Hungary has transposed Directive (EU) 2022/2464, the Corporate Sustainability Reporting Directive (CSRD), into national law through Act CVIII of 2023. This so-called ESG Act amended Act C of 2000 on Accounting by adding a new Chapter III/A, which sets out detailed rules on sustainability reporting obligations for companies operating in Hungary.
📘 Key Provisions of the Accounting Act
The newly introduced Chapter III/A stipulates that the sustainability report must be prepared as part of the annual report, in accordance with the European Sustainability Reporting Standards (ESRS) developed by EFRAG.
🎯 Scope of Application
The obligation applies to companies that meet at least two of the following thresholds on two consecutive balance sheet dates:
- Total assets exceed HUF 10 billion,
- Net turnover exceeds HUF 20 billion,
- Average statistical headcount exceeds 250 employees.
According to Section 95/N of the Accounting Act, these thresholds must be assessed on a consolidated basis. This means that the reporting obligation may also extend to a Hungarian subsidiary if the thresholds are met at the group level—even if the Hungarian entity does not meet them individually.
An important exception applies: a Hungarian subsidiary may be exempt from individual reporting obligations if the parent company prepares a CSRD-compliant consolidated sustainability report that covers the subsidiary’s operations and meets publication, auditing, and accessibility requirements.
🔍 Disclosure and Audit Requirements
The sustainability report must be audited by a certified auditor and published together with the annual financial statements.
The aim of this regulation is to increase transparency and accountability of Hungarian companies in relation to ESG (Environmental, Social, and Governance) aspects, in line with EU standards.
The reporting obligation applies to the 2025 financial year, and the first reports must be published in 2026.
🧭 Connection to the EU Taxonomy Regulation
In addition to the CSRD, Regulation (EU) 2020/852 on the EU Taxonomy also applies, defining which economic activities can be considered environmentally sustainable. Companies must report on the alignment of the following items with the taxonomy:
- Revenue
- Capital expenditures (CapEx)
- Operating expenditures (OpEx)
📌 What Needs to Be Launched in 2025:
✅ CSRD and taxonomy gap analysis at group level
✅ Establishment of ESG data management and reporting systems
✅ Alignment of sustainability strategy with legal and investor expectations
💡 Transparent ESG reporting is not only a legal obligation – it is also a market expectation and a competitive advantage.
📩 Do you have questions or need assistance?
Dr. Géza Katona, LL.M.
Rechtsanwalt / Attorney at Law
Katona & Partner Rechtsanwaltssozietät / Attorneys’ Association
H-106 Budapest, Tündérfürt utca 4.
Tel.: +36 1 225 25 30
Mobile: +36 70 344 0388
Fax: +36 1 700 27 57
E-mail: g.katona@katonalaw.com
www.katonalaw.com