New regulation in the TEÁOR nomenclature in Hungary

Effective as of January 1, 2025, the business activities of companies will need to be classified based on the NACE Rev. 2.1 (in Hungarian: TEÁOR’25) nomenclature. Helga Lieszkovszky, Oppenheim Law Firm’s expert, summarizes the key corporate law aspects of the new regulation.

As of January 1, 2025, the common classification system for economic activities was modified, and the TEÁOR’08 system, in effect since 2008, was replaced by the TEÁOR’25 system. The new system follows the updated European version of economic activity classification, NACE Rev. 2.1, the entry into force of which is mainly driven by technological advancements and the need for conformity with international classification systems. Companies will have several administrative and corporate law tasks as a result of the amendment.

The reclassification of business activities from TEÁOR’08 to TEÁOR’25 is straightforward with respect to many business activities, as some activities have the same name and code in both systems. However, there are some TEÁOR’08 business activity codes that are divided into several different TEÁOR’25 codes. In these cases, companies will need to determine which TEÁOR’25 code their business activities fall under.

The Central Statistical Office has automatically set the TEÁOR’25 main business activity code for all companies effective as of January 1, 2025, even in cases where the reclassification was not straightforward. The Central Statistical Office has notified all companies about the reclassification through the Company Gate portal. The Central Statistical Office forwarded the main business activity codes to the National Tax and Customs Authority, which, in turn, has passed it on to the company registry. Companies may request the amendment of the main business activity code set by the Central Statistical Office until July 1, 2025 from the National Tax and Customs Authority.

The National Tax and Customs Administration completed by January 31, 2025 the reclassification of the other business activity codes, the reclassification of which to the TEÁOR’25 system was straightforward. Resultantly, after January 31, 2025, the company registry will display all main business activity codes, and other business activity codes, the reclassification of which is straightforward, under the new TEÁOR’25 codes.

If the reclassification of the company’s other business activities is not straightforward, the National Tax and Customs Authority does not automatically reclassify these activity codes. In such case, companies must notify the National Tax and Customs Authority of the business activity codes reclassified according to the TEÁOR’25 system by July 1, 2025. As a result, it may occur that both TEÁOR’08 and TEÁOR’25 business activity codes are indicated in the company registry with respect to the same company until August 31, 2025. The National Tax and Customs Authority will delete all TEÁOR’08 activity codes - retroactively effective as of December 31, 2024 - on August 31, 2025, regardless of whether a corresponding TEÁOR’25 code has been submitted by the company or not. Therefore, we recommend that all companies review the list of their business activities and, if their reclassification is not straightforward, notify the National Tax and Customs Authority of the reclassification as soon as possible.

Since most companies have already been informed about the requirements of submitting the applicable requests to the National Tax and Customs Authority, this article will cover the rules and practical aspects regarding the amendment of the company’s constitutional document due to the reclassification of business activity codes. Most companies will also need to take steps in this respect to comply with applicable laws.

Amendment of the constitutional document due to the reclassification

In our view, the reclassification of the TEÁOR’25 activity codes in the constitutional document remains optional with respect to the main business activity and other business activities until the first amendment of the constitutional document on or after July 1, 2025; even if the company modifies its constitutional document for reasons unrelated to its business activities before July 1, 2025. Companies are only required to reclassify their business activities to the TEÁOR’25 system in their constitutional documents if they amend the constitutional document for reasons unrelated to their business activities on or after July 1, 2025.

The amendment of the constitutional document remains optional even if the main and/or other business activity codes have already been reclassified in the company registry. Pursuant to Act V of 2006 on Public Company Information, Company Registration and Winding-up Proceedings  (hereinafter: the Company Act), in our view, it is possible, to prepare the constitutional document with the TEÁOR’08 codes before July 1, 2025, even if the company registry already reflects the reclassified business activity codes.

Therefore, until a company amends its constitutional document on or after July 1, 2025 for a reason unrelated to its business activities, it is not required to arrange for the reclassification of its business activities according to TEÁOR’25 in the constitutional document. However, since the activities must be reclassified according to TEÁOR’25 until July 1, 2025, and reported to the National Tax and Customs Authority (if the National Tax and Customs Authority has not automatically reclassified all activities), it is advisable to also update the constitutional document simultaneously.

We note that pursuant to the amendment to the Company Act, companies are required to submit their constitutional documents to the court of registry indicating the TEÁOR’25 business activity codes, at the latest during the first amendment on or after July 1, 2025 of the data registered in the company registry (excluding data modified due to the automatic reclassification of the main business activity codes). It is important to highlight that cases where changes occur in the data registered in the company registry do not always align with cases when the amendment of the constitutional document is mandatory. Strictly following the wording of the amendment, if, on or after July 1, 2025, there is an automatic change in the company's bank account number or the data of any person registered in the company registry (e.g., address), the constitutional document must be amended to reflect the reclassification of the business activity codes according to TEÁOR’25 and submitted to the court of registry, even if modifying the constitutional document is not otherwise mandatory. In light of the above, we believe the provision only leads to a logical conclusion if we interpret it in a way that the reclassification is mandatory when the constitutional document is amended for the first time on or after July 1, 2025 for reasons unrelated to the reclassification of business activity codes.

The reclassification of other business activities - the reclassification of which is straightforward - by the National Tax and Customs Authority in the company registry is a change in the data registered in the company registry which is not exempted by the amendment of the Company Act from the provision requiring that the reclassification of the TEÁOR'25 business activity codes in the constitutional document and its submission to the court of registry must occur at the latest upon the first amendment to the data registered  in the company registry on or after July 1, 2025. Therefore, based on the strict, literal interpretation of the amendment of the Company Act, the reclassification of business activity codes in the constitutional document to the TEÁOR'25 system and the submission of the amended constitutional document to the court of registry is mandatory if, on or after July 1, 2025, the other business activities are reclassified in the company registry based on the company's notification to the National Tax and Customs Authority. Thus, the automatic reclassification in the company registry of the main business activity would not trigger the obligation to reclassify the business activities in the constitutional document, but the automatic reclassification of the other business activities would. However, this contradicts the provision of the Company Act which states that if the amendment of the constitutional document solely concerns business activities other than the company’s main business activity, it is not necessary to submit the amended constitutional document to the court of registry, and it is sufficient to update the business activities in the constitutional document simultaneously with the next amendment. In our opinion, the above provision is to be interpreted to mean that the reclassification is only necessary upon the first amendment of the constitutional document on or after July 1, 2025 which is unrelated to the reclassification of business activities.

In light of the above, beyond the fact that the company registry may indicate both TEÁOR'08 and TEÁOR'25 classified business activities until August 31, 2025 with respect to the same company; it may also occur that due to a later amendment of the constitutional document, the classification of the business activities registered in the company registry and those in the constitutional document differ.

However, companies may decide at any time on or after January 1, 2025, to reclassify their business activities according to the TEÁOR'25 system in their constitutional documents. If they decide to do so, and the amendment of the constitutional document solely serves the indication of the business activity names and codes in the constitutional document according to the TEÁOR'25 system, the registration  request may be submitted to the court of registry without the payment of the stamp duty and the and the publication cost.

In our view, during the first amendment of the constitutional document on or after 1 July, 2025, it will be mandatory for the companies to reclassify their main business activity and other business activities to the TEÁOR’25 system in their constitutional document.

Our professional opinion is that is preferable to reclassify the business activities in the constitutional document as soon as possible, regardless of whether the constitutional document is amended due to reasons unrelated to the business activities or not, ensuring that the constitutional documents contains the up to date data with respect to the company. Therefore, we suggest that companies reclassify their business activities to the TEÁOR’25 system during the next amendment of their constitutional document, even if the amendment of the constitutional document occurs before July 1, 2025.

Change of the scope of business activities during the transitional period

If a company changes its main business activity on or after January 1, 2025, the new main business activity must be classified according to the TEÁOR’25 system and must be reported to the National Tax and Customs Authority. The National Tax and Customs Authority will electronically notify the court of registry of the new main business activity; and resultantly, the registration of the new main business activity in the company registry is automatic. The amendment of the constitutional document is mandatory in case of the change in the main business activity, and the amended constitutional document must be submitted to the court of registry within 30 days from the amendment, pursuant to the general rules. Our view is that the reclassification of the other business activities is not required in the constitutional document upon the change of the main business activity if the main business activity is changed before July 1, 2025. However, we recommend that companies reclassify the entire scope of their business activities according to the TEÁOR’25 system in the constitutional document simultaneously with the change of the main business activity.

If a company modifies its other business activities after January 1, 2025, the new business activities must also be classified according to the TEÁOR’25 system and reported to the National Tax and Customs Authority. The registration in the company registry is automatic in this case as well. In case of changes in the other business activities, it is not necessary to submit a registration request to the court of registry, the amended business activities may be incorporated into the amended constitutional document attached to the next registration request. In our opinion, this creates a special situation, as the business activities, already modified according to the TEÁOR’25 system, must be incorporated into the constitutional document if the constitutional document is amended for any reason before July 1, 2025. However, the reclassification of activities not affected by the modification to the TEÁOR’25 system remains optional in the constitutional document until the first amendment after July 1, 2025. Nevertheless, in this case, we strongly recommend that the business activities are reclassified according to the TEÁOR’25 system in the constitutional document amended before 1 July, 2025, ensuring compliance with the applicable laws as early as possible.

This amendment of the Company Act does not affect the provisions that the amended main business activity and other business activities, and the business activities reclassified to the TEÁOR’25 system must be reported to the National Tax and Customs Authority. The National Tax and Customs Authority will electronically notify the court of registry; and resultantly, the registration of the business activities in the company registry is automatic.

Company establishment

A particular situation arises for companies founded before January 1, 2025, in case the registration request is submitted after January 1, 2025. In such cases, before January 1, 2025, the constitutional document could only include the business activities classified according to the TEÁOR’08 system. However, the company registry will include the new business activities automatically reclassified to the TEÁOR’25 system by the Central Statistical Office and the National Tax and Customs Authority upon the company’s registration in the company registry. Companies, whose constitutional document is adopted after January 1, 2025, can only indicate business activities classified according to the TEÁOR’25 system in their constitutional documents. Thus, depending on the date of adoption of the constitutional document, classifications according to different TEÁOR systems may appear in registration applications submitted on or after January 1, 2025.

Corporate law consequences of non-compliance

As briefly mentioned above, the National Tax and Customs Authority will automatically delete business activities classified according to the TEÁOR'08 system, even if the company does not report the business activities reclassified to the TEÁOR'25 system within the specified deadline.

If the company does not comply with the provisions regarding the reclassification of business activities to the TEÁOR'25 system in its constitutional document, and amends its constitutional document on or after July 1, 2025 without reclassifying the business activities to the TEÁOR'25 system, the court of registry may request the resubmission of the constitutional document during the registration process. If, for any reason, the amendment of the constitutional document of the company which omits the mandatory reclassification is registered, or if company fails to comply with the request by the court of registry in connection with the reclassification of business activities in the constitutional document, there is a possibility that a judicial oversight procedure may be initiated against the company. However, based on our experience so far, the initiation of a judicial oversight procedure is generally triggered by a more serious non-compliance.

If you need corporate law assistance regarding the reclassification of business activities to the TEÁOR'25 system or the deadline for the reclassification, or if you need detailed legal advice on the new regulations, we remain at your disposal.