Budapest Business Journal 3004 by Business Publishing Services Kft.

VOL. 30. NUMBER 4

FEBRUARY 25 – MARCH 10, 2022

HUF 1,850 | EUR 5 | USD 6 | GBP 4

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

SPECIAL REPORT INSIDE THIS ISSUE

Taxes & Accountancy

‘Radically Different’ tax System Making Good Digital Progress Two of the best-known tax and accountancy experts in Hungary give the Budapest Business Journal their assessment of the market situation in the country. 13

Financial Assistant Spreading Net An automated financial assistant developed to make bookkeeping simpler for small businesses is being made available in all member banks (though not yet all branches) of the Hungarian superbank in the making, Magyar Bankholding. 16

Transparency and Trust

SOCIALITE

Canvas and Cult: Szinyei Merse and Tommy Ramone David Holzer gets out of the cold and takes in some Hungarian culture up in the Castle District, including the iconinc “Picnic in May” by ground-breaking pioneer Pál Szinyei Merse, Hungary's first colorist. 22

NEWS

Last Year’s GDP Growth Exceeds Expectations Last year’s GDP data showed the most rapid growth in Hungarian economic history. Analysts were taken by surprise and quick to upgrade their forecasts for this year. 3

BUSINESS

Former AmCham President, GE managing director and PwC partner Farkas Bársony hopes to transform the giving landscape, promoting trust and transparency through impact marketing with his latest project, Sharity. 10 BUSINESS

M&A Market in Hungary Expands Almost 50% in 2021 The value of mergers and acquisitions in Hungary jumped by almost 50% to USD 1.7 billion last year compared to 2020, according to the latest annual global study by Allen & Overy? 7

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Budapest Business Journal | February 25 – March 10, 2022

IMPRESSUM

THE EDITOR SAYS

ON TENSION AND TAXATION

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

Czifra, Kester Eddy, Bence Gaál, David Holzer, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Gergely Sebestyén, Robert Smyth, Bálint Szőnyi, LISTS: BBJ Research (research@bbj.hu)

The good news is that in the two weeks since our last edition, Europe has not slipped into a war, at least not at the time of writing. But the recognition of the two breakaway rebel-held areas by Russia and the dispatch of its troops there to act as “peacekeepers,” has ratcheted up the tension even more. This feels unsustainable. Either one side will have to back down, or someone, nerves stretched to breaking point, will make a mistake and trigger the conflict no one says they want. Hungary is politically closer to Russia than any other European Union state. Indeed, as we pointed out in our last issue, Prime Minister Viktor Orbán is not long returned from a visit to Vladimir Putin in Moscow, although his was a scheduled trip, rather than a round of the shuttle diplomacy that has seen a string of world leaders beat a path to the Kremlin in response to the Ukraine crisis. It was instructive, therefore, to hear Minister of Foreign Affairs and Trade Péter Szijjártó speaking about another batch of 120 ventilators Hungary is donating to Ukraine. Half of the ventilators are to go to hospitals in Transcarpathia, an area of Ukraine with a large ethnic Hungarian population. Szijjártó acknowledged “tensions” between Hungary and Ukraine over what he called “violations of the Hungarian ethnic minority’s rights” in the country. Despite that, he said, “Hungary has always backed the territorial integrity and sovereignty of Ukraine.” Importantly, that message was confirmed on Tuesday when Orbán spoke with Ukrainian President Volodymyr Zelenskyy by phone. As a neighbor of Ukraine, Hungary is following developments there with concern, the PM said. He told Zelenskyy that the country supports joint European Union efforts aimed at resolving the situation.

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“In this framework, the government is continuously consulting with its Western allies,” Orbán was quoted as saying by state news agency MTI. He insisted that Hungary has supported, and continues to do so, the sovereignty and territorial integrity of Ukraine. ***** I had forgotten how different Hungary’s taxation system is until conversations with economic experts at our recent Expat CEO Boardroom event and for the Market Talk piece in this issue forced me to refocus. As is made clear on the pages inside, Hungary is something of an outlier with its emphasis on indirect and consumption taxes. Much less focus is placed on income tax and especially corporate tax; indeed, the country’s 9% for the latter is the lowest in the European Union and the fourth-lowest in the world. (One assumes there are not many readers of the Budapest Business Journal who are unhappy with that.) The good news is that Hungary has taken enormous strides in its digitization journey and can (and should) be congratulated for that. Less welcome, however, is the sheer number of taxes in existence. One of our expert witnesses puts it at almost 50, although 90% of all revenues come from just eight. The 40 or so others might be insignificant in terms of what they generate, but they still cause an administrative burden, both to the authorities and the poor benighted taxpayer. How nice it would be to see a more straightforward, slimmed-down version. We can but hope. Robin Marshall Editor-in-chief

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• Value Creation. We have a nearly 30-year history of supporting the development of diversity and sustainability in Hungary’s economy. The fact that we have been a trusted business voice for so long, indeed we were the first English-language publication when we launched back on November 9, 1992, itself has value. • Crisis Management. We have all lived through a once-in-a-century pandemic. But we also face an existential threat through climate change and operate in a period where disruptive technologies offer threats and opportunities. Now, more than ever, factual business reporting is vital to good decision-making. For more information visit budapestbusinessjournal.com

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• Independence. The BBJ’s journalism is dedicated to reporting fact, not politics, and isn’t reliant on advertising from the government of the day, whoever that might be.

THEN & NOW

In the color photo from state news agency MTI, Csaba Teszárek, on the left, moves the Creature’s head, while Sándor Márkus, on the right, plays Victor Frankenstein in a rehearsal of Mary Shelley’s story on Feb. 21, 2022, at the Puppet Theatre of Budapest, the biggest institution of its kind in Central Europe and the oldest professional puppet theater in Hungary. In the black and white image from the Fortepan public archive, puppets are being prepared for a show in what was then the National Puppet Theater in 1949 (the name changed in 1992).

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Budapest Business Journal | February 25 – March 10, 2022

News macroscope •

Last Year’s GDP Growth Exceeds Expectations Changes in Average Earnings in Hungary (2003-2021)

The most rapid growth in Hungarian economic history: that is how Minister of Finance Mihály Varga characterized last year’s GDP data. Analysts were taken by surprise and quick to upgrade their forecasts for this year.

Full-time employees; average monthly net earnings; HUF / month

Budgetary Institutions Private Sector

ZSÓFIA CZIFRA

The Hungarian economy grew by 7.1% last year, making it the most significant annual growth in Hungarian history, Varga commented on the latest GDP data, released on Feb. 15. The minister insisted that the data shows that the economic policy based on tax cuts, supporting families and businesses and investments have proved effective, as they allowed for a quick recovery even after a crisis. He also said that the Hungarian economy had performed outstandingly in 2021 compared to the EU. He said growth could be 5.9 % this year. Hungary’s gross domestic product increased by 7.2% according to raw data and

7.1%

according to seasonally and calendar adjusted and reconciled data in the

Numbers to Watch in the Coming Weeks The Central Statistical Office (KSH) will release investment data for the fourth quarter of 2021 on March 1. The next day, the second estimate of Q4 and full-year GDP figures will be out. On March 3, January retail trade statistics will be published by KSH, followed by the first estimate of January industrial production data on March 4.

* without family discount Source:

fourth quarter of 2021 compared to Q4 2020. Compared to Q3 2021, the economic performance rose by 2.1% according to seasonally and calendar adjusted and reconciled data. In 2021, the volume of GDP grew by 7.1% overall. The data has exceeded analysts’ expectations, and they were quick to raise their growth projections for this year in the light of the fresh data. ING Bank senior analyst Péter Virovácz said the growth was driven by the further recovery in consumption and, presumably, investment. The stronger-thanexpected fourth-quarter performance also suggests that, due to the good yearend alone, economic growth can be expected to be roughly 0.8 of a percentage point higher this year compared to the market consensus so far. It should not be ruled out that growth could approach or even exceed 6% in 2022, he thinks. The combination of surprisingly strong GDP data and the January inflation shock could encourage the national bank to raise interest rates for longer than previously expected. Eventually, the central bank base rate could peak at around 6%, Virovácz said.

Growth Sectors

Gergely Suppan, a senior analyst at Takarékbank, noted that growth occurred in all sectors except agriculture. Stagnating vehicle production, caused by a lack of microchips and other components, could have held back expansion by about one percentage point last year, he estimates. Consumption may have picked up, while investment may have continued to perform well, and the foreign trade balance has been a drag on growth to a smaller extent. At the beginning of this year, a 20% increase in the minimum wage and the canceling of the personal income tax for employees under the age of 25 could give a significant boost to growth through consumption. In the second half of the year, the expected easing of raw material and chip shortages and a further recovery in tourism could keep growth high. Therefore, Suppan said Takarékbank had raised its growth projection for this year from the previous 6% to 6.3%. According to K&H senior analyst Dávid Németh, growth in 2022 could be

around

5%,

given the current outlook. However, there are a number of downside risks

as well, he warned. There are many questions, he said; for example, when will order be restored in international supply chains, and when will high energy and commodity prices and inflation normalize? It is also a risk, and especially for growth in 2023, that tightening will be needed in both fiscal and monetary policy, he added. Gábor Regős, head of the macroeconomic department of Századvég Gazdaságkutató, highlighted that the weaker performance of the third quarter of last year had proved to be temporary. Preliminary GDP data confirms the expectation that economic growth this year could exceed 5%, he noted. Consumption, driven by wages rising even higher than inflation, will play a major role in this. Investment is also expected to increase, with a growing emphasis on the private sector due to the postponements of some public investments. In addition to rising inflation, the development of vehicle production poses a risk to this year’s growth: a prolongation of the chip shortage may slow down output, while a faster solution would help the economy expand, Regős said.

Tightening Cycle Continues The decision of the Monetary Council of the Hungarian National Bank (MNB) on Tuesday was as expected; however, the release of the next inflation report could bring a change in central bank policy, according to analysts. The MNB’s policymakers raised the key interest rate to 3.4% from 2.9% on Feb. 22, while they also raised the interest rate on overnight deposits to 3.0% and the interest rate on overnight and one-week secured loans to 5.4%. Gergely Suppan of Takarékbank said that the MNB’s management had prepared to continue the interest rate hike cycle due to the substantial rise in inflation risks. The analyst pointed out that the base rate could rise to 5.5% by the middle of this year, gradually catching up with the one-week deposit rate, which is expected to reach 5.5% in May.

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Immunity Certificates Extended Coronavirus ///roundup as Wastewater Levels Stagnate Hungary’s government has pushed back the date for restricting COVID immunity certificate validity for the fully inoculated from Feb. 15 to May 1 in a decree published in the official Magyar Közlöny [Hungarian Gazette], according to state news agency MTI. NICHOLAS PONGRATZ

Under the new government decree, the certificates will only be valid for the doublejabbed for six months after receiving the second dose, following which validity will require a booster shot. Hungarians who have recovered from COVID but have not been vaccinated will no longer be eligible for the immunity certificates. In the same issue of Magyar Közlöny, Hungary’s government enacted a decree enabling retailers that aren’t licensed pharmacies to sell COVID antigen rapid diagnostic tests, according to koronavirus.gov.hu. The measure is in line with European Union rules on COVID rapid tests, the decree noted. Hungary’s Competition Office (GVH) had issued a recommendation two weeks prior on expanding the availability of rapid COVID tests to a broader range of retailers. GVH

A sign on a door at the Dorottya Hospital in Nagykanizsa (215 km southwest of Budapest by road) on Feb. 22 points the way to a vaccination point. The text below the arrow directs children aged 5-11 years to the first floor. Photo by György Varga / MTI. also said it could propose a price cap on the tests if competition in the retail market doesn’t intensify and bring prices down. Domestically, concentrations of coronavirus hereditary material in wastewater continue to stagnate, the National Center for Public Health (NNK) said on its Facebook page on Feb. 15. According to the latest data, the concentration of material has still not changed as a national average, as there was no significant increase or decrease in any of the cities surveyed. Despite this plateauing, NNK warned that the concentration of the virus could still be classified as “elevated” everywhere. Several recent studies have taken stock of some of the challenges faced during the coronavirus pandemic. For instance,

some

54%

of domestic companies said they found it more difficult to comply with ethical operations during the crisis, despite these being important

to nine out of ten of those companies, according to a global survey by EY.

Critical Decisions

In Hungary, more than three-quarters of companies say they take into account the impact of critical business decisions on the organization’s reputation (78%) and whether they comply with current legislation (72%). Additionally, a recent study by researchers at the Faculty of Pedagogy and Psychology (PPK) of the Eötvös Loránd University found that men were the least respectful of lockdown conditions during the early days of the epidemic in 95% of the countries surveyed. In their study, researchers revealed from a sample of

countries

that men were less likely to consider distance rules based on gender, age, income, and education. Experts

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believe the data could be used in public health communications about COVID-19, according to a report on the university’s website. Meanwhile, Hungary continues to maintain a vaccine surplus, having received another two shipments of the Pfizer-BioNTech coronavirus vaccine for children aged five to 11, each consisting of 36,000 doses on Feb. 15 and 22. In a video message posted on Facebook earlier, Minister of Foreign Affairs and Trade Péter Szijjártó had blamed “political reasons” for the lack of acceptance, at the global level, of coronavirus vaccines produced in China and Russia, arguing that they “meet all requirements for efficacy and safety.”

“A recent study by researchers at the Faculty of Pedagogy and Psychology (PPK) of the Eötvös Loránd University found that men were the least respectful of lockdown conditions during the early days of the epidemic in 95% of the countries surveyed.” Later, Szijjártó said in another video message posted on Facebook that Hungary would be donating a further 120 ventilators to Ukraine. Szijjártó said half of these would go to hospitals in Transcarpathia, an area of Ukraine with a large ethnic Hungarian population.

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Significant Increase in Green Office Stock The Budapest office market is estimated to have seen an increase of nearly 180,000 sqm of green office space for 2021. There has been a significant rise in new build stock, with almost all new office buildings green certified; this represents 44% of all modern office space at 1,750,000 sqm, according to Colliers. GARY J. MORRELL

Both the number of new green buildings and the “greening” of existing buildings have continued to grow dynamically. In particular, the industrial market is experiencing a real boom for green logistics and manufacturing sites, according to Colliers. “As for the WELL certification, focusing on human health, while we have only seen pre-certifications in the past, two buildings attained final WELL certification last year. Besides these, six buildings have attained pre-certification and several ongoing projects are registered,” the real estate consultancy said. Companies are using hybrid-working models in the post-coronavirus era, involving a combination of traditional office attendance and home office working. Sustainability accreditation and the provision of amenities in response

to developing tenant and staff demands are said to be central for the commercial success of office projects and the availability of an exit strategy with a sale to investors. “A couple of years ago, an easily accessible, high-quality building with some services was easy to lease. Tenant expectations have certainly changed during the last two years, and now they include flexibility (both in layout and contractual terms), compliance with values and priorities of ESG (Environmental, Social, and Corporate Governance), and the preference for workplace consultancy, as well as integrated design and build services,” comments Máté Bihari, leasing and sales director at Horizon Development.

Great Expectations

“With clear ESG expectations guiding their search for the ideal office space, tenants place great emphasis on sustainability these days. Creating sustainable buildings is critical for us as a developer. Beyond targeting the LEED ‘Gold’ and WELL environmental ratings, we also plan to obtain the Access4You certificate to ensure that people with special needs can also make use of the complete offering of our latest development, ParkSide Offices,” Bihari explains.

“We work in a strict regulatory framework that defines how we select locations, conceptualize our projects, develop and operate our buildings, and manage acquisition and divestment processes,” he adds. The growing social responsibility of developers and owners is demonstrated by the fact that more buildings are being awarded the Access4you certificate, which is of Hungarian origin but registered as a European trademark. Access4you certifies the accessibility of facilities for different user groups with special needs, Colliers adds. “It is important to note that ESG is not a certification (although there are

News | 5

companies that issue such ratings) and not a mandatory regulation (for now), but rather a set of sustainability guidelines on how a company should operate in the three areas,” notes Norbert Szircsák, director of green building certification services at Colliers Hungary.

“ESG reporting has no fixed format, and the importance of each topic depends largely on the activities of the company concerned. The measurability of ESG aspects is, therefore, not yet truly standardized. This is why green certifications such as LEED and BREEAM have been developed in the past to measure the sustainability of buildings, and can also serve well in ESG reporting for real estate.” “ESG reporting has no fixed format, and the importance of each topic depends largely on the activities of the company concerned. The measurability of ESG aspects is, therefore, not yet truly standardized. This is why green certifications such as LEED and BREEAM have been developed in the past to measure the sustainability of buildings, and can also serve well in ESG reporting for real estate,” Szircsák concludes.

Sustainability Certified Office Buildings in CEE BREEAM

LEED

WELL

Czech Republic

498

Hungary

202

Romania

359

Poland

1,246

230

Slovakia

133

2 Source: Hungarian Green Building Council

Top Real Estate Executives in Hungary 2021 The Top Real Estate Executives magazine is a special annual publication of the Budapest Business Journal. The magazine presents the profiles of the most influential real estate executives in the Hungarian economy. It puts a human face on the local development market, focusing on leading personalities’ profiles and outstanding achievements. Please forward your subscription request to: circulation@bbj.hu, or order your copy in the webshop at www.budapestbusinessjournal.com

• Provides an essential overview of how Hungary’s real estate system operates. • Get an insight into the most significant developments in 2020, and a look at what is in store for 2021. • Get to know the personalities behind the real estate business. • Read personal accounts from the country’s top real estate executives detailing how they got into the business and some of their proudest achievements, among other things.

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WHO’S NEWS

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

László Kónya

Managing Director at Deutsche Telekom IT Solutions Named

cloud services, the Internet of Things, cyber security, software development, and automation services since 2018. The new managing director earned his university degree at Universitatea Babeș-Bolyai in ClujNapoca and gained a Master of Business Administration at Warwick University. He teaches virtual project management at the Corvinus University of Budapest. “I am very excited that I can continue to work with the entire team of DT-ITS. As the largest ICT employer in Hungary, we believe that our cooperation with universities as well as finding and educating talents to support our growing business are of essential importance,” said Kónya. “We are committed to sustainable digitization, and we are continuously expanding our service portfolio in a number of areas from artificial intelligence to automation so that we can further strengthen our position in the international value chain of ICT services,” he added.

On Feb. 1, László Kónya took over the managing director position at Deutsche Telekom IT Solutions (DT-ITS) from Erik Slooten. Kónya has 25-years of experience in IT and telecommunications. He started his career as a software engineer and project manager and later worked as the CEO of two Hungarian ICT companies specializing in software and IT outscoring. Kónya joined Deutsche Telekom group subsidiary DT-ITS in 2010 (it was then called IT Services Hungary), where he held several leadership positions. He started the Romanian and Bulgarian subsidiaries of T-Systems, oversaw IT business services, and led the company’s emergency and crisis management processes. As vice president for the growth portfolio, he has been responsible for public

mixed-use Szervita Square Building As of February, Erik Slooten (who in downtown Budapest. won the BBJ Expat CEO of the Year Horizon managing partner Balázs Award in 2021) is responsible for the Czár welcomed the new director. changes to service capabilities and “During the past five years, Máté quality management processes, as well Bihari has been an asset to Horizon as the development of automation as Development and proved his skills the global leader for delivery quality and dedication to us. On behalf of the and transformation at T-Systems entire board, I wish him continued International Cloud Services. success in directing the fields of both Under Slooten’s leadership, the commercial leasing and residential number of employees working at sales,” he said. DT-ITS grew to 5,000. He was also in charge of the successful rebranding of the company as Deutsche Telekom IT Solutions as a part of an international restructuring project and launched the company’s educational program supporting equal opportunities. “I am handing over the position to an experienced and mature leader who has already been efficiently supporting our dynamic growth and transformation in his former positions. László Kónya is not only a great colleague but an excellent professional and team player; I am confident that he will be the best person to represent DT-ITS on the international level. Also, I am very happy that we can continue working together in our new roles,” Slooten noted.

Leasing and Sales Director Appointed at Horizon Development

Erik Slooten

Máté Bihari has been appointed to the position of leasing and sales director at property development company Horizon Development. Having graduated with a degree in Economics from the Budapest Business School, he started his career in real estate with a residential focus as a consultant at the GDN Real Estate Network. After joining Horizon Development in 2017, he played an important role in leasing the commercial properties of Váci 1, Promenade Gardens, Szervita Square Building, Park Atrium, and Eiffel Palace. From 2020, he was also in charge of selling the luxury residences of the premium

Máté Bihari Bihari added, “I am committed to supporting Horizon Development’s property projects and look forward to the new magnitude of responsibilities. I am confident that my 15 years as a professional athlete have equipped me with the necessary integrity and perseverance, while my former immersion in the field has prepared me for the professional challenges that come with my new role.”

FOOD AT ITS BEST 2021 Please forward your subscription request to: circulation@bbj.hu, or order your copy in the webshop at budapestbusinessjournal.com

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Business

M&A Market in Hungary Expands Almost 50% in 2021

The value of mergers and acquisitions in Hungary jumped by almost 50% to USD 1.7 billion (HUF 521 bln) last year compared to 2020, according to the latest annual global study by law firm Allen & Overy. KESTER EDDY

However, this comprised little more than 5% of the USD 32 billion total value of M&A market in the Central and East European (CEE) region in what Balázs Sahin-Tóth, counsel at Allen & Overy Kádár in Budapest termed “the M&A jamboree of 2021.” Presenting the report via an online press conference on Feb. 11, SahinTóth said the CEE region (stretching from the Baltics to Albania, but not including Russia) registered 1,343 deals in 2021, with technology, financial services, and infrastructure/ energy “especially prominent.” Within this, the number of M&A transactions in Hungary totaled some 100 last year, led by deals in the media and entertainment, materials and real estate sectors. The largest single Hungarian transaction was IT company 4iG’s acquisition of Digi from Romania’s RCSRDS consortium, worth USD 715 million. The Budapest Business Journal “sat down” virtually with Sahin-Tóth to discuss points made in the press conference and on the law firm’s press release in greater depth. BBJ: In your press release, you wrote that “Allen & Overy’s understanding of the Hungarian and CEE market is demonstrated by its advisory work on some of the major regional transactions of the last year. The firm advised Aegon N.V on the EUR 830 million (USD 950.4 mln) sale of its insurance, pension and asset management business in Hungary, Poland, Romania and Turkey to Vienna Insurance Group AG Wiener Versicherung Gruppe.” The Hungary bit of this deal was blocked by the government. I assume this has still not gone through?

Balázs Sahin-Tóth, counsel at Allen & Overy Kádár. Balázs Sahin-Tóth: The Aegon deal was blocked and is being litigated. However, a political solution is likely as the government agreed with VIG that the state would acquire 45% in Aegon Hungary and Union insurance companies. It is assumed that, as part of that deal, the Minister of Interiors will let the Aegon sale go through. [Editorial note: in the meantime, the state has indeed acquired the above mentioned 45% stake] BBJ: Your firm advised DoorDash on the USD 8 bln acquisition of Wolt Enterprises, the Helsinki-based international technology company offering services in the food delivery, grocery and retail sectors in more than 22 jurisdictions worldwide. Has the value of the Hungarian subsidiary ever been made public? BS-T: I do not think so. BBJ: A&O also advised W.A.G Payment Solutions on its acquisition of 100% of WebEye Telematics, a leading fleet management solution provider in CEE, from the founders and management. To check: WebEye Telematics is a Hungarian-owned and Hungarianregistered company? Can you reveal the value of this deal? BS-T: Yes, WebEye Telematics is Hungarian-owned and registered. I cannot comment on the value. BBJ. Your report also “considers among others the requirements for AI due diligence and what technology investors are doing to retain and

incentivize key personnel in their acquisitions.” Can you offer some details here? For example, what are the requirements for AI due diligence? BS-T: It depends on the type of deal. For example, due diligence over the technical conditions for operating hardware (e.g., data centers) is key. Also, due diligence into software rights, including copyright, and which rights employees hold are material considerations. To incentivize key staff, share schemes are put in place to grant share or monetary awards to well-performing staff. Earn-outs and deferred consideration are being used to provide a reward for good

performance of the target company after completion. Shareholders’ agreements between the investor and management contain drag and tag [designed to protect both majority and minority shareholders] and other rights rewarding good performers and punishing bad leavers. BBJ: Hungarian M&A activity may have risen by nearly 50% compared to 2020, but it’s still relatively small within CEE. Legal uncertainty in Hungary has been mentioned before as an issue here, undermining evaluations of companies and acting as a disincentive to potential investors, especially those not already in Hungary. Has legal certainty improved or been further eroded in 2021? BS-T: Legal certainty was eroded as a result of uncertainty surrounding FDI approvals. BBJ: We’ve also had, for example, changes to the law on foodstuffs, which was passed just before Christmas, which means large retailers (essentially the large foreign-owned retail chains only) will have to hand over unsold goods gratis two days before the end of their shelf-life date to a new, state-owned entity for onward distribution. In another example, the prices of petrol and diesel at service stations have been capped at below cost price, a measure which, after being extended beyond the initial threemonth period, has reportedly led to the closure of some small service stations companies. What, in your opinion, is the effect of such legal changes on investors’ confidence in the legal certainty of the Hungarian market? BS-T: Government measures that run counter to business logic deter investors if they see that the government might force them to operate by producing losses. Generally, any state intervention in the free market might keep investors away, whilst such intervention may benefit consumers. BBJ: You said that, as a conservative estimate, you expect the Hungarian M&A market to grow by at least 20% this year. Which sectors do you expect will lead this growth? BS-T: I would put my bet on technology sectors, anything to do with digitalization, plus healthcare, retail and financial services.

2021 a ‘Scorching Year’ for Global M&A, Includes CEE ‘Mega Deals’ Allen & Overy’s Global M&A Insights report deems 2021 a “scorching year” in M&A worldwide, with the value of global transactions “surging to a record high” of more than USD 5.8 trillion. That represents an increase of 64% on 2020, the first year of the pandemic, and is 48% higher than 2018, the previous highest year on record. Globally, technology-sector deals were the main drivers for this growth, with M&A values in the tech sector alone exceeding USD 1 tln in 2021 for the first time, representing a 71% increase on 2020.

As noted, within these heady sums, CEE deals totaled just over USD 32.1 billion in value. These included what O&A termed the “mega-deals” such as [Czech anti-virus provider] Avast plc’s USD 8.35 bln merger with NortonLifeLock Inc., the USD 2.9 bln takeover of Aviva Poland by Allianz, and the USD 2.3 bln acquisition of the Czech Republic’s Ceska Telekomunikacni Infrastruktura (Cetin) by Singapore’s GIC. Such deals “demonstrate that the region has assets and opportunities large enough to attract multi-billion deals and leading international acquirers,” Balázs Sahin-Tóth argues.

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Company Bosch Strengthening Electromobility R&D, Production in Hungary German engineering giant Bosch Group said on Feb. 17 it would strengthen its electromobility R&D and production activities in Hungary, according to autopro.hu. “Our goal is to make Budapest a center in Central and Eastern Europe for the development of electric and hybrid drivetrains as well as other technical solutions,” Bosch’s head in Hungary, István Szászi, said. Bosch already produces electric drivetrains and e-mobility parts at three plants in Hungary. It employs about 3,000 people in Budapest working on future automotive industry technologies, including several hundred engineers tasked with electromobility developments. The Hungarian business expects a new campus it is building to undertake R&D in electromobility and autonomous vehicles to open in the second half of 2022. The engineering

News

giant pointed out its “active cooperation” with academia in Hungary and said a new production process and a part that represents “a big advance” in the creation of future vehicles was developed in a joint project between Robert Bosch Energy and Body Systems, based in Miskolc (180 km northeast of Budapest), and the University of Miskolc.

Kometa Raises HUF 12 bln From BGS Bond Issue Italian-owned Hungarian meat company Kometa 99 raised HUF 12 billion from the sale of a 10-year green bond issued under the Bond Funding for Growth Scheme (BGS) of the National Bank of Hungary (MNB), according to auction data posted on the bourse’s website. The company’s first bond issue attracted significant investor interest, partly because the Kaposvár (185 km southwest of Budapest) company is the first pig processor in Europe, and just the second worldwide, to receive a green rating due

to its commitment to environmental awareness. Bids came to HUF 14.5 bln. The average yield was 5.02%, 27 basis points over mid-swaps. Kometa 99 told MTI it would use the proceeds from the issue for investments that will double capacity at its base in Kaposvár (185 km southwest of Budapest) and create “several hundred” jobs. Managing director Giacomo Pedranzini said the investments would ensure all production waste is recycled within three years while cutting the company’s CO2 emissions by 30% within five years.

profit reached HUF 81.5 bln, compared to a HUF 14.3 bln loss in the base period. Upstream revenue climbed 82% to HUF 223.2 bln and operating profit reached HUF 79.4 bln, improving from a HUF 24.3 bln loss in the same period a year earlier. Turnover of MOL’s consumer services division rose 50% to HUF 537.1 bln, but the business’s operating profit slipped 13% to HUF 24.3 bln.

MOL Income up to HUF 110.3 bln

Chinese automotive industry supplier Baolong will build a HUF 5 billion plant to make parts for electric and smart vehicles in Szigetszentmiklós (20 km south of Budapest), Minister of Foreign Affairs and Trade Péter Szijjártó said on Feb. 17, according to origo.hu. The state is contributing HUF 1.5 bln to support the investment, which will add 35 positions to a headcount of 180 at present, Szijjártó said. Baolong is bringing its European base for electromobility strategy to Hungary, he said. Chinese investments in Hungary have now exceeded USD 5 bln, Szijjártó said.

Hungarian oil and gas company MOL’s fourth-quarter net income rose to HUF 110.3 billion from HUF 14.9 bln in the base period, lifted by wider refining margins and higher oil and gas prices, an earnings report released on the website of the Budapest Stock Exchange early on Feb. 18 showed. MOL’s revenue climbed 78% to HUF 1.78 trillion. Cost of raw materials and consumables used rose 87% to HUF 1.343 bln, but total operating expenses increased just 58% to HUF 1.618 tln, lifting operating profit to HUF 161.8 bln. MOL’s downstream revenue rose 86% to HUF 1.566 tln and the operating

HUF 70 bln Spent at Ferenc Liszt in Past 3 Years Budapest Airport says it has spent more than HUF 70 billion on the development of Ferenc Liszt International Airport in the last three years, and investments will continue in the coming years with the reopening of Terminal 1 and the construction of the new Terminal 3, according to portfolio.hu. In its

announcement, the airport operator recalled that a new passenger pier with 14 delivery gates was built in the last three years, covering 11,500 sqm and with 2,500 seats. Air cargo base BUD Cargo City has also been completed, and in 2021 the airport handled its most significant volume of cargo to date,

exceeding 183,000 tons. A third considerable investment saw the infrastructure expanded with a new baggage sorting hall, extending the belt system to nearly 3 km. The airport said that access to terminal buildings has also become safer and faster with a new dual-lane so-called turbo roundabout.

Baolong Building HUF 5 bln Plant in Szigetszentmiklós

Jysk Recruiting for Regional Distribution Center Danish home furnishings retailer Jysk is recruiting to fill 300 positions at a new EUR 200 million regional distribution in Ecser, 25 km east of central Budapest. The 143,000 sqm distribution center, which will serve shops in Hungary, as well as Bosnia and Herzegovina, Croatia, the Czech Republic, Serbia, Slovakia and Slovenia, will start operating from midMarch, Jysk told state news agency MTI. Headcount there could rise as high as 500 as turnover grows, it added. Jysk employs around 800 people at 90 shops in Hungary. It is adding four more stores in its business year, ending on Aug. 31, 2022. Revenue of Jysk’s local unit rose 11% to HUF 57 billion in the business year that ended on Aug. 31, 2021.

Orbán Meets Vodafone Group CEO

Photo shows the Plaza Premium Group’s 40-seat, 107-square-meter Plaza Premium Lounge, the eighth and most recent lounge to open in Budapest Airport’s SkyCourt. Photo courtesy of bud.hu

Prime Minister Viktor Orbán met with Vodafone Group CEO Nick Read in his office in Budapest on Feb. 22, according to napi.hu [Daily]. The PM’s press chief Bertalan Havasi said that the sides discussed Hungary’s digital development and boosting competitiveness. He added that they also touched on Vodafone’s plans and established that these serve to advance Hungary’s economy and society. Other topics the sides spoke about were digitalization among Hungarian SMEs, investments in private 5G networks supporting industrial development, and establishing smart cities that serve sustainability, Havasi said. He added that the parties acknowledged that Vodafone has supported Hungary’s development and harmonized its business goals with the country’s interests over the past 22 years. Vodafone Hungary has more than 3.8 million subscribers. It has created about 9,000 jobs in Hungary.

Opening a business doesn’t make you a businessman.

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Business

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Budapest Business Journal | February 25 – March 10, 2022

Sharity and Synlab Join Forces on Impact Marketing The Sharity mobile app, a Hungarian Top100 innovation that seeks to change the culture of giving by connecting people and good causes to promote transparency and trust, has announced a significant new partnership with the country’s largest private healthcare provider, Synlab Hungary Kft. ROBIN MARSHALL

Richárd Lévai (left), managing director of Synlab Hungary Kft. and Farkas Bársony, CEO of Sharity, sign their partnership agreement. The CEO, and Sharity’s CSR Ambassador, is probably somewhat better known to readers of the Budapest Business Journal. Farkas Bársony is a former president of the American Chamber of Commerce in Hungary and was previously a partner at PwC Hungary and prior to that managing director of GE Hungary. “I am very proud that our team finally got to this point after years of investing our time, energy and money into this innovative idea and solution,” Bársony tells the BBJ. “We are even more confident today that we can start reforming the culture of giving by creating this new standard in transparency and providing opportunities to donate in simple, innovative ways,” he explains.

Sharity says it looks to motivate inactive people, those who do not have the means or might be suspicious of good causes, to support charities. The app provides an opportunity for people to donate through the traditional means of a credit card. However, what marks it out is that it also offers an opportunity for people to make a “donation” without spending any money at all, simply by watching an ad from partners such as Synlab. As Sharity’s English-language YouTube video puts it, the app connects good causes with those willing to help. Export the Idea “It does not matter if you are only a “I have received great feedback from time millionaire,” the video explains. fellow CEOs and marketing, CSR, “Besides financial support, you can and HR leaders who are open to new, also do good by watching an ad. Every innovative ideas and ready to move view counts. This way, you can donate away from the traditional thinking and several times a day.” approaches. There is already some The app provides users with a quarterly international interest too; therefore, we summary of how donations for each are looking to export the idea.” charity campaign were used. The content While variations of the model of for this is uploaded to the app by the organizations and is analyzed by software support through watching ads are not unknown globally, Sharity says this is developed explicitly for the purpose. the first such mobile app in Hungary, The team of contracted ambassadors and the company is the pioneer of what behind Sharity includes former Olympic it calls “impact marketing,” where the gymnast, journalist and presenter aim is to reach an immediate positive Zsuzsa Csisztu, Paralympic swimmers social impact with marketing or Fanni Illés and Zsanett Adámi, actor advertising activities. András Csonka, broadcaster and TV “We are not aware of any other solutions presenter Levente Harsányi, reporter and or applications in the world with the TV presenter Éva Barabás and Jázmin transparency standards that are built Hollósi, a star of TikTok and YouTube into Sharity. We do not deduct any (and a student at MOME, the Moholycommission from donations made with the Nagy University of Art and Design). help of the platform. All known websites The chief ambassador and PR director raising funds for good causes work is Antónia Bálint (Miss Hungary ’91 on a commission basis,” Bársony says. and a former TV presenter).

we just decided at one point, we should do something about it,” he explains. He estimates the company founders have spent approximately HUF 100 million of their own money to develop the app with the help of a Big 4 firm. “The software and the algorithms built in are very complex, but we could not compromise because of the transparency standards we are introducing. Our business model is based on the advertising fees paid by the companies as we do not deduct anything from the donations.” Bársony describes the operation as “Profit for the interest of non-profit. There should not be a conflict here. We found a business model based on impact marketing in which we make the companies more interested in charity activities in the most innovative ways.” Although he says there is a five-year business plan with concrete numbers, for now, the focus is on populating Sharity with charity organizations that agree to its transparency standards, growing the number of users with the help of the ambassadors and marketing activities, and seeking cooperating partners like Synlab. Although the app only recently launched, Bársony says it already features 25-plus organizations with charity campaigns, with more being added day by day. He puts the number of users at more than 2,000 currently and growing. "Sharity is now working on a wallet function, where users can collect a “charity margin” from invoices issued by companies who build a charity element Do Something About It into their prices. Users can collect this “I became an ambassador in a charity “charity margin” from their both online some years ago where we organize sports and off-line puchases. They will be able events for kids recovering from serious to donate this to any of the campaigns cancer diseases to help them reintegrate from this wallet.” and was faced with these difficulties The app is available for both iPhones again. Along with some of my friends, and Android mobiles.

Sharity ads up the viewing time of “donors” and then forwards the amount of support offered by Synlab and other advertisers to the non-profit organization selected by the viewer. The company says registered foundations and associations can significantly increase their revenue. “As a listed company, Synlab considers it extremely important to organize its social programs through transparent systems, which is why we chose Sharity,” said Richárd Lévai, managing director of Synlab Hungary Kft. at the announcement of the link-up. He added that, by enlisting the help of Sharity, Synlab had effectively delegated the right to decide which social initiatives are worthy of significant support to the public and its employees. Sharity does not only offer its users a “feel good” factor, however. They can also get discounts on services. Synlab, for example, offers coupons for “Good to Live” packages that grant a free general health check to promote and raise awareness of prevention programs. Bársony says he has been working on Sharity (the name is a portmanteau of charity and sharing and will soon change to Sharity Impact) for approximately five years. He says he was responsible for significant donation activities in his previous leadership roles and saw the problems caused by a lack of transparency and trust. It was also difficult for smaller charity organizations to access big companies.

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Budapest Business Journal | February 25 – March 10, 2022

Schneider Electric Encouraging Talented French Trainees Schneider Electric says it is hosting the highest number of Volontariat International en Entreprise (V.I.E.) trainees among French-owned companies operating in Hungary, through a scholarship scheme run by the French government. BBJ STAFF

Under the V.I.E. initiative, 24 young people at Schneider have the opportunity to learn, develop and gain valuable practical experience. This year, participants in the program will be able to take part in a competition, for which Schneider Electric has offered an additional prize. Globally, nearly 7,500 young people are taking part in the V.I.E. program, a government scheme that offers young people the opportunity to work in local branches of Frenchheadquartered companies in 118 countries around the world. The trainees work abroad for between six and 24 months. Participants in the program receive a monthly grant determined by France. The largest contingent of V.I.E. trainees in Hungary are the 24 currently working at Schneider Electric’s domestic subsidiaries. “In our company, inclusion and the support and encouragement of young talent is an important part of our corporate culture. In line with this, it is natural for us to participate in the V.I.E. program and I am very proud that so many people have chosen us,” says Katalin Ivanov, the country HR director at Schneider Electric in Hungary.

“I am convinced that the young French people coming to Hungary will gain a lot of valuable professional and human experience, as will their colleagues in Hungary. The importance we attach to supporting and teaching the next generation is also demonstrated by the fact that we have close cooperation with several universities in Hungary,” Ivanov adds. Most of the young French people working for Schneider in Hungary come for a period of 12-18 months and typically work in procurement or supply chain areas.

Competition Launched

The Committee of Foreign Trade Counsellors of France in Hungary, the

Simon Landy, one of Schneider Electric’s 24 V.I.E. French trainees, works as an HR Business partner Economic Department of the French Embassy in Hungary and the Hungarian-French Chamber of Commerce and Industry have launched a competition for participants in the V.I.E. program in Hungary. Applications have until March 1 to submit an eight page essay introducing

Business | 11

the trainee and the company employs them, and describing the achievements and progress made by the trainee during the international work placement. The applications will be assessed by a professional jury, with the five best candidates having the opportunity to present themselves in person to the jury. As in previous years, the awards will be presented at an event for the French-Hungarian business community at the French Residence in Budapest.

“I am convinced that the young French people coming to Hungary will gain a lot of valuable professional and human experience, as will their colleagues in Hungary. The importance we attach to supporting and teaching the next generation is also demonstrated by the fact that we have close cooperation with several universities in Hungary.” The 2022 competition will award five prizes, including two offered by Schneider Electric.

Schneider Electric in Hungary Schneider Electric has been present in Hungary since 1991. The company, which employs around 2,000 people here. It has four factories, two in Zalaegerszeg (227 km southwest of Budapest by road), one in Gyöngyös (80 km northeast) and one in Kunszentmiklós (70 km south) and a regional logistics center in Szigetszentmiklós (on the southern

outskirts of the capital) serving more than 20 countries. In addition, the business, sales and customer service center and the European headquarters of the Energy and Sustainability Services division are located in Budapest. The company's global finance and procurement services center is also located in the Hungarian capital.

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Budapest Business Journal | February 25 – March 10, 2022

Inflation and Democracy: Warnings From History Photo by SIRSOL / Shutterstock.com

According to macro analyst Octavio Costa, the United States (and, for that matter, most of the world) are facing three macro extremes simultaneously: The debt problem of the post-World War II era of the 1940s; the highly inflationary environment of the 1970s; and Bubble equity valuations, as in the 1990s, before the dotcom bubble. LES NEMETHY

Each of these problems would be formidable in isolation. That we are facing them simultaneously significantly limits the room for maneuver for central bankers and economic planners. Ray Dalio, a macro investor and founder of a leading U.S. hedge fund Bridgewater Associates, believes we are in the final phases of an 80-year economic down cycle, the aforementioned trifecta being fairly typical symptoms. The stresses induced by these difficulties lead to polarization and civil strife. He believes there is a

30% chance

The Corporate Finance Column

of a civil war type event in the United States over the next five years as the down cycle reaches new lows. In a recent interview, Charlie Munger, a close associate of investor Warren Buffet stated that inflation is the

graveyard of democracies, contributing to the collapse of multiple countries and civilizations, from the Roman Empire to the Weimar Republic. Inflation eats away at savings, reduces purchasing power, leading to dissatisfaction and civil strife. Munger’s scenario is that the U.S. dollar will inflate to become effectively worthless within 100 years, which may threaten the very foundations of democracy in the States and elsewhere. My own view is that given the current macro situation, the dilution of the U.S. dollar may be much faster.

Increased Sensitivity

The currency has effectively lost 97% of its value since “temporarily” coming off the gold standard in 1971. The U.S. Fed is already widely regarded as responding late to the threat of inflation, perhaps even losing control of the situation, yet is prevented from raising interest rates dramatically because of uncertainties surrounding Ukraine, COVID, and global debt levels (at 360% of Global GDP), that increases sensitivity to interest rate hikes. Labor markets are tight, and inflation is becoming embedded in expectations, meaning that it will be stubborn to combat, possibly even with a tendency to accelerate. Given the background, what are the options for the Fed? And what are the options for investors?

The Fed has no good options. The trifecta, caused by years of poor fiscal and monetary governance, has diminished room for maneuver. If the Fed were to apply the monetary brakes (in other words, dramatically raise interest rates) in a fragile and decelerating economy, with record debt levels and global uncertainties, a major recession or depression would be the result. Taking inflation back to

2% would

require raising interest rates to levels that would completely throttle the economy. In today’s circumstances, just preventing an acceleration of inflation would already be a not bad result. The inflation would have a monumental societal cost on retirees and savers in general but perhaps falls short of Weimar inflation levels that destroyed the preWorld War II democracy. Allowing negative real interest rates for five to seven years would have the enormous benefit of allowing the world to inflate away its debt (assuming profligate spending is stopped), as in the late 1940s. As for investors, I believe gold to be the best hedge. Bitcoin is highly correlated to the Nasdaq, and inversely to the volatility or risk index (VIX); it does not provide the type of countercyclical hedge offered by gold.

Follow the Gold

It is not an accident that central banks the world over hold vast amounts of gold. The Deutsche Bundesbank, the German central bank, has recently stated that it would not rule out the revaluation of gold to deal with high debt levels. Other than gold, resource and mining shares also provide a hedge. Global resource companies (excluding energy) represent a mere 2.5% of the worldwide value of all publicly listed equities. As the world wakes up to the threat of inflation and seeks refuge in tangibles, there will be a rotation into commodities and mining shares. In my opinion, this process has barely begun. There is an increasing sense that, as we reach the bottom of this

80-year cycle,

there will be increasing turbulence that will result in an economic reset. The head of the IMF has warned of such. It is too early to predict what will happen in the reset, but it could involve the U.S. dollar losing its currency reserve status, changes in the Bretton Wood organizations (the International Monetary Fund, the World Bank, and so on) and a more pivotal role for gold, as fiat currencies strive to regain credibility. Above all, moving into the first more positive phase of the next debt cycle will require excellence in leadership. Disclaimer: This article is for educational purposes only. It should not be construed as investment advice. Investors should perform their own due diligence and consult their financial advisors.

Les Nemethy is CEO of Euro-Phoenix Financial Advisers Ltd. (www.europhoenix.com), a Central European corporate finance firm. He is a former World Banker, author of Business Exit Planning (www.businessexitplanningbook. com), and a previous president of the American Chamber of Commerce in Hungary.

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Budapest Business Journal | February 25 – March 10, 2022

Special Report Taxes & Accountancy

Károly Radnai, the managing partner of Andersen in Hungary, and András Szalai, CEO and managing partner of Process Solutions, are two of the bestknown tax and accountancy experts in Hungary. The Budapest Business Journal asked them to give their assessment of the market situation in the country. ROBIN MARSHALL

Photo by Peshkova / Shutterstock.com

Market Talk: ‘Radically Different’ tax System Making Good Digital Progress

BBJ: What are the significant tax and accountancy changes in 2022? Károly Radnai: There have been very few changes from a regulation or procedural point of view, at least compared to the average of earlier periods, but there have been very significant tax cuts implemented on employers’ tax burdens in particular. Also, a unique, not necessarily tax change is the one-off refund of the personal income tax liability of individuals paid in 2021. What is changing, however, is the concept of auditing and collecting taxes by the authorities. More and more

emphasis is placed on digitalization and the experience is quite positive. András Szalai: We believe that the major change is the further reduction of employer’s charges. In addition, there are various other changes but we do not consider these to be significant. BBJ: Does Hungary follow any “unconventional” tax and accountancy policies, or is it broadly in line with global market norms? KR: The tax system of Hungary is radically different than most other members of the European Union; there

is much more emphasis on indirect or consumption taxation and less on income taxation, corporate income tax in particular. This latter may change as a result of the global minimum tax initiative proposed by the OECD and the EU and to be enacted as of 2023. ASz: In general, there is a high VAT and low corporate income tax rate compared to other EU countries. There is good progress with online data submission: almost all issued invoices are sent to the tax authority in real-time. On ad-hoc measures: There has been a one-time personal income tax refund in 2022 to parents (at quite a material amount). Due to COVID, there were temporary changes in tax legislation. It was not fully clear, or at least not so straightforward, who was eligible to use certain allowances and donations. BBJ: What Hungarian tax or accountancy regulations do you think most need changing? KR: There are still a very significant number of tax types. There are almost 50 different taxes in effect, although 90% of the tax revenues are derived from just eight taxes, so the rest are relatively insignificant. However, they still cause a lot of administrative burdens, both for the authorities and the taxpayers. So, the number of tax types should be reduced drastically and kept to only 20 to 25 at the maximum. ASz: Predictability of tax legislation would be welcome, with more time to introduce tax changes. Although Hungarian law intends to provide exact instructions (not like the International Financial Reporting Standards, which tends to provide guidance), we still Continued on page 14 ▶▶▶

VGD Hungary – Your strategic partner

Gyöngyi Ferencz Audit, M&A

Erik Thurn Audit, Accounting

Andrea Kuntner Tax, Payroll

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Budapest Business Journal | February 25 – March 10, 2022

Continued from page 13 ▶▶▶

INSIDE VIEW

Cross-border Teleworking and Permanent Establishment Risks Dr. Bálint Zsoldos

Head of Tax KCG Partners Law Firm

If there is something we learned from the COVID pandemic, it is that many jobs that were previously considered as requiring a fixed location can be (and are) performed remotely in the long term. Employees and employers are adjusting to this new reality and tax might be a critical factor in long-term solutions.

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

Background

to work from home after the cessation of the public health measures imposed or recommended by the government? By its own definition, the OECD guidance is relevant only to circumstances arising during the COVID-19 pandemic when public health measures are in effect and maintains that each jurisdiction may adopt its own guidance to provide tax certainty to its taxpayers. The Hungarian tax authority has now confirmed that even in the case of longterm or permanent cross-border home office scenarios, if and when the pandemic is already over, working from home does not necessarily trigger a permanent establishment for the employer. An important distinction is whether the company requires home working or whether it only offers the possibility to work from home while maintaining office space for its employees in another country. “Voluntary” home office by the employee should not be considered a PE for the employer and, therefore, should not trigger additional tax and compliance burdens. The Hungarian tax authority also stressed, in accordance with the OECD guidance, that the issue of whether a PE exists is a test based on all the relevant facts and circumstances on a case-by-case basis. Hungary has an extensive network of double taxation treaties with more than 80 countries based on the OECD Model Convention. The Hungarian tax office also established that, despite the changes to the Model Convention in 2017, there are no significant differences between the rules applicable to treaty and non-treaty states from a Hungarian PE point of view. As of January 2021, two new elements have been added to the concept of establishment in the Hungarian Corporate Income Tax of International Trade provisions, with the purpose to approximate the concepts of establishment in the Model Convention (the existing conventions) and the Hungarian CIT rules (for non-treaty states).

With today’s modern technological solutions (internet, smart devices, conferencing platforms, cloud-based collaboration, file sharing, and so on), the possibility of employees not only working in their employer’s office has been becoming more common, even before the global pandemic. As a result of recurring waves of COVID19 and the lockdowns and travel restrictions, teleworking has, in many sectors, become standard practice. The corresponding rules (tax, social security, labor law) for these arrangements were not designed with such extraordinary circumstances in mind. The OECD realized early that companies rightly might be concerned that employees dislocated to jurisdictions other than the one in which they regularly work could create a “permanent establishment” (PE) in those jurisdictions, triggering new filing requirements and tax obligations for those businesses in various additional countries. The OECD issued guidance back in April 2020, updated in January 2021, Summary stating that a place must have a certain The Hungarian tax authority confirmed degree of permanency and be at the a rather promising approach in its disposal of an enterprise for it to be latest non-binding ruling regarding the considered a fixed place of business interpretation of PE implications, or the through which the business of that enterprise is wholly or partly carried on. lack thereof, of cross-border home office setups. This might allow employees and It also implies that a temporary change employers to find mutually beneficial longdue to extraordinary circumstances term home office arrangements, based (such as the pandemic) should not on the employee’s request, without the create a PE for the business/employer, additional headache of PE risks in Hungary. either because such activity lacks a sufficient degree of permanency or continuity or because the home office is not at the disposal of the enterprise.

New Normal?

But what happens if an individual (for example, an expat realizing the benefits of remote working from their home country near to their family) continues

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think that, in some instances, these instructions are difficult to follow in a straightforward manner. BBJ: We have seen pre-election tax rebates once again this year. Beyond the obvious potential for a change in government, does a general election have an effect on your business? KR: In the short term, the change in government would not cause either a positive or negative impact. However, if there was not a stable government after the election, or if the new government started to invent unconventional and disrupting tax rules, it would have a rather negative effect. It is a common stereotype that tax advisors love tax rule changes, but this is not true; we do not like them as they create a lot of uncertainties that can have a business risk factor also on our business and products already developed (and especially tax technology products). ASz: No, not in general, although a change in economic growth and the interest of foreign investment towards Hungary may have an indirect impact. BBJ: How is digitization continuing to shape the tax and accountancy business? KR: Hungary has made massive progress in this regard and we expect rather a consolidation and fine-

tuning than further drastic changes. There was a big plan for automating VAT filings that finally was dropped by the government, most likely due to IT difficulties and I am not sure

“There are almost 50 different taxes in effect, although 90% of the tax revenues are derived from just eight taxes, so the rest are relatively insignificant. However, they still cause a lot of administrative burdens, both for the authorities and the taxpayers. So, the number of tax types should be reduced drastically and kept to only 20 to 25 at the maximum.” if that plan will ever come back to life. The focus will most likely shift to improving tax audit techniques using the data the tax authority collects every day. The tax advisory market has also been changing and tax technology is becoming a more influential part of our business. ASz: Going digital from paperbased processes has been a must in recent years. This is partly driven by the pandemic to enable remote work and partly by client and employee expectations to streamline operations. Even if already digital, a process may still need to be improved by eliminating manual tasks and introducing automation to the extent possible. Certain clients and state authorities are still progressing with digitization, so it will be a joint effort from all the players of the industry to continue this journey. See also our response about the changing daily tasks of accountants and the need for the education system to follow the change below.

Károly Radnai, the managing partner of Andersen in Hungary, has more than 20 years of experience in various fields of taxation and is chairman of the taxation committee of the American Chamber of Commerce in Hungary. He started his professional career at Arthur Andersen in 1997, then joined EY in 2002 where he worked as a senior manager and led the division of professionals specialized in corporate income tax until he left the firm in 2009 to set up OrienTax. It took on the Andresen brand name in 2020.

BBJ: Is your profession still appealing to Gen Z candidates (and beyond)? Do you have any concerns about finding suitably skilled talents to power your business? KR: Honestly, I do not really get this concern about Generation Z. The fresh graduates applying for jobs with us have pretty much the same skills as those five or 10 years ago. We hire primarily legal and financial graduates (50-50%); possibly other industries have different experiences. ASz: Yes, we believe so. We are running internship programs and recruiting fresh graduates. The general labor market situation impacts accounting businesses as well.

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Budapest Business Journal | February 25 – March 10, 2022

András Szalai, CEO and managing partner of Process Solutions, graduated from a Spanish-Hungarian bilingual school. He studied economics, accounting and business valuation at university, and started his professional career as an assistant at Process Solutions in 2000. Szalai has been working there ever since, and is now one the partners managing the Hungarian office.

In order to remain competitive, we have to continuously improve our career proposition to the talent we work with, just as we must do the same with our service offering to our clients.

Photo by Peshkova / Shutterstock.com

BBJ: Looking toward the mid- to longer-term, how would you change the education system to ensure it is fit for purpose for your needs? KR: A lot should be improved already in the basic education system, especially in terms of language and digital skills. Not only for the pupils but also for the teachers. But the most critical issue is the lack of teachers. This profession

ASz: More practical elements are essential. Digitalization requires a more adaptive higher education, with a strong focus on practice and technology. In other words, more efficient teaching of accounting systems, coupled with practical development of “business thinking” through real-life case studies. The other crucial issue is teaching the skill-level use of international accounting standards such as IFRS. Partly because globalization requires using uniform methodologies and systems, and, secondly, because several financial SSCs have been set up in Hungary. Students need to acquire up-to-date knowledge that will make it easy for them to fit into international business life. In addition, this helps the faster development of domestic companies as well as their expansion outside of Hungary. The fresh financing and accounting graduates no longer perform precisely the same tasks as they did even two or three years ago. The daily routine of an accountant is now not limited to just recording data, but it increasingly involves tracking automated processes and analyzing their results. In addition, it is essential to significantly increase the number of state-funded students in high economic education, as this would help the financial sector and would be a long-term investment into Hungarian economic growth and competitiveness. Editor’s note: A number of other firms were approached by the Budapest Business Journal to contribute to this piece but were unable to meet our tight deadline.

INSIDE VIEW

Precondition of Sustainable Automation is Simplification Péter Kóczé Partner

Grant Thornton Digital

The almost four-year history of Real-time Invoice Reporting in Hungary shows that the potential for automating financial processes is enormous, but the side effects of not introducing digitalization properly can be significant. Aside from the fanfare of success stories from the Hungarian Tax and Customs Administration (NAV), little has been said about the difficulties that have challenged some compliance teams. The striking decrease in the Hungarian VAT gap, impressive by EU standards, can be linked to the introduction of real-time invoice data reporting in 2018. More than one million taxpayers have been connected to NAV’s system. Their hundreds of millions of invoices each year are also entered into the tax authority’s risk analysis system the moment they are issued. The drastic reduction in the number of tax audits requiring personal presence is also due to the positive impact of digitization by the tax authorities. If we look at the changes from NAV’s point of view, the RTIR obligation is a real success story: it has led to increased efficiency and reduced administrative burdens, as well as more efficient operations. On the taxpayer’s side, however, the picture is not so positive. There is undoubtedly a group of mostly smaller operators, where the introduction of mandatory electronic invoice data reporting has not had a lasting negative impact on operations, apart from some initial inconveniences and the natural learning curve. However, Grant Thornton’s experience is that there are a significant number of companies where the new obligation can only be met in the long term with increased costs and administrative burdens. The most affected companies use their own (or legacy) ERP systems for invoicing, which were not developed with the Hungarian legal environment in mind. Companies have only been able to ensure compliance

by integrating additional software, further increasing the complexity and thereby also the possibility for errors.

Negatively Affected

While potential problems with invoices issued can be detected and reported immediately by financial departments or customers, the responsibility for detecting and dealing with failures in real-time invoice reporting would, in many cases, fall on the IT department, which, in addition to being disinterested, is also negatively affected by a lack of invoicing knowledge. At the same time, NAV devotes considerable resources to detecting incorrect or missing data, contacting the companies concerned and launching compliance investigations, as the accuracy of invoice data reports is essential for the good operation of its systems. The market has also recognized this need, and some solutions to address the problem have started to emerge. Consulting firms such as Grant Thornton have developed automated or semiautomated online invoice audit solutions to support software-based screening and management of invoice reporting issues. Grant Thornton has been involved in several projects aimed at the mass remedial submission of missing data or correcting erroneous invoice data to NAV. Technology can be an effective way to combat errors made by another technology in that it can be used to manage the additional administrative burden caused by mistakes, but it can also lead to further costs. It may be worthwhile completely rethinking existing processes and technologies used to reduce costs, in addition to administrative burdens, in a sustainable way. One way to achieve this is moving all accounts receivable processes to the digital space provided by NAV. The existing framework has allowed companies to fulfill their invoicing and invoice reporting obligations with a single electronic document from last year. A NAV XML e-invoice is suitable for invoice data reporting and digital archiving, as well as for establishing the legal basis for the customer to deduct its VAT. After the transition to NAV XML e-invoices, the invoicing and the data reporting processes will no longer be separated, thereby reducing the complexity of the technology and eliminating the need for the subsequent verification and reconciliation of the data included in invoices and reported to the tax authority.

www.grantthornton.hu

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

is very much underrecognized, which is a shame and shows us perilous prospects for the future. The education should also be much more practice- and real lifeoriented. Digitalization could make learning much more motivating if appropriately used.

Special Report | 15

Special Report

www.bbj.hu

Budapest Business Journal | February 25 – March 10, 2022

INSIDE VIEW

Concept and Benefits of 1-stop-shop Service Providers János Girászin

Lajos Bagdi

Niveus Consulting Group

Partner

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

For the purposes of this article, one-stop-shops are firms that can provide their clients with accounting, tax, legal and related services within one organization without requiring the client to contact multiple service providers. Although the history of the one-stop-shop dates back to the first part of the 20th century, it took some time for financial services companies to implement the concept. In the past decades, though, it has become more common as both service providers and clients realized the benefits of the idea. The Big4 firms were probably the first to switch to a full-scope financial advisory company, including not only traditional accounting and audit services but also advisory and legal teams. In recent years, smaller (even boutique) firms also offer accounting, tax, and legal services at the same place, allowing their customers to benefit from a more client-focused and flexible approach that might not be available at large multinational service providers.

Benefits of 1-stops

There are several advantages to one-stop-shops. Possibly the most significant is the ease of communication. One-stop-shops may provide the client with a single point of contact for all the requested services, whether registering a new company or setting up a tax-efficient structure. While the one-stop shop internally manages communications between the various service lines involved, valuable time is saved for the client. Furthermore, one-stop-shop service providers may provide a “package deal” when negotiating the fees as

Partner

they can streamline their processes to become more efficient than different organizations of various sizes, corporate cultures, professional standards, etc. Streamlined processes can not only reduce the costs of services but also have a positive effect on deadlines as well. When all the parties involved in the procedure are part of the same organization, they can quickly settle any issues. Should the accountant disagree with the tax advisor, they can discuss it internally. The client might well become aware of any problems only after they have already been solved. Last but not least, the technical knowledge is highly concentrated in an organization operating as a one-stop-shop; as a result, the clients can be served in the most professional way.

Automated Financial Assistant Spreading net at Magyar Bankholding An automated financial assistant developed to make bookkeeping simpler for small businesses is being made available in all member banks (though not yet all branches) of the Hungarian superbank in the making, Magyar Bankholding.

The digital platform is known as Bupa and is provided by Budapest Asset Financing Ltd. The service takes the administrative and invoicing burden off the shoulders of SME leaders. According to one of the leaders of Magyar Bankholding, almost 20,000 businesses have already joined Bupa, and tens of thousands of invoices have been issued through it. Bupa is already available across the entire branch network of Budapest Bank. It was added in six MKB Bank branches last fall, two in Budapest (at MOM Park and on Váci út) and the others in the provincial cities of Debrecen, Győr, Pécs and Szeged. Last month it was also added in seven branches of Takarékbank, at two sites in the captial (at Infopark and Czuczor utca) and one each in Debrecen, Pécs, Salgótarján, Szeged and Szolnok.

Niveus as a 1-stop-shop

The dedicated team of Niveus Consulting Group is constantly working to provide all of the above benefits and more. Although Niveus started operations 14 years ago as a small boutique advisory firm, we now employ more than 40 professionals and have over 400 clients. In the past decade, we have gradually extended our services to cover accounting and payroll, tax advisory, transfer pricing, M&A advisory and legal services. To be a true one-stop-shop, Niveus is part of DFK International, an association of independent audit, accounting, tax and legal service providers present in more than 90 countries across the world. Thanks to this membership, we are able to provide our clients with onestop-shop services for cross-border challenges as well.

“Our short-term goal is to make Bupa interconnectable with the internet banks of all three Hungarian Bankholding member banks; in time, we will connect it with the other major domestic banks,” explains Beatrix Mészáros, deputy CEO for Subsidiaries of Magyar Bankholding. “The popularity of the product is demonstrated by the fact that since its launch, more than

19,000 businesses

www.niveus.hu

thousands of small businesses will benefit from the full service of the financial assistant,” Mészáros adds. Magyar Bankholding service is one of the first financial assistants on the market that, when linked to a Budapest Bank account, allows customers to settle their accounts in addition to opening and receiving invoices, all within one interface.

BBJ STAFF

Account Balances

Photo by Elnur / Shutterstock.com

16 | 3

have already joined Bupa, and more than 130,000 invoices have been issued through the digital platform, worth nearly HUF 57 billion. By establishing a banking relationship with domestic financial institutions, hundreds of

Tracking income and expenses, up-todate current account balances, and the ability to keep an eye on the cash flow of the business and financial planning are also greatly assisted. Another advantage of the product is that it complies with National Tax and Customs Administration (NAV) reporting obligations: the program automatically sends the issued invoice to the tax authority. The service is also available to accountants to have up-todate information on company finances. Magyar Bankholding represents a triple bank fusion, with the merger of Budapest Bank and MKB Bank to take place next month, on

March

31.

Takarék Group will join by the end of the second quarter of 2023. The merged bank aims to serve all customer segments with an emphasis on providing a 21st-century range of products and services to retail, micro, small- and medium-sized enterprise and agricultural customers. It says it aims to be the most modern bank in Hungary, introducing flexible, internationally leading digital solutions, it claims. On Feb. 21, Magyar Bankholding announced it had chosen the Londonbased Thought Machine as its partner to launch its new digital banking world. It says it will be the first traditional domestic bank to use this cloud-based technology. As a result of the agreement between bankholding member MKB and Thought Machine, the integrated bank will create and operate the new digital banking platform and retail digital banking products with the help of Vault, the core banking system of Thought Machine. The clients of Thought Machine include international banks such as JPMorgan Chase, Standard Chartered, and Lloyds Banking Group.

www.bbj.hu

Budapest Business Journal | February 25 – March 10, 2022

Special Report | 17

Tax Consultants piT and soCial seCuRiTy

CoRpoRaTe Tax

TRansfeR pRiCing

Tax and finanCial due dilligenCe

indusTRy oR speCial Taxes

adveRTising Tax

exCise Tax

audiTing

aCCounTing

payRoll aCCounTing

finanCial ConsulTing

HR ConsulTing

Real esTaTe ConsulTing

oTHeR seRviCes

vaT

yeaR esTablisHed no. of full-Time employees on Jan. 1, 2022

Tax ConsulTing RelaTed seRviCes ToTal neT Revenue in 2021 (Huf mln)

Company WebsiTe

neT Revenue fRom Tax ConsulTing in 2021 (Huf mln)

Rank

Ranked by net revenue from tax contulting in 2021 (HUF mln)

✓

kpmg magyaRoRszág www.kpmg.hu 1

16,068 29,781

andeRsen adóTanáCsadó zRT. www.andersen.com/hu

1989 A

1,540

1,545

2009 49

1,474

3,110

2001 135

Rsm HungaRy www.rsm.hu

leiTneR + leiTneR Tax kfT. www.leitnerleitner.com

724

743

WTs klienT adóTanáCsadó kfT. www.wtsklient.hu

585

601

2006 A

1998 25

saldo pénzügyi TanáCsadó és infoRmaTikai zRT. www.saldo.hu

Híd adószakéRTő és pénzügyi TanáCsadó zRT. www.hcg.hu

aCCaCe HungaRy kfT. www.accace.com

addRess pHone email

Rezső Rózsai, István Henye (A) –

Rezső Rózsai, gábor beer Krisztina Nagy Gabriella Liptay

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

károly Radnai, györgy székely – Attila Götz

1124 Budapest, Csörsz utca 43. (1) 920-6800 karoly.radnai@ hu.andersen.com

✓

–

✓

–

(100) –

zsolt kalocsai Klára Vaitz Szilvia Morvay

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

Judit Jancsa-pék, nóra Tünde Rácz – –

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

✓

–

✓

– LeitnerLeitner International GmbH (100)

✓

–

Individuals (100) –

zoltán lambert, Tamás gyányi Andrea Pásztor Esther Lausek

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

levente Torma, ákos istván Csajbók Ákos István Csajbók Gabriella Takács-Jenei

1124 Budapest, Csörsz utca 49–51. (1) 510-1100 taxconsulting@ dlapiper.com

✓

–

DLA Piper Posztl, Nemescsói, Györfi-Tóth és Társai Ügyvédi Iroda (100) –

1959 48

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–

✓

–

✓

–

Individuals (100) –

andrás sarkadi-nagy Enikő Kovács Dóra Heitner

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

365

2012 6

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–

Individuals (100) –

Tamás verbai, Jenő szarvák – –

1139 Budapest, Hajdú utca 27. (1) 700-1470 verbai.tamas@hcg.hu

730

2001 33

✓

–

✓

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

andrea kuntner – Krisztina Csákics

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

247

297

1996 13

✓

–

✓

–

✓

–

István Nemecz (30) ACCACE Holding BPO (70)

istván nemecz Katalin Berényi Nemeczné Norbert Nagy

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

245

260

2008 15

✓

–

✓

–

Individuals (100) –

János girászin Lajos Bagdi –

1023 Budapest, Bécsi út 3–5. (30) 863-7778 bagdi.lajos@niveus.hu

535

471

684

365

319

2010 A

vgd HungaRy kfT. www.vgd.hu 9

Top loCal exeCuTive Cfo maRkeTing diReCToR

Individuals (100) –

dla pipeR adóTanáCsadó és feJleszTési szolgálTaTó kfT. – 6

oWneRsHip (%) HungaRian non-HungaRian

niveus Tax seRviCes kfT. www.niveus.hu 11

finaConT szolgálTaTó és TanáCsadó kfT. www.finacont.com

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

m-audiT könyvvizsgáló, feJleszTő és szolgálTaTó kfT. www.m-audit.hu

faiRConTo zRT. www.fairconto.hu

abT HungáRia NR TanáCsadó kfT. www.abt.hu

bdo magyaRoRszág www.bdo.hu

indusTRy oR speCial Taxes

adveRTising Tax

exCise Tax

audiTing

aCCounTing

payRoll aCCounTing

finanCial ConsulTing

HR ConsulTing

Real esTaTe ConsulTing

–

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

péter bergmann József Tamás Kiss, Sándor Soltész Mónika Tóth-Balog

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

györgy pintér, ádám menich, gábor Jankó, gábor kis, brigitta T. burián Gábor Kis –

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

2002 131

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–

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–

Finacont Holding Befektetési Kft. (100) –

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Individuals (100) –

Julianna varga – Dóra Pődör-Molnár

1023 Budapest, Bécsi út 3-5. (96) 525-030 mbgyor@molnar-banyai.hu

–

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

györgy kozma Andrea Darázs István Rajkai

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

veronika antal Ruszinné Zsolt Ruszin –

1097 Budapest, Könyves Kálmán körút 12–14. (20) 922-8470 fairconto@fairconto.hu

224

✓

–

1993 57

✓

–

ABT Treuhand Vagyonkezelő Zrt. (100) –

József láng – –

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

–

(100) –

zoltán gerendy, ilona orbók – –

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

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

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

gRanT THoRnTon HungaRy www.grantthornton.hu A

1989 A

2001 A

2002 A

2,289

23,8614

1,825

pwC magyaRoRszág www.pwc.hu

✓

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

Rödl & paRTneR magyaRoRszág www.roedl.hu

✓

1995 9

17,064

✓

pmx ConsulTing gRoup magyaRoRszág adóTanáCsadó kfT. www.pmxconsulting.hu

✓

1990 4

✓

1998 60

mazaRs könyvszakéRTő NR és TanáCsadói kfT. www.mazars.hu

✓

886

CRoWe fsT NR ConsulTing kfT. www.crowe.hu

✓

addRess pHone email

ey magyaRoRszág www.ey.hu

✓

Top loCal exeCuTive Cfo maRkeTing diReCToR

1,297

✓

oWneRsHip (%) HungaRian non-HungaRian

111

bpo audiT Tax NR www.mgi-bpo.hu

deloiTTe magyaRoRszág NR www.deloitte.hu

Tax and finanCial due dilligenCe

TRansfeR pRiCing

1995

CoRpoRaTe Tax

268

piT and soCial seCuRiTy

137

oTHeR seRviCes

vaT

beRgmann könyvszakéRTő és adóTanáCsadó kfT. www.bergmann.hu

yeaR esTablisHed no. of full-Time employees on Jan. 1, 2022

Company WebsiTe

www.bbj.hu

Budapest Business Journal | February 25 – March 10, 2022

Tax ConsulTing RelaTed seRviCes ToTal neT Revenue in 2021 (Huf mln)

Special Report neT Revenue fRom Tax ConsulTing in 2021 (Huf mln)

Rank

18 | 3

✓

–

✓

–

✓

–

✓

–

(100) –

✓

–

✓

–

Individuals (100) –

ferenc kölber – –

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

balázs bíró Sándor Laczka Marcell Nagy

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

19903 799

✓

– (100)

1989 765

✓

–

✓

– Ernst & Young Center Cluster Limited (100)

botond Rencz Győri Attila Ágnes Pellion

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

✓

– IB Interbilanz Holding Wirtschaftsprüfung GmbH (A)

Waltraud körbler, ágoston Jakab, Judit gittinger, gábor szarka – –

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

1139 Budapest, Fiastyúk utca 4–8. (1) 429-3010 mazars@mazars.hu

1991 100

1991 A

1994 7

1989 A

1991 A

✓

–

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

philippe michalak budzan, zoltán lászló benedek – –

✓

–

Individuals (100) –

János szalai – –

1066 Budapest, Mozsár utca 16. (30) 740-7477 info@pmxconsulting.hu

✓

– PwC CEE (100)

Tamás lőcsei, lászló deák Tamás Pál Borbála Palotai

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

✓

–

✓

–

✓

– Rödl International GmbH (100)

Roland felkai – –

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

noTes: (1) The figure includes Finacont Kft.’s total net revenue in 2021 and Finacon-T 3GA Kft.’s relevant professional revenue in 2021. (2) Data of business year 2020 for Deloitte subsidiary Deloitte Zrt. provides tax services. (3) Establishment year of Deloitte Üzletviteli és Vezetési Tanácsadó Zrt. (4) Data of business year July 1, 2020 - June 30, 2021.

A = would not disclose,

NR = not ranked, NA = not appliacable

This list was compiled from responses to questionnaires received by February 23, 2022, and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. The list is based on companies’ voluntary data submissions. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14, or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

www.bbj.hu

Budapest Business Journal | February 25 – March 10, 2022

Special Report | 19

Accounting Firms yeAR estAblisHed no. oF Full-time employees on jAn. 1, 2022

HR Consulting

tRAnsFeR pRiCing

m&A

Audit

mAnAgement Consulting

tAx Consulting

FinAnCiAl Consulting

mAjoR Clients in 2021

pAyRoll ACCounting

otHeR seRviCes

pRepARAtion oF montHly And AnnuAl RepoRts

pRepARAtion oF iFRs RepoRts And FinAnCiAl stAtements

ACCounting tRAining

ACCounting Consulting

pRepARAtion oF ACCounting poliCy

speCiAl ACCounting seRviCes RevieW oF bookkeeping WoRk peRFoRmed by A gRoup entity AbRoAd (ssC)

CompAny Website

totAl net Revenue in 2021 (HuF mln)

net Revenue FRom ACCounting in 2021 (HuF mln)

RAnk

Ranked by net revenue from accounting in 2021 (HUF mln)

oWneRsHip (%) HungARiAn nonHungARiAn

top loCAl exeCutive CFo mARketing diReCtoR

AddRess pHone emAil

1999 305

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

jános babos, Andrew majlath, András szalai – –

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

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

3,433

6,140

✓

–

✓

–

✓

tmF mAgyARoRszág kFt. www.tmf-group.com 2

Rsm HungARy www.rsm.hu

1,905

3,736

✓

–

✓

–

1994 181

– TMF Group B.V. (100)

orsolya ignácz Ágnes Bartha Norbert Szabó

1138 Budapest, Népfürdő utca 22. Duna Tower (1) 461-8100 business. hungary@ tmf-group.com

1,397

3,110

✓

–

✓

–

✓

2001 135

(100) –

zsolt kalocsai Klára Vaitz Szilvia Morvay

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

www.ps-bpo.com

Getting over the challenges of pandemic to gain competitive advantage for the future The pandemic has triggered significant changes in the business process outsourcing (BPO) industry. All market players realized that they should reinterpret the meanings of such traditional terms like workplace, András Szalai home, team management Managing Partner and certain elements of Process Solutions people development. After a two-year pandemic it is worth to look back, summarize experience then shape our strategy to create opportunity instead of waiting for it. Below we review some of the factors we keep in focus to improve on our ‘People–Process– Technology’ framework to be able to offer our clients the most up-to-date solutions.

Digitalization and impact on people development BPO firms who have adopted advanced digital processes and IT solutions have now developed an efficient and reliable service model that will enable them to gain a competitive advantage in the future. Digitalization supports to eliminate the paperbased processes and enables service providers to progress with automation of ongoing routine work. The daily tasks of an employee may switch from processing to managing the automation in place to maintain successful service delivery while the time saved by automation can be directed to higher value client service. Such new tasks will require careful change management as well as trainings for the entire team

while the remote work already demands different management methods. A lot of exciting challenges in learning and development are still ahead of us. Obviously, this can only be achieved if we continuously train our teams to use the new solutions effectively. The training methodology itself also had to change significantly. The new PS e-Learning system integrates both on-line (or classroom) and e-learning modules to set flexible training series adapted to the special needs of teams. Moreover, the new system results in significant time savings for PS trainers, who are our most skilled professionals.

Hybrid working model Since the beginning of the epidemic, we at Process Solutions have been continuously improving our systems and processes so the possibility to combine home office (HO) with on-site work is now part of our everyday life. Regarding the so-called “hybrid model” there are two aspects that require special attention and need constant fine-tuning. Sense of „work-life balance” for employees In the last two years the traditional concept of “worklife balance” has changed enormously, as HO has officially moved “work” into our home life, as “remote work”. There is a significant difference in the “individual sense” that employees have, depending on their habits, work experience and life situation, when they have to manage their work and private life at the same time. Meanwhile the possibility of HO with all its comfort and clear advantages has become an employee expectation. Especially because former concerns like ongoing delivery and client service cannot function from home” have proven to be over-pessimistic.

Finding the right balance between HO and office work We believe that many BPO firms are considering whether to choose the hybrid model for their future operations. While accepting the change in employee expectations most of us may have realized the importance of office work. For the continuous development of a company, to progress at the right momentum and energy level, the teams need to spend valuable time together, in the office. This is typically important in situations when we are integrating new employees. Benefits of working in teams including positive personal interactions and social relationship, effective support by team leaders are critical aspects of a business to succeed and continuously improve. We move into the “Next Normal” with great anticipation of the benefits of the hybrid model.

Market outlook After a two-year pandemic in many aspects the global economy has got back to the situation it was before March 2020 where for many firms the biggest concern was the difficult labor market and their growth was dependent on successful recruitment, retention and learning and development strategies. With continued efforts to optimize operations via automation and new technology, focus on people development and “the human side” remains the most important element of a successful business strategy.

The No.1 Accounting Firm in Hungary since 2006

beRgmAnn könyvelő iRodA pénzügyi szolgáltAtó kFt. www.bergmann.hu

FinACont szolgáltAtó és tAnáCsAdó kFt. www.finacont.com

Wts klient könyvelő kFt. www.wtsklient.hu

molnáR és bányAi kFt. www.molnar-banyai.hu

ACCACe HungARy outsouRCing kFt. www.accace.com

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✓

top loCAl exeCutive CFo mARketing diReCtoR

AddRess pHone emAil

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

péter bergmann, péterné bergmann Sándor Soltész Krisztina Bergmann

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

Finacont Holding Befektetési Kft. (100) –

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

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

–

1998 59

Individuals (100) –

zoltán lambert, györgy kőrösi, eszter balogh, Andrea pásztor Andrea Pásztor Esther Lausek

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

✓

1998 60

Individuals (100) –

julianna varga – Dóra Pődör-Molnár

1023 Budapest, Bécsi út 3–5. (96) 525-030 mbgyor@ molnar-banyai.hu

✓

2007 52

István Nemecz (30) ACCACE BPO Holding (70)

istván nemecz Katalin Berényi Nemeczné Norbert Nagy

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

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

HR Consulting

tRAnsFeR pRiCing

m&A

Audit

mAnAgement Consulting

tAx Consulting

FinAnCiAl Consulting ✓

oWneRsHip (%) HungARiAn nonHungARiAn

✓

leitneR + leitneR 11 Audit kFt. www.leitnerleitner.com

✓

–

✓

2017 61

Individuals (A) Individuals (A)

✓

–

✓

–

✓

1995 45

ITL Real Estate Kft. (100) –

Alessandro Farina – –

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

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

márta siklós, nóra tünde Rácz – –

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

Attila Kollár (100) –

kolos kollár István Plájer Erika Németh

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

510

688

✓

425

855

–

✓

–

✓

eConoseRve gAzdAsági 12 tAnáCsAdó kFt. www.econoserve.eu

memolux szeRvező Fejlesztő és szolgáltAtó kFt. www.memolux.hu

694

✓

2002 131

tamás kovács, judit gudman, krisztina benkő, dániel benkő – –

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

404

itl gRoup kFt. www.itlgroup.hu 10

1990

✓

bpion seRviCes kFt. bpion.com 9

mAjoR Clients in 2021

pAyRoll ACCounting

pRepARAtion oF montHly And AnnuAl RepoRts

pRepARAtion oF iFRs RepoRts And FinAnCiAl stAtements

ACCounting tRAining

ACCounting Consulting

pRepARAtion oF ACCounting poliCy ✓

otHeR seRviCes

yeAR estAblisHed no. oF Full-time employees on jAn. 1, 2022

Budapest Business Journal | February 25 – March 10, 2022

speCiAl ACCounting seRviCes RevieW oF bookkeeping WoRk peRFoRmed by A gRoup entity AbRoAd (ssC)

CompAny Website

totAl net Revenue in 2021 (HuF mln)

Special Report net Revenue FRom ACCounting in 2021 (HuF mln)

RAnk

20 | 3

✓

344

699

✓

–

✓

287

760

–

✓

1994 A

Bau-Haus Kft., Humán Centrum Kft., BASF Hungária Kft., ✓ Medis, Shell Hungary Zrt., XXXLutz Kft.

✓

–

✓

–

1991 52

✓

–

✓

1989 61

Libra Szoftver Zrt. (100) –

kálmán Faur Zoltán Komora Katalin Sáfár

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

✓

2001 33

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

Andrea kuntner – Krisztina Csákics

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

–

2006 27

Erika Dékány (100) –

erika dékány – –

4025 Debrecen, Széchenyi utca 48. (52) 430-738 info@ humanholding.hu

1995 9

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

veronika Antal Ruszinné Zsolt Ruszin –

1097 Budapest, Könyves Kálmán körút 12–14. (20) 922-8470 fairconto@ fairconto.hu

vgd HungARy kFt. www.vgd.hu 264

Humán Holding üzleti szolgáltAtó kFt. www.humanholding.hu

204

730

328

✓

–

✓

–

✓

–

✓

–

✓

–

✓

Gastroil Zrt., Elite Cosmetix Kft., Axol Pharma Zrt., In Group Kft., Media 1 Kft.

✓

–

✓

–

✓

–

✓

–

✓

–

Humán Holding Tapasztalat. Szakértelem.

FAiRConto zRt. www.fairconto.hu

186

224

–

✓

–

✓

–

✓

–

www.bbj.hu

HR Consulting

✓

oWneRsHip (%) HungARiAn nonHungARiAn

1992 20

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

Andrea butkovics – Melinda Németh

1041 Budapest, István út 16. (1) 452-6900 office@colling.hu

Tibor Kmeczó (100) –

tibor kmeczó Tibor Kmeczó Nikolett Kmeczó

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

Colling könyvelő és tAnáCsAdó kFt. www.colling.hu 17

peRsCRiptoR 18 könyvelőiRodA kFt. www.precizkonyveles.hu

AiRon Consulting kFt. www.airon.hu

eCoCReAtive zRt. 21 www.ecocreative.hu

top loCAl exeCutive CFo mARketing diReCtoR

AddRess pHone emAil

170

215

–

✓

–

✓

–

✓

–

✓

–

2010 17

166

–

✓

–

✓

–

✓

–

2016 18

Niveus Holding Kft. (100) –

györgy szabolcsi – –

1023 Budapest, Bécsi út 3–5. (30) 861-4009 office@niveus.hu

–

2003 10

Eszter Danku-Szigecsán (100) –

tamás danku – –

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

Individuals (100) –

Csaba szikra-mezei Tibor Papp –

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

Individuals (100) –

tibor papp – –

1114 Budapest, Bartók Béla út 29. (1) 311-1510 iroda@iriszoffice.hu

niveus ACCounting seRviCes kFt. www.niveus.hu 19

Special Report | 21

yeAR estAblisHed no. oF Full-time employees on jAn. 1, 2022

tRAnsFeR pRiCing

✓

m&A

–

Audit

–

mAnAgement Consulting

pRepARAtion oF montHly And AnnuAl RepoRts

✓

tAx Consulting

pRepARAtion oF iFRs RepoRts And FinAnCiAl stAtements

✓

FinAnCiAl Consulting

ACCounting tRAining

–

mAjoR Clients in 2021

pAyRoll ACCounting

ACCounting Consulting

176

otHeR seRviCes

pRepARAtion oF ACCounting poliCy

176

speCiAl ACCounting seRviCes RevieW oF bookkeeping WoRk peRFoRmed by A gRoup entity AbRoAd (ssC)

totAl net Revenue in 2021 (HuF mln)

CompAny Website

net Revenue FRom ACCounting in 2021 (HuF mln)

RAnk

Budapest Business Journal | February 25 – March 10, 2022

130

–

✓

–

✓

–

✓

–

✓

–

126

127

–

✓

–

✓

–

✓

–

2007 A

ÍRisz oFFiCe zRt. www.iriszoffice.hu

105

108

–

✓

–

✓

–

✓

–

✓

Cons-budApest ügyviteli szolgáltAtó és AdótAnáCsAdó kFt. www.consbp.hu

102

178

–

✓

–

✓

–

✓

–

✓

1993 20

– Mag. Gerhard Pichler GmbH (100)

krisztina gubicza Éva Burján –

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

–

2007 9

Beáta Kincs (100) –

beáta kincs – –

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

2014

(100) –

tibor papp – –

1114 Budapest, Bartók Béla út 29. (21) 311-1514 hyper@ hypercortex.hu

(100) –

zoltán gerendy – –

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

(100) –

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

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

Individuals (100) –

Ferenc kölber – –

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

– IB Interbilanz Holding Wirtschaftsprüfung GmbH (A)

Waltraud körbler, ágoston jakab, judit gittinger, gábor szarka – –

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

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

philippe michalak budzan, zoltán lászló benedek – –

1139 Budapest, Fiastyúk utca 4–8. (1) 429-3010 mazars@mazars.hu

– Rödl International GmbH (100)

Roland Felkai – –

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

Audit-lAbteCH 24 könyvelőiRodA kFt. www.audit.labtech.hu

HypeRCoRtex zRt. 25 www.hypercortex.hu

bdo mAgyARoRszág www.bdo.hu

bpo Audit tAx www.mgi-bpo.hu

CRoWe Fst NR Consulting kFt. www.crowe.hu gRAnt tHoRnton HungARy NR www.grantthornton.hu

mAzARs könyvszAkéRtő és NR tAnáCsAdói kFt. www.mazars.hu Rödl & pARtneR NR mAgyARoRszág www.roedl.hu

–

✓

–

✓

Őrmester Vagyonvédelmi Nyrt., Optimit Hungária Kft., Szerip Zrt., ✓ Gammo Europe Kft., Multimag Kft., VB2MV Kft.

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

2,289

1,825

✓

–

✓

–

✓

–

✓

notes: (1) The figure includes Finacont Kft.’s total net revenue in 2021 and Finacon-T 3GA Kft.’s relevant professional revenue in 2021.

✓

–

✓

–

✓

–

2004 A

1989 A

2001 A

2002 A

1991 100

1991 A

www.bbj.hu

Budapest Business Journal | February 25 – March 10, 2022

Socialite

Canvas and Cult: Szinyei Merse and Tommy Ramone David Holzer gets out of the cold and takes in some colorful Hungarian culture up in the Castle District. DAVID HOLZER

When we left the Pál Szinyei Merse “Canvas and Cult” exhibition at the Hungarian National Gallery, it was around 7 p.m., dark and bitterly cold, but the queue of people waiting to get in still stretched from the entrance to the Gallery across the cobbles to the wall of the castle ramparts. Earlier that afternoon, my Hungarian partner, her sister and I had stood in that queue, so I knew how those people felt. When we’d arrived, the queue had been the shape of a letter “C” on its side. As we stood, stamping our feet and hugging ourselves for at least an hour, I’d tried to take my mind off the cold and freezing wind by counting the number of people in the queue. I reckoned it to be 1,000. I’d assumed that, when we saw the queue, we’d leave. This would have fitted in perfectly with what I’d decided was to be the theme of this article: not being able to get into places. The night before, a Friday, we’d gone in search of the legendary Maciművek teddy bear shop on Szent István körút, the street that leads down from Nyugati Railway Station to Margit híd. We’d intended to replace a plush puppy that had gone missing, believed stolen. It’s a long story. Anyway, the shop had vanished, which was when I came up with my theme. I thought I was being oh-so-clever.

Art Supplies

Earlier on the day of our visit to the Pál Szinyei Merse “Canvas and Cult” exhibition, we’d scurried down the strange streets behind the Opera House on Andrássy út in search of the Művészellátó Szaküzlet art supplies shop, trying to get there before it closed at 1 p.m. I prayed we wouldn’t find it, but we did. Sadly, it was also open. My partner was thrilled to see the Schmincke Mussini turquoise and antique gold oil paints she was looking for and we joined the queue of presumably weekend artists clutching paints, brushes and bits of wood to make into frames.

Pál Szinyei Merse’s “Picnic in May.” Photo by Gabriella Kiss. The paints were a gift for my partner’s sister and watching her face light up with joy when she was given them in that queue outside the Hungarian National Gallery was the best part of the day for me. I didn’t really get the point of Pál Szinyei Merse. But then I’m not Hungarian. From noble Hungarian stock, Szinyei Merse was born in 1845 and died in 1920. He studied art in Munich. When the Franco-Prussian war broke out, he moved to Genoa, Italy, but returned in 1872. Tiring of harsh criticism of his work, he gave up painting for more than a decade until his friends organized a retrospective

1894

where one of his paintings was bought by Emperor Franz Joseph. From then on, he never stopped painting. Szinyei Merse’s reputation lies in the fact that, as the exhibition blurb has it, he was “a ground-breaking pioneer and the first true colorist in the history of Hungarian painting.” Colorist art is where, as you’d probably imagine, color is the most important thing. The French Impressionists, roughly contemporary with Szinyei Merse, are the pioneers of colorism in art. One of the truly impressive things about Szinyei

Merse is that he arrived at the same realization as the Impressionists while being unaware of what they were doing.

Independent Discovery

According to the exhibition’s illuminating biographical notes, “at the same time as them, and in some paintings even earlier than them, he independently discovered the capacity of sunlight to break up forms and transform colors, the means of constructing images with complementary colors, and the use of color values to convey tones of light.” Like the Impressionists, Szinyei Merse focused mainly on painting people in nature. Which brings us to “Picnic in May,” a painting so popular it’s achieved fridge magnet status. This is an especially colorful composition of a group of people enjoying a picnic on a very green hillside. Szinyei Merse’s aim, he said, was to paint “a beautiful spring day that is being enjoyed by a merry company on an excursion away from the city.” On its website, the Hungarian National Gallery explains that “Picnic in May is one of the best known and most highly cherished works in Hungarian painting. Its value derives not only from its artistic innovativeness, but also from its theme. The image of a group of friends enjoying a picnic in a magnificent spring landscape

has prompted feelings of cheer and happiness in every generation of viewers. It was this casual, simple joie de vivre, free from all sense of nostalgia, that made this painting so modern.” I have to admit I didn’t look at “Picnic in May” the way a Hungarian would. Then again, and forgive me for the gross generalization I’m about to commit, my cultural DNA isn’t made of up decades of disappointment and despair. The chocolate box colors just didn’t do it for me. My Hungarian partner and her sister, the artist, loved “Canvas and Cult,” and that’s good enough. I was simply very happy to spend a couple of hours thawing out. That’s not to say I don’t warm to Hungarian artists. The following morning I strolled from Andrássy út, where Szinyei Merse used to hang at the Japán Kávéház, down to the Toldi Cinema at Bajcsy-Zsilinszky út 36-38, the street that runs down from Deák Ferenc towards Nyugati. Here I had a moment of silence in front of the plaque that commemorates the great Tamás Erdélyi. Better known to the wider world as Tommy Ramone, the drummer and first producer of the mighty Ramones, he’s the only Hungarian inducted into the Rock and Roll Hall of Fame so far. “Canvas and Cult” is now closed. The plaque to Tommy Ramone will, I hope, never fall.

www.bbj.hu

Budapest Business Journal | February 25 – March 10, 2022

Socialite | 23

A Pilgrim’s Progress to Worship Wine at Pannonhalma As does its famous Benedictine Abbey, the hills of the Pannonhalma wine region in Hungary’s northwest rise majestically out of the flatness of the Kisalföld (Little Great Plain) and certainly look like prime vineyard sites. The Cseri family, who run the Cseri Pincészet. The principal winemaker is Nórbert Cseri (blue shirt), but his son Barni is now starting out.

ROBERT SMYTH

The predominantly loess soils with their high lime content help the grapes retain acidity, keeping the wines fragrant and fresh. As temperatures rise in what has traditionally been considered a coolclimate wine region, this ability to keep the acid will be crucial. Pannonhalma is hardly a haven of Hungarian indigenous varieties, but it is prime Sauvignon Blanc territory with a style that’s vibrant but not overly aromatic, reminding me a little of the Sauvignons of the Südsteiermark region in Austria, sitting deliciously somewhere between the more restrained Old World and the more opulent New World in style. Riesling is equally popular here, with some rich, complex wines being made. While Pannonhalma was once split equally between red and white wine production, white dominates today, although the darker wines are now picking up plaudits. Indeed, perhaps a benefit of global warming is that the region has been producing some concentrated, complex reds due to heightened ripeness. Having been to the Pannonhalmi Főapátság Pincészet (Pannonhalma Archabbey Winery) countless times, but not since before the COVID pandemic, it was a privilege to return recently to the cutting-edge gravity-fed production unit, built discreetly into the hill under the monastery itself, and also to check out another five wineries for the first time. Pannonhalmi’s winemaker Zsolt Liptai considered the 2020 Sauvignon Blanc “the wine of the vintage.” While it has sold out, the tank sample of

the

2021

that I tried is coming along nicely, with zesty elderflower and cut grass aromas emanating from the glass. This wine is skilfully crafted by picking grapes from two vineyards on different dates; the Tavaszó provides acidity and green notes, while the Széldomb brings riper, tropical notes. Always looking to innovate, the monastery’s Sauvignon Blanc will contain a component fermented in a closed tank from the 2022 vintage to further boost its appeal by capturing more of the grape’s primary aromas.

More Intense

2020, which started off too cool until everything came up to speed in the summer, was also great for Riesling, with the Pannonhalmi winery coming out with both the regular yet taut and structured Rajnai rizling (the literal Hungarian translation for Rhine Riesling, to differentiate it from the unrelated Olaszrizling grape) and the more intense Prior, only released in top vintages. The winery also makes one of the finest Bordeaux-style blends in Hungary: Infusio. It hails from a plateau on the south-facing Babszökő vineyard. The Infusio 2019 has more Cabernet Franc than usual at 40%, with Merlot contributing 60%. It is very elegant with minty aromas that beautifully complement the intense black and red fruit, with sleek tannins and an extremely long, delicious finish. The high alcohol content of 15% is nicely integrated and does not bring any burn. It costs HUF 8,950 from apatsagipinceszet.hu, the monastery webshop. Pannonhalmi Főapátság and four of the others wineries (Hangyál Pincészet, Herold Pince, Pécsinger Szőlőbirtok, and Tár Pincészet) belong to the PH-Érték organization, whose wines are fresh, crispy blends based on a backbone of at least

50% Riesling.

Pecsinger’s PH-Érték 2020 (60% Riesling, 30% Olaszrizling, 10% Királyleányka), for example, has a touch of a petrol note, bringing some complexity. The excellent Cseri Pincészet was also once a member but has stepped out. This latter still makes some fabulous aged Rieslings and a nice Pét-Nat from the same variety. PH-Érték is a clever play on words, whereby Érték means “value” and PH can be interpreted as referring to the Pannonhalma wine region, the relatively high PH value coming from the high lime content in the soils, or the cultural value of the area. Pecsinger has a striking space-agelike Dezső Ekler-designed winery, dramatically surrounded by vineyards, near the village of Győrújbarát. While I was tasting wine from the tank, the owner of the Pedro bakery (the place

to go for breakfast in Pannonhalma town) rolled in and took a large plastic container full of wine away with him. Wine sold in this way is still a significant part of Pecsinger’s income and it has a chain of shops in western Hungary where customers come and get their plastic bottles filled. It is transitioning over to a higher portion of bottled wine.

Excellent Reds

Another large Győrújbarát winery moving in a similar direction is Babarczi, which makes some excellent reds, including a Kékfrankos, which is ultra-rare in the wine region. Winemaker Zsuzsanna Babarczi picked the Kékfrankos relatively early and aged it in French oak, resulting in a vibrant and enjoyable light wine with restrained tannins. It costs HUF 3,100 from babarczipince.hu. The same winery’s earthy, complex, concentrated Cabernet Franc Marianum 2019 (HUF 10,000) bagged a gold medal at the Berliner Wine Trophy. Located at the foot of the hill topped by Pannonhalmi Főapátság is the fledgling Herold Pince, which came out with its first wines in 2015. Among its 12 hectares, Herold has half a hectare of Olaszrizling, which is rare in the region, as are indigenous varietals in general. The Olaszrizlings were the standout wines for me here, and apparently also for the owner, Ádam Herold, who has tagged the German world Liebling (“favorite”) onto the premium Olaszrizling. The 2018 Liebling is

creamy, oily and complex, with a waxy texture, remarkable concentration and with the vibrant acidity to cut through the richness. It was fermented and aged in oak for six months and is a bargain

HUF 2,590

from pannonborbolt.hu, having won a Grand Gold medal at Hungary’s Vinagora international wine competition. The winemaker is Szabolcs Fiderman, who also makes wine with two friends in the nearby Neszmély wine region at N3 Borműhely. The Tár Pincészet, in Tényő, works with five clones of Olaszrizling from Hungary and neighboring countries, with an Austrian clone used to make the impressive 2021, which has citrus and herb notes and is soon to be released. The Sauvignon Blanc from here is exciting, with the 2021 costing a bargain HUF 1,950 from limapubandhostel.hu. The village of Nyúl, with its winding cellar rows that evoke J.R.R. Tolkien’s Middle Earth, is home to Hangyál Pincészet, which is itself housed in a nicely designed modern building. Balázs Hangyál is such a fan of Slovenian Sauvignon Blanc, which has much in common with that of Südsteiermark immediately across the Austrian border, that he planted Slovenian clones. The result is stunning, with the 2021 oozing juicy gooseberry and costing HUF 2,200 from wineloverswebshop.hu. The Chardonnay from here is also delicious.

Sunset over the Hangyál Pincészet in the village of Nyúl.