Navigating the maze of Hungarian SAP localization in the financial module

Onespire Ltd.

Introduction

In this article, we provide an overview of the most important localization tasks for the SAP ERP system to comply with complex national legislation and other requirements, and our company’s related services.

The Hungarian legal environment and the financial localization of the SAP ERP system

The requirements in Hungary are fundamentally more complex than the regulatory requirements in other European countries. These include specific tax and tax return requirements, online invoicing obligations, and a regulatory environment that can change on an annual basis, which can be challenging for both domestic and foreign-owned companies.

For companies and organizations operating in Hungary, SAP has a specific localization package that tailors the ERP system to local legislation and business requirements.

Our company, Onespire Ltd. provides financial localization support for many companies operating in Hungary, including new SAP implementations and rollout projects. Among these, our two projects delivered for MOHU MOL Hulladékgazdálkodási Ltd. and STADA Hungary Ltd. can be highlighted, where we ensured for these enterprises that their SAP ERP systems were financially compliant with Hungarian legislation.

There are several important tasks in the Hungarian localization of the SAP ERP system. In the financial domain, we would like to highlight the following tasks that can be grouped into eight areas as in the list below, to provide a starting point for consideration.

1. Management and localization of tax requirements in the SAP Finance module in Hungary

2. Localization settings in SAP for the NAV Online solution

3. Financial reports and statements in SAP’s Hungarian localization package

4. Preparing Hungarian tax declarations in SAP

5. Date management in the SAP solution in compliance with national legislation

6. Special advance payment management settings in SAP

8. Asset management in SAP

1. Management and localization of tax requirements in the SAP Finance module in Hungary

Localization enables the management of Hungarian tax requirements, including the calculation and management of VAT. VAT rates can be defined in the system and automatically applied to business transactions.

It is important to comply with Hungarian legislation and to set up Hungary-specific taxation, such as telephone and car expenses and deferred VAT. The VAT treatment of services provided on a continuous basis should also be mentioned here, such as maintenance contracts or regular services where the activity covers a fixed period.

2. Localization settings in SAP for the NAV Online solution

NAV Online is a real-time electronic data reporting system in Hungary that taxpayers are obliged to use to submit issued invoices.

To connect to the solution, certain technical requirements must be met, such as SAP integration with the NAV Online API and support for secure and accurate data transfer between the systems. Onespire Ltd. has its own solution for establishing the connection, but we are familiar with and have implemented several other NAV online invoicing systems available on the market, including SAP’s standard solution within the SAP eDocument Framework.

3. Financial reports and statements in SAP’s Hungarian localization package

SAP’s localization package includes a sample reporting structure for the preparation of Hungarian financial reports and statements, which can provide a basis for a company’s individual reports. This includes annual reports, balance sheets and income statements, other financial reports, which all must be prepared in accordance with local accounting rules and regulations.

4. Preparing Hungarian tax declarations in SAP

Localization makes it easy for companies to prepare periodic and ad-hoc tax declarations and data submissions to the Hungarian tax authorities in SAP. This can include the generation of VAT returns and other reports related to reporting obligations.

The VAT report generated by SAP contains all relevant data and information on the VAT paid or received by the company. This includes details of VAT calculations, VAT amounts accounted for, VAT rates, tax liabilities.

The domestic summary report includes aggregated data on transactions related to domestic purchases. The EU Summary Report includes aggregated data on transactions with Member States of the European Union.

The SAP Audit report can be used to generate a list, in accordance with the Hungarian legal requirements, to the tax authorities in connection with an audit report about the invoices issued containing sales tax. The legislation states that this list must include the invoices issued during the period.

These reports are available in the SAP system for easy download and use during the VAT submission process. It is important that the reports are used in accordance with tax authority requirements and local legislation.

Hungarian SAP localization in the financial module illustration

5. Date management in the SAP solution in compliance with national legislation

In SAP, it is possible to customize and configure the date derivation logic according to the Hungarian tax requirements. Companies define the date derivation logic for incoming and outgoing invoices in their accounting policies. These adjustments must be made in the system individually on a client-specific basis.

6. Special advance payment management settings in SAP

In Hungary, the issue and accounting of advances is handled in a special way. When accounting for advances, tax regulations and local accounting rules must be considered. In particular, it should be noted that the reporting of advances to the NAV may also be required for VAT returns.

7. Issues related to the cash register in the SAP system

For the exchange rate management of the foreign currency cash register, SAP allows the calculation of the weighted average exchange rate by means of a localized report as standard. The calculation uses the weighted average exchange rate calculated for the previous working day, the exchange rate of the booked incoming payments on that day and the opening and closing balances.

8. Asset management in SAP

The most important point to highlight in asset accounting is that we have to calculate depreciation according to the tax law to comply with Hungarian legislation. This may differ from the depreciation under the Accounting Act used for financial statements.

Financial localization of the SAP ERP system in Hungary

Above we have mentioned only a few examples of the tasks to be performed, which has to be performed in the field of financial localization of SAP in terms of ensuring compliance.

As frequent legislative changes, a complex tax system and compliance with local reporting requirements in Hungary can be quite challenging, it is important for companies and implementation professionals to understand local legislation and financial requirements in detail and consult with SAP support for a successful localization.

Onespire Ltd. has extensive professional experience in all the topics listed above, thanks to which it can provide professional and effective support in establishing financial compliance with Hungarian legislation.

Our experts are not only familiar with standard SAP solutions, but can also assist in the assessment and implementation of individual client needs, as well as related consulting services.

Author: Dorottya Barthó