Accounting in Euros, US Dollars or Pound Sterling

As we approach the end of the current fiscal year, it is common for internationally active companies to realize that there will be significant, unrealized exchange rate differences in the financial statements of their foreign subsidiaries.

Should this lead to a loss, it may be necessary to recapitalize the equity, while in the case of exchange rate gains, although no real profits have been made, corporate tax liability may become higher. Divergences between local and foreign settlements due to exchange rate differences are also common.

So has the time arrived to change the accounting currency from the local currency to a functional currency? In our article we summarize the aspects on the basis of which it is worthwhile for international companies to change the accounting currency of their foreign subsidiaries.

Using Hungary as an example, we discuss the different options and choices between currencies, the possibilities of tax holidays and practical aspects of managing the change.

For further information on questions concerning changeover to currency-based accounting, please do not hesitate to contact Gyarmathy&Partners