Euro and other currencies used as functional currency under Hungarian accounting standards

Euro and other currencies

Used as a functional currency under Hungarian accounting standards.

Used as a functional currency under Hungarian accounting standards.

An increasing number of companies in Hungary handle significant amounts of turnover in foreign currencies, and would like to avoid or at least minimise any losses from exchange rate movements and fluctuations in results. In this case it makes sense to change the currency used for bookkeeping purposes, and therefore prepare financial reports in a foreign currency.

Changes to Act on Accounting in 2010

The Act on Accounting in force from 1 January 2010 (Hungarian Accounting LAW, “HAL”) enables businesses to keep their books in euros or in other foreign currencies, and to prepare their financial reports in the selected currency. This provision can have a significant effect on real estate firms, or on businesses with substantial turnover in foreign currency, since the vast majority of their incomes and costs are in foreign currencies and so switching to using the given currency as a functional and presentation currency can be a logical step. Financial institutions (such as banks, investment banks and insurance companies) are still not permitted to change their reporting currency.

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