947 info@drvilmanyi.eu

FAIRCONTO ZRT. 13

14

www.fairconto.hu

38

DR. VILMÁNYI ADÓSZAKÉRTŐ IRODA KFT. www.drvilmanyi.eu

202

✓

✓

✓

✓

–

–

–

2013

37

37

–

–

–

–

–

–

Representation in front of tax office

35

308

–

✓

✓

✓

✓

–

–

1996 26

István Nemecz (30) ACCACE Limited (70)

István Nemecz István Nemecz Masoud Tajik

1132 Budapest, Váci út 22–24. (1) 412-3530 (1) 412-3530 hungary@accace.com

31

122

–

✓

✓

✓

✓

–

Tax supervision, tax registration, transfer price consulting

1992 15

Tünde Gulyás (50) Andrea Butkovics (50) –

Andrea Butkovics Ernő Varga Melinda Németh

1138 Budapest, Váci út 141. (1) 452-6900 – office@colling.hu

✓

Business advisory, legal services, corporate risk services

1999 556(4)

– (100)

Gábor Gion, Attila Kövesdy Gerard Lucey Krisztina Némedi

1068 Budapest, Dózsa György út 84/C (1) 428-6800 (1) 428-6801 deloitteinhungary@ deloittece.com

✓

Transaction and business consulting, tax consulting, legal services

1989 381

– Ernst & Young Center Cluster Limited (100)

Botond Rencz Csaba Horváth Orsolya Ludvig

1132 Budapest, Váci út 20. (1) 451-8100 (1) 451-8199 mailbox.ey@hu.ey.com

– IB Interbilanz Wirtschaftsprüfung GmbH (100)

Waltraud Körbler – –

1093 Budapest, Vámház körút 13. (1) 455-2000 (1) 455-2040 office@hu.gt.com

Ferenc Eperjesi, István Henye KPMG

Robert Stöllinger William Curley Miklós Scheibelhoffer

1134 Budapest, Váci út 31. (1) 887-7100 (1) 887-7101 info@kpmg.hu

Ÿ

ACCACE HUNGARY KFT. www.accace.com 15

COLLING ACCOUNTING & CONSULTING KFT. www.colling.hu 16

NR

DELOITTE MAGYARORSZÁG

(1)

www.deloitte.hu

Ÿ

8,720(2)

Ÿ

11,800

✓

✓

✓

✓

✓

(3)

ERNST & YOUNG TANÁCSADÓ KFT. www.ey.com/hu NR

NR

IB GRANT THORNTON CONSULTING KFT. www.grantthornton.hu

Ÿ

(5)

✓

–

Ÿ

✓

✓

✓

✓

✓

✓

✓

–

–

–

1991

Ÿ

KPMG MAGYARORSZÁG www.kpmg.hu NR

NR

MAZARS KÖNYVSZAKÉRTŐ ÉS TANÁCSADÓI KFT. www.mazars.hu

Ÿ

16,968

Ÿ

1,548

Ÿ

14,409

(6)

✓

✓

✓

✓

✓

✓

Legal advisory

1989 800

✓

✓

✓

✓

–

–

–

1991 113

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

Philippe Bruno Michalak Budzan – –

1123 Budapest, Nagyenyed utca 8–14. (1) 429-3010 (1) 235-0481 mazars@mazars.hu

✓

Tax and legal consulting, transfer pricing, corporate administration services, settling of tax debates, state subsidies

1989 650

– PwC CEE (100)

Nick Kós, Tamás Lőcsei Tamás Pál Borbála Palotai

1055 Budapest, Bajcsy-Zsilinszky út 78. (1) 461-9100 (1) 461-9101 info@hu.pwc.com

–

Control, consulting and submission of VAT reclaim, tax automatization, strategic tax planning, M&A structuring, transfer pricing, tax control framework

2014

– Ryan NL Coöperatie U.A. (100)

Brendan F. Moore, G. Brint Ryan David English Jim Aubele, Matt Hummel

1054 Budapest, Szabadság tér 7. (1) 580-9200 (1) 580-9299 info@ryan.com

PwC MAGYARORSZÁG www.pwc.hu NR

NR

RYAN TAX SERVICES MAGYARORSZÁG KFT. www.ryan.hu

Ÿ

Ÿ

(5)

✓

–

✓

–

✓

–

✓

–

✓

–

We cannot promise chills and thrills…

Ÿ

Bookkeeping, AdministrAtion, A Ation, tAx x Consult ConsultAnCy

1097 Budapest, könyves kálmán krt. 12−14. | t tel: 06 (1) 238-8023 | Fax: 06 (1) 238-8024 | e-mail: fairconto@fairconto.hu | Web: www.fairconto.hu NOTES: (1) Tax consulting services provided by Deloitte Üzletviteli és Vezetési Tanácsadó Zrt. in Hungary. (2) Data of 2014. (3) Establishment year of Deloitte Üzletviteli és Vezetési Tanácsadó Zrt. (4) No. of full-time employees of Deloitte Könyvvizsgáló és Tanácsadó Kft., Deloitte Üzletviteli és Vezetési Tanácsadó Zrt. and Deloitte CRS Kft. on January 1, 2016. (5) Data of business year July 1, 2014-June 30, 2015. (6) IFRS revenues of KPMG member firms in Hungary in financial year October 1, 2014 – September 30, 2015.

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Accounting firms

pRoCess solutions kft. www.ps-bpo.com

3

www.ucmsgroup.hu

tmf magyaRoRszág Könyvelő és szolgáltató kft.

top loCal exeCutive Cfo maRketing diReCtoR

addRess pHone fax email

276 1999

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

jános babos, andrew majlath, andrás szalai – –

1134 Budapest, Váci út 33. (1) 451-7100 (1) 451-7196 info-hu@ps-bpo.com

110 1995

– UCMS Group EMEA (100)

béla kakuk Katalin Búzás Balázs Zoltán Nagy

1146 Budapest, Hermina út 17. (20) 775-5888 (20) 775-5888 info.hu@ucmsgroup.com

Ÿ

62 1994

– TMF Group Invest Two B.V. (100)

petrina angelova makakova, zsuzsanna táborszki Cselovszkiné – –

1077 Budapest, Wesselényi utca 16., III. em. (1) 461-3100 (1) 461-3150 hungary@tmf-group.com

Ÿ

104 1990

Individuals (100) –

péter bergmann, péterné bergmann Sándor Soltész Dóra Krén

1138 Budapest, Váci út 186. (1) 238-9000 (1) 238-9010 bergmann@bergmann.hu

Ÿ

44 1989

Péter Hajnal (100) –

péter Hajnal – –

1103 Budapest, Kőér utca 2/A (1) 235-3010 (1) 266-6438 office@bdo.hu

Ÿ

48 1998

Individuals (100) –

györgy Kőrösi, eszter balogh Andrea Potássy Judit Balogh

1143 Budapest, Stefánia út 101–103. (1) 887-3700 (1) 887-3799 klient@klient.hu

Ÿ

70 2002

– Oriolo Holdings Ltd. (100)

györgy pintér, ádám menich, gábor ádám Gábor Kis –

1062 Budapest, Aradi utca 16. II. emelet 2. (1) 345-0092 (1) 345-0093 finacont@finacont.com

Ÿ

74 2001

(100) –

zsolt kalocsai Klára Vaitz Edina Váradi

1138 Budapest, Faludi utca 3. (1) 886-3700 (1) 886-3729 info@rsm.hu

Ÿ

57 1990

Zoltán Tóth (80), Péter Berta (20) –

péter berta – –

8900 Zalaegerszeg Ady Endre utca 2. (92) 550-050 (92) 550-060 whc@whc.hu

(100) –

istván Rajkai Józsefné Kulifai –

1142 Budapest, Erzsébet királyné útja 125. (1) 460-7412 (1) 460-7490 mlx@memolux.hu

2,489

3,272

✓

✓

✓

–

–

–

–

✓

–

Wizz Air, British Petroleum, General Electric, Sumitomo

868

1,785

✓

✓

✓

✓

✓

–

–

✓

–

Maersk, Sanyo, BlackBerry

✓

Management and HQ service, VAT registration, financial representation

uCms gRoup HungaRy kft. 2

oWneRsHip (%) HungaRian non-HungaRian

majoR Clients in 2015

otHeR

due dilligenCe

m&a

auditing

management Consulting

tax Consulting

finanCial Consulting

payRoll aCCounting

aCCounting

total net Revenue in 2015 (Huf mln)

seRviCes

no. of full-time employees on jan. 1, 2016 yeaR establisHed

1

Company Website

net Revenue fRom aCCounting in 2015 (Huf mln)

Rank

Ranked by net revenue from accounting in 2015 (HUF mln)

857

1,431

✓

✓

–

–

–

–

✓

www.tmf-group.com

BeRgMAnn Könyvelő iROdA Pénzügyi szolgáltató kft. 4

www.bergmann.hu

736

793

✓

✓

✓

✓

–

–

✓

✓

–

670

2,100

✓

✓

✓

✓

✓

✓

✓

✓

Finance sector temp agency, HR and IT consulting

640

658

✓

✓

✓

–

✓

–

✓

✓

–

–

Business management, reporting and controlling, finance administration, HR administration and recruitment

bdo HungaRy (aCCounting, payRoll and outsouRCing) 5

www.bdo.hu

Wts klient kft. www.klient.hu 6

finaCont szolgáltató és tAnácsAdó Kft. 7

8

www.finacont.com

Rsm HungaRy AdótAnácsAdó és Pénzügyi szOlgáltAtó zRt.

583

561

640

1,248

✓

✓

✓

✓

✓

–

✓

✓

✓

–

–

–

–

✓

✓

HR consulting

www.rsm.hu

WHC Holding kft. www.whc.hu 9

10

MeMOlUX szeRvező, feJlesztő és szolgáltató kft.

393

412

✓

✓

–

✓

–

–

–

–

IFRS, transfer price

379

495

✓

✓

✓

✓

–

–

–

–

–

Ÿ

46 1989

308

397

✓

✓

✓

✓

✓

–

–

✓

Transfer price consulting

Ÿ

36 2002

Ferenc Kölber (50), Zoltán Kiss (25), László Kiss (25) –

ferenc kölber, lászló kiss Ferenc Kölber –

1124 Budapest, Jagelló út 14. (1) 225-3490 (1) 225-3491 info@bakertillyhungaria.hu

Ÿ

48 2001

(100) –

szilvia sarkadinagy, ildikó miszori, lászló killik, ágnes kása-forgács Csilla Bögre –

1146 Budapest, Zichy Géza utca 5. (1) 422-1339 (1) 688-4869 info@bpokft.hu

www.memolux.hu

11

bakeR tilly HungáRia tanáCsadó kft.

12

bpo audit tax

www.bakertillyhungaria.hu

www.mgi-bpo.hu

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546

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✓

✓

✓

–

✓

✓

✓

–

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bilanCe adótanáCsadó és Könyvelő Kft. www.bilance.hu

majoR Clients in 2015

otHeR

due dilligenCe

m&a

auditing

management Consulting

tax Consulting

finanCial Consulting

payRoll aCCounting

aCCounting

total net Revenue in 2015 (Huf mln)

seRviCes

no. of full-time employees on jan. 1, 2016 yeaR establisHed

13

Company Website

www.bbj.hu

Budapest Business Journal | Jan 29 – Feb 11, 2016

net Revenue fRom aCCounting in 2015 (Huf mln)

Rank

28 4

oWneRsHip (%) HungaRian non-HungaRian

top loCal exeCutive Cfo maRketing diReCtoR

addRess pHone fax email

26 1991

SASK Gazdasági Tanácsadó Kft. (100) –

Csaba molnár Vilmos Wágner Vilmos Wágner Jr.

2900 Komárom, Erdélyi utca 4. (34) 540-770 (34) 540-779 bilance@bilance.hu

202

210

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✓

✓

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–

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–

Racemark International Kft., SANO-Modern Takarmányozás Kft., Komáromi Komthermál Kft., WF Építőipari Kft., Well Done St. Moritz Kft.

166

308

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Ÿ

26 1996

István Nemecz (30) ACCACE Limited (70)

istván nemecz István Nemecz Masoud Tajik

1132 Budapest, Váci út 22–24. (1) 412-3530 (1) 412-3530 hungary@accace.com

–

Labor law, HR and cafeteria consulting

VERITAS Csatlakozástechnikai Kft., EOS Faktor Zrt., VIASAT Zrt., BEIERSDORF Kft., EXTREME

24 1995

Branko Holding Zrt. (100) –

mihály Csécsei – Annamária Huszár

1012 Budapest, Márvány utca 16. (1) 889-6200 (1) 889-6201 info@branko.hu

Ÿ

19 1994

– Leitner + Leitner Österreich Wirtschaftsprüfungs GmbH (55), Leitner + Leitner International GmbH (45)

márta siklós – –

1027 Budapest, Kapás u- 6-12. (1) 209-4874 – office@leitnerleitner.hu

Ÿ

15 2001

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

gyöngyi ferencz, andrea kuntner, erik thurn – –

1134 Budapest, Váci út 33. (1) 225-7575 (1) 225-7574 vgd.budapest@vgd.hu

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

zsolt Ruszin – –

1097 Budapest, Könyves Kálmán körút 12–14. (1) 238-8023 (1) 238-8024 fairconto@fairconto.hu

aCCaCe HungaRy kft. www.accace.com 14

15

BRAnKO Pénzügyi és számviteli kft. www.branko.hu

161

292

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leitneR+leitneR audit kft. 16

www.leitnerleitner.com

150

342

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148

278

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vgd feRenCz & paRtneR kft. www.vgd.eu 17

faiRConto zRt. 18

www.fairconto.hu

132

202

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Ÿ

9 1995

125

345

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25 1995

– Alessandro Farina (100)

alessandro farina – –

1056 Budapest, Váci utca 81. (1) 269-5679 (1) 269-5625 info@itlgroup.hu

24 1990

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

józsef dencsi, tibor dencsi – –

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

itl gRoup kft. 19

20

www.itlgroup.hu

balanCe kft.

www.balancekft.hu

101

167

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Eni Hungaria Zrt., Újpesti Egészségügyi Szolgáltató Nonprofit Kft., Dél-Budai Egészségügyi Szolgálat Nonprofit Kft., Fővárosi Biztonsági Iroda Kft., Fővárosi Művelődési Ház, Jäger Kft.

91

122

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Tax supervisions, tax registrations, transfer price consulting

Ÿ

15 1992

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

andrea butkovics Ernő Varga Melinda Németh

1138 Budapest, Váci út 141. (1) 452-6900 – office@colling.hu

Ÿ

16 1993

– CONSULTATIO Wirtschaftstreuhand GmbH (100)

krisztina gubicza – –

1121 Budapest, Zugligeti út 6. (1) 391-4130 (1) 391-0055 office@consultatiobp.hu

Ÿ

9 2003

Eszter DankuSzigecsán (50), Tamás Danku (50) –

tamás danku – –

1011 Budapest, Szilágyi Dezső tér 1. (1) 700-4141 (1) 700-4545 info@grandconsulting.hu

Csaba Benedek (60), József Benedek (30), Ildikó Oczot Benedekné (10) –

Csaba benedek Ildikó Oczot Benedekné –

1033 Budapest, Laktanya utca 35. (1) 439-2300 (1) 439-2303 kozpont@benedek.hu

Colling aCCounting & Consulting kft. www.colling.hu 21

22

Cons-budapest ügyviteli szOlgáltAtó és AdótAnácsAdó Kft.

81

125

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Transfer price registration, VAT registration for non-Hungarians

80

89

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–

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Company establishment and management

www.consultatiobp.hu

gRand Consulting kft. www.grandconsulting.hu 23

24

adószabászat kft.

77

89

✓

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✓

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–

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Ÿ

9 1990

25

audit-labteCH kft.

58

58

✓

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✓

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–

✓

Outsourced finance services

Gyulai Kft., CívisSeed Kft., e-Vision Kft., Mustáng Hungária Kft., Safety-Kleen Kft.

10 2007

Individuals (100) –

ildikó gál, beáta kincs – –

4026 Debrecen, Bem tér 14. (1) 279-1722 (1) 279-1723 office@audit.labtech.hu

NR

MAzARs KönyvszAKéRtő és tAnácsAdói Kft.

Ÿ

1,548

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113 1991

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

philippe bruno michalak budzan – –

1123 Budapest, Nagyenyed utca 8–14. (1) 429-3010 (1) 235-0481 mazars@mazars.hu

www.benedek.hu

www.audit.labtech.hu

www.mazars.hu

BBJ_2402_spec_report.indd 28

2016. 01. 27. 20:15

5 Socialite BBJ

Kékfrankos key to unlocking Eger’s red potential

György Lőrincz Junior and Senior.

Local grape puts the beef into Bullʼs Blood.

taste so right? Was it the fact that the wine had the benefit of a good spell of bottle ageing to express itself? Well, maybe, but more importantly is that the local Kékfrankos grape was handed ROB SMYTH a starring role in this wine and shined, making up almost half (46%) of this After years of trying to find the killer blend that also includes an international blend, it appears that the local grape grape brigade of Cabernet Franc (26%), Kékfrankos has emerged ahead of a Merlot (18%), Syrah (5%) and Pinot Noir field of international grapes to stamp its (5%). This is about more than merely mark on St. Andrea’s premium Bikavér: putting local talent ahead of foreign Merengő. finesse, though, as the Kékfrankos St. Andrea’s Merengő Bikavér brings this wine the kind of taught Superior, for a long time this leading acidity and vibrant red fruit that helps Eger winery’s flagship red blend, was bring out the best in the distinguished one of those wines that I never really rest, while retaining local character understood all the fuss about. OK, it along the way. No one grape is supposed typically came out as a sophisticated, to dominate a Bikavér blend, especially polished and complex blend, but it in the Superior category where at least often lacked that “wow” factor that five grapes must be used, but it does makes a wine great and one of a kind. make this wine much more than merely Interestingly, I’ve normally found the being a fine imitation of essentially individuality I missed in the premium French wine (especially Bordeaux blend oozing out of the next wine down and Burgundy), which is what certain – St. Andrea’s Hangács – also a Bikavér vintages of Merengő mimic very well. Superior but a good few thousand forints cheaper. Hangács somehow The importance of Kékfrankos possessed more of a sense of place I’m not the only one to pick up on the and it does indeed come from a single importance of Kékfrankos in making vineyard. I had also heard that this compelling, rather than just good, wine was the preferred tipple of those wine. György Lőrincz Jr. explained that he and his father, who is the actually working at the cellar. Nevertheless, my view of the “top main man at St. Andrea, clearly see blend” changed last year when I got to the importance of Kékfrankos and we try the 2011 edition of Merengő, which can expect it to play a prominent role blew me away with its combination in St. Andrea’s Bikavér going forward. of energy, elegance, complexity and The one thing Kékfrankos can lack is unique character. Why did it suddenly sheer concentration, but that has hardly

BBJ_2402_socialite.indd 29

Nagy Eged Hill, said to be the highest vineyard in Hungary. been a problem in Austria’s Burgenland where vintners have put refinement and harmony first in their Blaufränkish (the same grape) and very much appealed to the palates of some of the leading critics. To give the Kékfrankos grape that bit more body, the Lőrinczs are adopting a method used by the pioneering Piemontese winemaker Roberto Voerzio, who cuts the stems just before his Nebbiolo grapes are picked, in order to build up the sugar and concentration. Many people in Hungary just don’t get Kékfrankos, which is no surprise given that it made such thin, tepid wines during communism and long after, as its strained vines were forced to pump out huge amounts of dilute juice. However, treat it well and reduce the yields, and the results can be nothing short of astonishing. The 2010 vintage was poor and saw no Merengő made, but 2009 was a great vintage for reds and the resulting Merengő is a fine wine: Really earthy with black olive, mixed spices, pepper and blood orange notes, but with Kékfrankos playing more of a supporting role. It is quite southern Rhône-like, if we are to try and benchmark it against France. Merlot had the most presence in 2008 – 40% to Kékfrankos’ 33%, which tasted like something between a Burgundy and a Bordeaux, showing lovely mature tertiary flavors of dried leaves, undergrowth, tobacco and leather. The 2007 has small red berries oozing out of the glass and is almost Pinot Noir-

like, despite just having 8% of that Burgundian grape in the mix. The 2006 was a revelation as that zesty freshness previously present in 2011 returned and here the grape’s share was up to 50%. The 2006 is the only other Merengő to date in which Kékfrankos claimed the lion’s share. Going back further, the 2005, 2003 and 2002 were still all in a good state, but very Bordeaux-like. Merengő has been trumped at the top of the St. Andrea tree by Nagy-Egedhegy Egri Bikavér Superior, which comes from the heights of Nagy Eged Hill, said to be the highest vineyard in Hungary. It is a huge outcrop of limestone surrounded by the otherwise rhyolite tuff and brown forest soils that dominate the region. Limestone is known for elegant wines, which is absolutely the case with this offering, which is layered and silky. This blend of Kékfrankos, Pinot Noir, Merlot and Syrah debuted in 2011 and if any criticism could be leveled at this limited release wine in its first vintage, then it would be that it could have done with a tad more concentration to justify its lofty, ultra-premium price tag. The 2012 is a more impressive specimen: Easy on the eye with an inviting purple-ruby color, striking a great balance between concentration and refinement, oozing pure fruit (especially blueberry), with smooth tannins, beautifully integrated oak and striking length. Kékfrankos contributes 30% to the 2012 and, as far as I know, is the biggest contributor.

2016. 01. 27. 20:18

30

5 Socialite

www.bbj.hu

Budapest Business Journal | Jan 29 – Feb 11, 2016

WHAT’S

ON

BEAR FESTIVAL (MACKÓ FESZTIVÁL) January 30-February 2, Budapest Zoo

A REVOLUTION IN ART: RUSSIAN AVANT-GARDE IN THE 1910S AND 1920S January 29-May 1, Hungarian National Gallery

This four-day event celebrates all things related to bears. It is designed to be both fun and educational and features the many bear species living at the zoo as well as educational programs, arts and crafts workshops, concerts and theatrical performances. Most events are held in Hungarian but English speakers can be accommodated on request. zoobudapest.com

The National Gallery will exhibit 40 works from the avant-garde collection of the Ekaterinburg Museum of Fine Arts that have never before been seen together outside of Russia. Artists featured include Kazimir Malevich, Wassily Kandinsky, Alexander Rodchenko, El Lissitzky, Natalia Goncharova and Mikhail Larionov. The Ekaterinburg Museum of Fine Arts boasts a collection from practically every movement of the Russian avant-garde, including Cubism, CuboFuturism, Neo-Primitivism, Suprematism and Constructivism. The exhibition will be accompanied by a detailed catalogue in English and Hungarian. mng.hu/en

VADIM REPIN February 2, Palace of Arts Violinist Vadim Repin will perform in Budapest accompanied by the Hungarian Virtuoso ensemble under the direction of Mikós Szenthelyi. Siberian-born Repin was first introduced to the violin at the age of five and already by the age of 14 he was debuting on stages in Tokyo, Munich, Berlin, Helsinki and a year later at Carnegie Hall in New York. He has since gone on to perform with many of the world’s greatest orchestras including the London Symphony Orchestra and the London Philharmonic. Repin is known for his passionate yet sensitive playing style and in this evening’s performance he will present Mozart’s “The Marriage of Figaro”, Bruch’s “Violin Concerto in G minor, op. 26”, followed by Mozart’s “Symphony in A major” and “Symphony in G minor” mupa.hu

A CELEBRATION OF FOLK MUSIC January 30, Palace of Arts This popular celebration of Hungarian folk music is back in Budapest for its ninth year and will take place in the Palace of Arts concert hall and foyer. The program includes many of the great elders and young titans of the genre, the orthodox and the experimental, partisans of both acoustic and electronic styles, and the champions of Hungarian, southSlavic and Gypsy traditions. Among the many performers are: Kálmán Balogh and Miklós Lukács Cimbalom Duo, the Misi Dresch String Quartet, Khamoro, Téka, Fókatelep, Babra, Mihály Dresch, Balázs Vizeli and Gabriella Tintér Band. mupa.hu MAURI Hird-sokorszag-124x77-2016.pdf

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Work by avant-garde painter Kazimir Malevich features in ‘A Revolution in Art’.

SUBJECTS February 4, Eventuell Gallery This small independent gallery will exhibit the works of furniture designers from Czech Republic, Poland, Slovakia and Hungary as part of a program presented by the Moholy-Nagy University of Art and Design with the support of the Visegrad Fund. This is a follow up to a similar exhibit that took place as part of the Budapest Spring Festival. Inspirations for the designs were derived from various sources including the film “Roman Holiday” starring Audrey Hepburn, Polish folklore, organic and industrial forms and everyday objects. eventuell.hu GRAND CHINESE NEW YEAR CONCERT February 4, Palace of Arts As tradition dictates, the Palace of Arts will celebrate the Chinese New Year with a showcase of traditional music from the various ethnic groups of China, played on traditional and unusual instruments, while threads of Western music will also be represented. The Chinese Traditional Orchestra of the China National Opera and Dance Drama Theater will expose audiences to everything from symphonic music, to traditional Chinese folk operas, to Chinese musical theater. mupa.hu BEATLES CARNIVAL WITH THE BLACKBIRDS February 4, A38 Hungaryʼs oldest and most authentic Beatles tribute band has been covering

the songs of the Fab Four since 2004. Little did they know back then that they would still be playing those tunes 11 years later as a professional band. With a steady following, The BlackBirds will cover all the hits and some lesser known gems at one of the city’s coolest venues. A38.hu JAMISON ROSS February 10, 14, Palace of Arts American drummer Jamison Ross honed his skills as a young man in the congregation of his grandfatherʼs church. Encouraged by his mother, he supplemented his instinct for music through formal training, acquiring a masterʼs degree in jazz in New Orleans. Following a monumental win at the 25th Thelonious Monk International Jazz Competition in 2012, Ross has had the opportunity to work with such jazz greats as Cécile McLorin Salvant, Dr. John, Christian McBride and Wynton Marsalis. His debut album, released in 2015, demonstrates the drummer’s ability to shift seamlessly between soul-jazz, blues and funk not only as a drummer but also a singer and a composer. mupa.hu VADYM KHOLODENKO PIANO RECITAL February 10, Liszt Academy Concert Center Ukrainian pianist Vadym Kholodenko trained in Moscow and exploded onto the world stage after receiving a gold medal at the Fourteenth Van Cliburn International Piano Competition in 2013, one of the most prestigious awards in the genre. This was followed that same year by a run of 50 performances across the globe.

2016. 01. 27. 20:18

www.bbj.hu

Budapest Business Journal | Jan 29 – Feb 11, 2016

Pieces such as this Pin Sofa can be seen at the ‘Subject’ exhibit on February 4.

5 Socialite

31

Violinist Vadim Repin performs at the Palace of Arts.

Kholodenko’s playing is characterized by precise technique, passion and an almost shy demeanor. For this performance he will present Schumann’s “Nachtstücke, op. 23” and “Humoresque, op. 20” as well as Scriabin’s “24 Preludes, op. 11” and “Fantasia, op. 10”. zeneakademia.hu OLYMPIC QUALIFICATION TOURNAMENT February 11, 12, 14, Papp László Budapest Sportaréna The Hungarian National Ice Hockey team is ranked 16th in the world and during this qualifying tournament at the Budapest arena, it will compete for a spot at the 2018 Winter Olympics in Pyeongchang, South Korea; the qualification tournament begins on February 11 with Hungary against Lithuania. The last time these two teams faced off was during the previous Olympics qualifiers, which Hungary won. On February 12, Estonia, who qualified this past fall from the previous round, will play Hungary. On February 14, Hungary is back on the ice up against Poland, whicho is only three spots behind Hungary in the international rankings. budapestarena.hu

Téka Band will play during the Celebration of Folk Music festival taking place at the Palace of Arts on January 30.

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H -1052 Budapest, Vigadó tér 3. Kikötő Tel: +36 1 411 09 33 Fax: +36 1 411 09 46 www.spoonrestaurants.hu spoon@spoonrestaurants.hu

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2016. 01. 27. 20:18