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Hungary Introduces Beneficial Ownership Regulations in Line with EU Directives

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Budapest, HUNGARY - June 6, 2021

In a move aimed at enhancing transparency and combating money laundering, the Hungarian government has implemented regulations requiring businesses to disclose their ultimate beneficial owners (UBOs). This significant step is part of Hungary’s efforts to comply with EU anti-money laundering directives.

New Regulations for Businesses in Hungary

Requirements for Business Entities

  • All business entities registered in Hungary, including non-governmental organizations and partially state-owned companies, will be required to provide information on their UBOs.
  • This includes individuals who own or control more than 25% of a company’s shares or voting rights.

Internal Procedures for Beneficial Ownership Records

  • Entities must establish internal procedures to ensure that their beneficial ownership records are kept up-to-date.

Central Register and Trust Index System

  • The data collected will be transmitted by banks and other financial institutions to the central register operated by the Hungarian Tax Administration.
  • The register will assign each entity a registration number and a trust index, known as a “TT” index, which can range from 10 to 0.
    • If an entity’s TT index falls below 8 points, its ownership status is automatically classified as uncertain.
    • A score below 6 points classifies it as unreliable.

Consequences of Unreliable Rating

  • Entities with an unreliable rating will be treated as high-risk customers by service providers and may be refused transactions above HUF 4.5 million (approximately EUR 12,000).
  • Those who have faced negative legal consequences due to their trustworthiness index can appeal to the Ministry of Finance if they believe that actions taken against their account-holding bank were unjustified.

Next Steps Towards Establishing a Single Register

  • The introduction of these regulations marks a significant step towards establishing Hungary’s Single Register of Legal Persons, which is expected to be operational by 2024.
  • The register will consolidate existing business registers and provide a more comprehensive overview of company ownership structures in the country.

Expert Assistance Available

Tax experts from VGD Hungary are available to assist businesses with any questions or concerns regarding the new beneficial ownership regulations.