When registering your Hungarian company, you should also indicate its main activity. You do not simply state what you are planning to do: there is an official list, accepted by all EU countries, and you select the item that suits your planned activity the most. Each activity has a numeric ID, which is called their NACE code.
What exactly is a NACE code?
NACE is a classification system of things a company can do, created in 1970 to be used internationally to make economic statistics comparable by country. Its latest version was published in 2008, and it is currently used all over the European Union.
The name NACE is short for the General Industrial Classification of Economic Activities within the European Communities (the abbreviation comes from the French name: Nomenclature générale des Activités économiques dans les Communautés Européennes). In Hungarian, it is called TEÁOR, short for “Tevékenységek Egységes Ágazati Osztályozási Rendszere”, which means the same.
To reflect the classification, NACE uses codes to describe activities in a top-down fashion: first you consider the main area, and then you narrow it down. The full NACE code of an activity consists of one letter and 4 numbers.
- Level 1: letters A – U. The main area of the activity. g. J: Information and communication
- Level 2: 2 digits describing the division of the activity. g. J58 – Publishing activities.
- Level 3: 1 digit describing the group of the activity. g. J58.2 – Software publishing.
- Level 4: 1 digit describing the class of the activity. g. J58.2.1 – Publishing of computer games.
Seems complex? Check out our NACE code picker!
The NACE code for your Hungarian company
When you set up your Hungarian company, you must choose at least one activity for it – this will be its main activity. You can also choose an unlimited number of other activities as secondary or supplementary activities. The main activity must be indicated right at company setup and later can be modified only by a lawyer, for a set fee; the secondary activities can be added or modified by your accountant as you see fit.
Compared to other activities, most of your company’s revenues should come from the main activity, but there is no lower threshold. If your company has various activities, it can happen that only 25% of your revenue comes from your main activity, if that 25% is still more than what comes from all other activities.
At the same time, the NACE code does not have to be indicated on your invoices. You can also issue invoices even for activities you have not signed up for previously. However, if you see that you will create many invoices for a given activity, it makes sense to add that activity to your company data. While neither the Tax Authority (NAV) nor the Central Statistical Office (KSH) will follow invoice by invoice how much revenue you made for each activity, KSH will ask you once a year to indicate your approximate revenue for each activity.
When you set up bank your corporate bank account, the bank will also ask about your activities. When you are filling out their form, it also makes sense to think in the terms of NACE codes. This way you give the bank information that is more easily digestible, while also indicating that you know what you are talking about, proving that you are a trustworthy and reliable partner.
Need help with company formation?
When you set up your EU company in Hungary, you will be asked to indicate its main activity in terms of the NACE classification, so you will have to choose the right NACE code from the full list of 629 classes. When you do the incorporation with the Helpers Team, we will help you select the right NACE codes as part of our service based on your description. You can focus on launching your business – leave the administrative tasks to us.