More burden on companies

Restrictive regulations on registered seat services

Due to changes in legislation, companies whose seat is provided by a registered seat provider, so that its seat is located in a place where the company does not actually operate, must review its business practice in this respect.

Registered seat services

Registered seat services are services where a registered seat is made available for a company by a service provider but the company does not actually use the property and the company does not fulfill its obligations relating to the registered seat. In principle, a registered seat can be provided in a place exclusively owned by the service provider. However, registered seat services can also be provided if the owner of the property gave prior written consent and the parties are affiliated undertakings or the service provider is registered as the company’s delivery agent at the Registry or if a long-term accounting management agreement exists between the parties. Strict regulations on registered seat services are also applicable for non-commercial registered seat services.

Service agreement

Existing service agreements must be modified by 30 June 2018 at the latest and in the future registered seat services can be provided only in accordance with the new regulations. The agreement must be in writing, it cannot be terminated by ordinary termination within one year and the agreement cannot be concluded for a definite term, except if the company is also established for a definite term. The company is obliged to specify in the agreement which of its documents will be stored at the seat, but at least its corporate documents, permits, financial reports and tax filings must be kept there. The service provider must place the company’s sign on the property and this must be clearly visible from the public area. The service provider must also store separately the company’s documents and property and keep a list of these. A provision of the agreement indemnifying the provider in respect of these obligations is invalid. Additionally, the service provider must notify the company of receipt of mail within one working day.

Obligation to notify

The service provider must send data concerning registered seat services to the tax authority by 29 September 2017. The reporting obligation is not only applicable to future services but also to existing registered seat services. Non-compliance with the reporting obligation is sanctioned by default penalty.

Source: Decree no. 7/2017 (VI.1.) of the Hungarian Minister of Justice on registered seat services

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