Doing Business 2018 Hungary Economy Pro le of Hungary Doing Business 2018 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction Procedures, time and cost to complete all formalities to build a warehouse and the quality control and permits safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time and total tax rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local rms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more e cient regulation; o ers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business o ers detailed subnational reports, which exhaustively cover business regulation and reform in di erent cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The rst Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business, also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has bene ted from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. Page 2   for insolvency Doing Business Labor market 2018 regulation Hungary Flexibility in employment regulation and aspects of job quality About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local rms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more e cient regulation; o ers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business o ers detailed subnational reports, which exhaustively cover business regulation and reform in di erent cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The rst Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business, also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has bene ted from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. The distance to frontier (DTF) measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s distance to frontier is re ected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the frontier. The ease of doing business ranking ranges from 1 to 190. The ranking of 190 economies is determined by sorting the aggregate distance to frontier scores, rounded to two decimals. More about Doing Business (PDF, 5MB) Ease of Doing Business in Region OECD high income DB 2018 Rank 190 1 Hungary Income Category High income 48 Population 9,817,958 DB 2018 Distance to Frontier (DTF) GNI Per Capita (US$) 12,570 0 100 72.39 City Covered Budapest DB 2018 Distance to Frontier (DTF) 0 100 77.46: Regional Average (OECD high income) 77.30: Poland (Rank: 27) 76.27: Czech Republic (Rank: 30) 73.00: Moldova (Rank: 44) 72.39: Hungary (Rank: 48) Page 3   71.91: Bulgaria (Rank: 50) aggregate distance to frontier scores, rounded to two decimals. More Doingabout 2018 (PDF, Doing Business Business 5MB) Hungary Ease of Doing Business in Region OECD high income DB 2018 Rank 190 1 Hungary Income Category High income 48 Population 9,817,958 DB 2018 Distance to Frontier (DTF) GNI Per Capita (US$) 12,570 0 100 72.39 City Covered Budapest DB 2018 Distance to Frontier (DTF) 0 100 77.46: Regional Average (OECD high income) 77.30: Poland (Rank: 27) 76.27: Czech Republic (Rank: 30) 73.00: Moldova (Rank: 44) 72.39: Hungary (Rank: 48) 71.91: Bulgaria (Rank: 50) Note: The distance to frontier (DTF) measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s distance to frontier is re ected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the frontier. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Hungary 1 1 13 29 29 28 55 62 79 82 90 93 Rank 110 108 109 136 163 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Distance to Frontier (DTF) on Doing Business topics - Hungary 100.00 100 87.60 80.09 80 75.00 73.75 71.49 67.93 63.26 60 54.75 DTF 50.00 40 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Change:+0.01 Change:+0.01 Change:0.00 Investors Change:-0.01 Borders Change:+1.85 Change:+0.37 Change:+0.32 Permits Change:0.00 Change:0.00 Change:+0.04 Starting a Business Page 4   This topic measures the paid-in minimum capital requirement, number of procedures, time and cost for a small- to medium-sized a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Change:+0.01 Change:+0.01 Change:0.00 Investors Change:-0.01 Borders Change:+1.85 Change:+0.37 Change:+0.32 Permits Change:0.00 Change:0.00 Doing Business 2018 Hungary Change:+0.04 Starting a Business This topic measures the paid-in minimum capital requirement, number of procedures, time and cost for a small- to medium-sized limited liability company to start up and formally operate in economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The distance to frontier score for each indicator is the average of the scores obtained for each of the component indicators. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and operate a To make the data comparable across economies, several assumptions company (number) about the business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay Pre-registration (for example, name verification no bribes. or reservation, notarization) Registration in economy’s largest business city The business: - Is a limited liability company (or its legal equivalent). If there is more than Post-registration (for example, social security one type of limited liability company in the economy, the most common registration, company seal) among domestic rms is chosen. Information on the most common form is Obtaining approval from spouse to start business obtained from incorporation lawyers or the statistical o ce. or leave home to register company - Operates in the economy’s largest business city and the entire o ce Obtaining any gender-specific permission that space is approximately 929 square meters (10,000 square feet). For 11 can impact company registration, company economies the data are also collected for the second largest business city. operations and process of getting national - Is 100% domestically owned and has ve owners, none of whom is a legal identity card entity; and has a start-up capital of 10 times income per capita and has a Time required to complete each procedure turnover of at least 100 times income per capita. (calendar days) - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does Does not include time spent gathering not perform foreign trade activities and does not handle products subject information to a special tax regime, for example, liquor or tobacco. It does not use Each procedure starts on a separate day (2 heavily polluting production processes. procedures cannot start on the same day) - Leases the commercial plant or o ces and is not a proprietor of real Procedures fully completed online are recorded estate and the amount of the annual lease for the o ce space is equivalent as ½ day to 1 times income per capita. Procedure is considered completed once final - Does not qualify for investment incentives or any special bene ts. document is received - Has at least 10 and up to 50 employees one month after the commencement of operations, all of whom are domestic nationals. No prior contact with officials - Has a company deed 10 pages long. Cost required to complete each procedure (% of The owners: income per capita) - Have reached the legal age of majority. If there is no legal age of majority, Official costs only, no bribes they are assumed to be 30 years old. No professional fees unless services required by - Are sane, competent, in good health and have no criminal record. law or commonly used in practice - Are married and the marriage is monogamous and registered with the authorities. Paid-in minimum capital (% of income per capita) - Where the answer di ers according to the legal system applicable to the Funds deposited in a bank or with third party woman or man in question (as may be the case in economies where there before registration or up to 3 months after is legal plurality), the answer used will be the one that applies to the incorporation majority of the population. Standardized Company Page 5   before registration or up to 3 months after is legal plurality), the answer used will be the one that applies to the incorporation majority of the population. Doing Business 2018 Hungary Standardized Company Legal form Korlatolt Felelossegu Tarsasag (KFT) - Limited Liability Company Paid-in minimum capital requirement HUF 1,500,000 City Covered Budapest OECD high OECD high Indicator Hungary income income Overall Best Performer Procedure – Men (number) 6 4.9 4.9 1.00 (New Zealand) Time – Men (days) 7 8.5 8.5 0.50 (New Zealand) Cost – Men (% of income per capita) 5.4 3.1 3.1 0.00 (United Kingdom) Procedure – Women (number) 6 4.9 4.9 1.00 (New Zealand) Time – Women (days) 7 8.5 8.5 0.50 (New Zealand) Cost – Women (% of income per capita) 5.4 3.1 3.1 0.00 (United Kingdom) Paid-in min. capital (% of income per capita) 43.8 8.7 8.7 0.00 (113 Economies) Figure – Starting a Business in Hungary and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 93.76: Moldova (Rank: 23) 91.35: Regional Average (OECD high income) 87.60: Hungary (Rank: 79) 87.44: Czech Republic (Rank: 81) 85.37: Bulgaria (Rank: 95) 82.78: Poland (Rank: 120) Note: The ranking of economies on the ease of starting a business is determined by sorting their distance to frontier scores for starting a business. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Starting a Business in Hungary – Procedure, Time and Cost Time Cost 7 6 6 5 ost (% of income per capita) 5 4 Time (days) 4 3 3 2 2 Page 6   starting a business. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Hungary Figure – Starting a Business in Hungary – Procedure, Time and Cost Time Cost 7 6 6 5 Cost (% of income per capita) 5 4 Time (days) 4 3 3 2 2 1 1 0 0 1 2 3 4 *5 *6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Details – Starting a Business in Hungary – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Hire a lawyer who will represent the company; create the company deed 1 day HUF 100,000-260,000 and prepare any other necessary legal document ; varies according to Agency : Lawyer the complexity The company must be represented by a lawyer during the registration process. The lawyer's commission fee is subject to free agreement, and it depends on the complexity of the case. 2 Open a bank account and deposit the capital 1 day no charge Agency : Bank Companies must open a bank account and deposit their capital. The current legislation envisages certain restrictions that relate to dividend distribution and apply to those founders who pay less than 50% of the required minimum paid-in capital at the time of incorporation. Furthermore, such founders bear liability for the company’s obligations in the amount of their outstanding obligations. These provisions are stipulated in the Section 3:162 of the Civil Code. 3 Apply for registration at the Registration Court (simpli ed electronic 2 days Free of charge for registration) incorporation. Agency : Registration Court The Tax Authority examines if the request for company’s registration was submitted to the Court of Registration. The Tax Authority can refuse to issue a tax number if a hindrance (e.g. tax debt exceeding HUF 15 million) exists regarding a managing director, an owner entitled to represent the company Page 7   or an owner/majority shareholder. The Tax Authority also examines these (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Doing Business 2018 Hungary Details – Starting a Business in Hungary – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Hire a lawyer who will represent the company; create the company deed 1 day HUF 100,000-260,000 and prepare any other necessary legal document ; varies according to Agency : Lawyer the complexity The company must be represented by a lawyer during the registration process. The lawyer's commission fee is subject to free agreement, and it depends on the complexity of the case. 2 Open a bank account and deposit the capital 1 day no charge Agency : Bank Companies must open a bank account and deposit their capital. The current legislation envisages certain restrictions that relate to dividend distribution and apply to those founders who pay less than 50% of the required minimum paid-in capital at the time of incorporation. Furthermore, such founders bear liability for the company’s obligations in the amount of their outstanding obligations. These provisions are stipulated in the Section 3:162 of the Civil Code. 3 Apply for registration at the Registration Court (simpli ed electronic 2 days Free of charge for registration) incorporation. Agency : Registration Court The Tax Authority examines if the request for company’s registration was submitted to the Court of Registration. The Tax Authority can refuse to issue a tax number if a hindrance (e.g. tax debt exceeding HUF 15 million) exists regarding a managing director, an owner entitled to represent the company or an owner/majority shareholder. The Tax Authority also examines these circumstances and hindrances in case there is any change in the above enlisted persons. The Registry Court receives the application for registration, and after a certi cate is issued with the company’s name, address, temporary tax and statistical number and the number of reference of the registration. If the National Customs and Tax Authority consider that the founder or the managing director falls under suspicion according to the above detailed statutory obstacles, Tax Authority does not duly send the tax number of the company to the Registry Court within one working day and the registration process will be suspended for the period of the pending investigation. Companies can be incorporated in 2 ways: 1. By simpli ed electronic ling Incorporation: 2 business days (up to 8 business days) In the simpli ed electronic ling, the companies must use a standardized template for the articles of association. 2. By standard electronic ling: Incorporation: 15 business days As of March 16, 2017, the fee for incorporation has been abolished. Along with the submission of the registration application, the court also Page 8   registers companies with the State Tax Authority (for VAT and income tax their outstanding obligations. These provisions are stipulated in the Section Doing 3:162 of the Civil Business 2018 Code. Hungary 3 Apply for registration at the Registration Court (simpli ed electronic 2 days Free of charge for registration) incorporation. Agency : Registration Court The Tax Authority examines if the request for company’s registration was submitted to the Court of Registration. The Tax Authority can refuse to issue a tax number if a hindrance (e.g. tax debt exceeding HUF 15 million) exists regarding a managing director, an owner entitled to represent the company or an owner/majority shareholder. The Tax Authority also examines these circumstances and hindrances in case there is any change in the above enlisted persons. The Registry Court receives the application for registration, and after a certi cate is issued with the company’s name, address, temporary tax and statistical number and the number of reference of the registration. If the National Customs and Tax Authority consider that the founder or the managing director falls under suspicion according to the above detailed statutory obstacles, Tax Authority does not duly send the tax number of the company to the Registry Court within one working day and the registration process will be suspended for the period of the pending investigation. Companies can be incorporated in 2 ways: 1. By simpli ed electronic ling Incorporation: 2 business days (up to 8 business days) In the simpli ed electronic ling, the companies must use a standardized template for the articles of association. 2. By standard electronic ling: Incorporation: 15 business days As of March 16, 2017, the fee for incorporation has been abolished. Along with the submission of the registration application, the court also registers companies with the State Tax Authority (for VAT and income tax purposes) and with the Statistical O ce through an online system. 4 Register with the National O ce for Health Insurance 1 day no charge Agency : National O ce for Health Insurance (done through the National Tax and Customs Authority) The company needs to register with the Hungarian Social Security O ce. Before commencing an employment, the employer has to le the employee’s data to the Tax Authority, i.e. to notify the Tax Authority on the employment with that employee. Once the ling is done, the noti cation is considered to be performed. Data required for each employee: 1. Name; 2. Birthdate and place of birth; 3.Tax and social securty number; 4. Citizenship; 5. The start of the work-contract and the code of the type of employment (i.e., permanent, termporary); 6. Field of activity (FEOR statistical code for activity types); 7. Weekly working times; 8. Education, training or quali cations, as well as the certi cations number and issuing entities name. Page 9   registers companies with the State Tax Authority (for VAT and income tax Doing purposes) Business and with the 2018 Statistical O ce through an online system. Hungary 4 Register with the National O ce for Health Insurance 1 day no charge Agency : National O ce for Health Insurance (done through the National Tax and Customs Authority) The company needs to register with the Hungarian Social Security O ce. Before commencing an employment, the employer has to le the employee’s data to the Tax Authority, i.e. to notify the Tax Authority on the employment with that employee. Once the ling is done, the noti cation is considered to be performed. Data required for each employee: 1. Name; 2. Birthdate and place of birth; 3.Tax and social securty number; 4. Citizenship; 5. The start of the work-contract and the code of the type of employment (i.e., permanent, termporary); 6. Field of activity (FEOR statistical code for activity types); 7. Weekly working times; 8. Education, training or quali cations, as well as the certi cations number and issuing entities name. 5 Registration for Municipal Business Tax 1 day no charge Agency : Tax Department of Municipality (simultaneous with previous Newly incorporated companies are obliged to register with the municipality procedure) for the municipal business tax (helyi iparüzési adó) within 15 days after registration at the company registrar. The information they need to provide includes: company name, seat, tax number, etc. In Budapest this can happen in three ways: 1. Download and print the registration form from the municipality´s homepage (https://ssl.budapest.hu/web_hair/ufo.do? _ID=2016-01) and submit lled out form by registered mail; or 2. In person at the municipal tax department; or 3. electronic ling of the registration form through the e-government system (ügyfélkapú) if one has access to it. The municipality issues a certi cate of receipt for the online registration and, in the case of paper based registration, a stamped certi cation of receipt. Later on, the municipality issues a local taxpayer-number to the company. The number is sent by mail to the company address. The tax rate in Budapest is currently set at 2% (the maximum limit set by national law; from this downwards the municipality can decide on rebates), payable twice a year. 6 Register with the Hungarian Chamber of Commerce and Industry 1 day, simultaneous Annual contribution Agency : Hungarian Chamber of Commerce and Industry with previous of HUF 5,000 procedure Economic actors whose registration in the register of companies is mandatory and private entrepreneurs shall within ve working days after registration apply for registration in the regional chamber of economy of competence (Section 8/A of Act CXXI of 1999 on Chambers of Economy as amended on January 1, 2012). Chamber registers shall contain the following particulars of economic operators: a) name; b) registered seat, establishment(s), branch(es); c) main activity, and the activity or activities actually performed; d) tax number; e) bank account number(s); f) classi cation according to the Act on Small and Medium-sized Enterprises and the Support Provided to Such Enterprises; Page 10   g) electronic contact information (e-mail, website); currently set at 2% (the maximum limit set by national law; from this Business the Doing downwards municipality 2018 Hungary can decide on rebates), payable twice a year. 6 Register with the Hungarian Chamber of Commerce and Industry 1 day, simultaneous Annual contribution Agency : Hungarian Chamber of Commerce and Industry with previous of HUF 5,000 procedure Economic actors whose registration in the register of companies is mandatory and private entrepreneurs shall within ve working days after registration apply for registration in the regional chamber of economy of competence (Section 8/A of Act CXXI of 1999 on Chambers of Economy as amended on January 1, 2012). Chamber registers shall contain the following particulars of economic operators: a) name; b) registered seat, establishment(s), branch(es); c) main activity, and the activity or activities actually performed; d) tax number; e) bank account number(s); f) classi cation according to the Act on Small and Medium-sized Enterprises and the Support Provided to Such Enterprises; g) electronic contact information (e-mail, website); h) name of legal representative, and - in the case of voluntary disclosure, upon the economic operator’s speci c request - name of the designated contact person, including contact information. Applies to women only. Takes place simultaneously with previous procedure. Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required noti cations, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certi cation requirements. The most recent round of data collection was completed in June 2017. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility Submitting all relevant documents and obtaining connections are used. all necessary clearances, licenses, permits and certificates The construction company (BuildCo): Submitting all required notifications and - Is a limited liability company (or its legal equivalent) and operates in the receiving all necessary inspections economy’s largest business city. For 11 economies the data are also collected for the second largest business city. Obtaining utility connections for water and - Is 100% domestically and privately owned; has ve owners, none of whom sewerage is a legal entity. Has a licensed architect and a licensed engineer, both Registering and selling the warehouse after its registered with the local association of architects or engineers. BuildCo is completion not assumed to have any other employees who are technical or licensed Time required to complete each procedure experts, such as geological or topographical experts. (calendar days) - Owns the land on which the warehouse will be built and will sell the warehouse upon its completion. Does not include time spent gathering information The warehouse: Page 11   Each procedure starts on a separate day— Applies to women only. Takes place simultaneously with previous procedure. Doing Business 2018 Hungary Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required noti cations, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certi cation requirements. The most recent round of data collection was completed in June 2017. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility Submitting all relevant documents and obtaining connections are used. all necessary clearances, licenses, permits and certificates The construction company (BuildCo): Submitting all required notifications and - Is a limited liability company (or its legal equivalent) and operates in the receiving all necessary inspections economy’s largest business city. For 11 economies the data are also collected for the second largest business city. Obtaining utility connections for water and - Is 100% domestically and privately owned; has ve owners, none of whom sewerage is a legal entity. Has a licensed architect and a licensed engineer, both Registering and selling the warehouse after its registered with the local association of architects or engineers. BuildCo is completion not assumed to have any other employees who are technical or licensed Time required to complete each procedure experts, such as geological or topographical experts. (calendar days) - Owns the land on which the warehouse will be built and will sell the warehouse upon its completion. Does not include time spent gathering information The warehouse: Each procedure starts on a separate day— - Will be used for general storage activities, such as storage of books or though procedures that can be fully completed stationery. online are an exception to this rule - Will have two stories, both above ground, with a total constructed area of Procedure is considered completed once final approximately 1,300.6 square meters (14,000 square feet). Each oor will document is received be 3 meters (9 feet, 10 inches) high and will be located on a land plot of No prior contact with officials approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of - Will have complete architectural and technical plans prepared by a warehouse value) licensed architect. If preparation of the plans requires such steps as Official costs only, no bribes obtaining further documentation or getting prior approvals from external Building quality control index (0-15) agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative Sum of the scores of six component indices: and regulatory requirements). Quality of building regulations (0-2) The water and sewerage connections: Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer Quality control during construction (0-3) tap. If there is no water delivery infrastructure in the economy, a borehole Quality control after construction (0-3) will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. Liability and insurance regimes (0-2) - Will have an average water use of 662 liters (175 gallons) a day and an Professional certifications (0-4) average wastewater ow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater ow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater ow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Standardized Warehouse Page 12   and 4 inches in diameter for the sewerage connection. Doing Business 2018 Hungary Standardized Warehouse Estimated value of warehouse HUF 171,322,424.10 City Covered Budapest OECD high OECD high Indicator Hungary income income Overall Best Performer Procedures (number) 20 12.5 12.5 7.00 (Denmark) Time (days) 205.5 154.6 154.6 27.5 (Korea, Rep.) Cost (% of warehouse value) 0.6 1.6 1.6 0.10 (5 Economies) Building quality control index (0-15) 13.0 11.4 11.4 15.00 (3 Economies) Figure – Dealing with Construction Permits in Hungary and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 75.16: Poland (Rank: 41) 75.14: Regional Average (OECD high income) 73.35: Bulgaria (Rank: 51) 67.93: Hungary (Rank: 90) 62.77: Czech Republic (Rank: 127) 51.98: Moldova (Rank: 165) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their distance to frontier scores for dealing with construction permits. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Dealing with Construction Permits in Hungary – Procedure, Time and Cost Time Cost 0.25 200 0.2 Cost (% of warehouse value) 150 Time (days) 0.15 100 0.1 50 0.05 0 0 1 2 *3 *4 5 *6 *7 8 9 10 11 12 13 * 14 15 * 16 17 * 18 * 19 20 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Page 13   component indicators. Doing Business 2018 Hungary Figure – Dealing with Construction Permits in Hungary – Procedure, Time and Cost Time Cost 0.25 200 0.2 Cost (% of warehouse value) 150 Time (days) 0.15 100 0.1 50 0.05 0 0 1 2 *3 *4 5 *6 *7 8 9 10 11 12 13 * 14 15 * 16 17 * 18 * 19 20 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Dealing with Construction Permits in Hungary and comparator economies – Measure of Quality 14 13.0 13.0 12.0 12.0 12 11.4 10.0 10 Index score 8 6 4 2 0 Hungary Bulgaria Czech Republic Moldova Poland OECD high income Details – Dealing with Construction Permits in Hungary – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Request and obtain certi cate of site ownership and site map from the 1 day HUF 9,250 Földhivatal Agency : Land Administration Földhivatal The site map is obtained by BuildCo. The site ownership certi cate can be obtained either by BuildCo or by the local construction authority. The authorities have introduced an electronic application and database and internal administrative processes have become more e cient. However, site ownership certi cate and the site maps have to be obtained in a physical copy for the purposes of applying for a building permit. 2 Request and obtain urban planning approval 30 days no charge Page 14   Agency : Municipal Planning Board Hungary Bulgaria Czech Republic Moldova Poland OECD high income Doing Business 2018 Hungary Details – Dealing with Construction Permits in Hungary – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Request and obtain certi cate of site ownership and site map from the 1 day HUF 9,250 Földhivatal Agency : Land Administration Földhivatal The site map is obtained by BuildCo. The site ownership certi cate can be obtained either by BuildCo or by the local construction authority. The authorities have introduced an electronic application and database and internal administrative processes have become more e cient. However, site ownership certi cate and the site maps have to be obtained in a physical copy for the purposes of applying for a building permit. 2 Request and obtain urban planning approval 30 days no charge Agency : Municipal Planning Board The Municipal Planning Board has to approve the basic project plan (not the detailed architectural plans) of the building. During this approval the Municipal Planning Board establishes whether the building will be far away from other neighboring buildings, how it ts into the landscape, and whether the envisioned construction project complies with the aesthetic standards of the region. 3 Obtain a geo-technical report 14 days HUF 100,000 Agency : Private Licensed Company BuildCo hires an external geo-technician in order to study the land’s capacity, quality, and its groundwater properties. The hired technician visits the site and digs the land at two or three points depending on the quality of the land. The cost recorded is based on two digging points. The technician submits the soil samples to a laboratory. The lab result de nes the methods by which the foundation of the warehouse is laid. This information is also necessary in order for BuildCo’s architect to draw the architectural plans. BuildCo is required to attach the geo-technician's report as part of the technical documentation for the construction license, pursuant to Regulation No. 312/2012. (XI. 8.). 4 Request and obtain a utility statement from Budapest Waterworks Ltd. 1 day no charge Agency : Budapest Waterworks Ltd. BuildCo completes a form and submits it to Budapest Waterworks Ltd. The form has to include the property’s address, and the estimated water demand along with an attached site map. After the form is received by the utility it issues a utility statement. The statement states the water capacity: the external network water capacity for consumption and in case of re, and at what pressure level the re water can be provided in case of re. The form is also submitted when applying for the water and sewage connection. According to Regulation No. 312/2012 (XI.8.), BuildCo is no longer required to submit the utility's o cial statement to the construction license application. However, according to the same regulation, BuildCo is required to state that the technical conditions of the site will able to facilitate the water connection. Therefore, a statement is requested from the utility, and attached to the construction license application. Moreover, the information provided in the statement is essential for BuildCo to draw the re plans that are part of the construction license application. Page 15   technical documentation for the construction license, pursuant to Doing Regulation Business No. 312/2012. 2018 (XI. 8.). Hungary 4 Request and obtain a utility statement from Budapest Waterworks Ltd. 1 day no charge Agency : Budapest Waterworks Ltd. BuildCo completes a form and submits it to Budapest Waterworks Ltd. The form has to include the property’s address, and the estimated water demand along with an attached site map. After the form is received by the utility it issues a utility statement. The statement states the water capacity: the external network water capacity for consumption and in case of re, and at what pressure level the re water can be provided in case of re. The form is also submitted when applying for the water and sewage connection. According to Regulation No. 312/2012 (XI.8.), BuildCo is no longer required to submit the utility's o cial statement to the construction license application. However, according to the same regulation, BuildCo is required to state that the technical conditions of the site will able to facilitate the water connection. Therefore, a statement is requested from the utility, and attached to the construction license application. Moreover, the information provided in the statement is essential for BuildCo to draw the re plans that are part of the construction license application. 5 Request and obtain authorization from the water authorities 30 days no charge Agency : Budapest Waterworks Ltd. BuildCo submits its application for water connection, along with the utility statement on water capacity, the average amount of water usage, a site ownership certi cate, and a site map on which BuildCo identi es where the connection point on-site will be according to Regulation No. 58/2013 (II.27.). The utility reviews the application and sends out the Utility Permission document (which includes the project's technical details and the total cost, along with two copies of the contract). 6 Request and obtain re protection authorization 30 days HUF 3,000 Agency : Fire Protection Department The architectural plans contain the re protection statement, which must be approved by the Fire Department. The authorization must be obtained before the construction license is issued. 7 Request and obtain authorization from the sewage authorities 15 days no charge Agency : Budapest Sewage Works BuildCo submits its application along a site ownership certi cate, a site map, a site drawings, and the technical plans of the connection. The utility overviews the application and sends out the contract along with the utility permission document. The documents identify BuildCo’s responsibilities to receive a sewage connection’s approval. 8 Request and obtain construction license 45 days HUF 113,700 Agency : Mayor’s O ce of the District Municipality The investor applies for the construction license through the ETDR online system, which was introduced on October 1, 2013. The construction license will be issued in 45 days if all documents are submitted properly. When an application is submitted for a construction license, the Municipality is responsible for contacting the National Public Health and Medical O cer Service (ANTSZ) for their approval of the construction project, as well as other special authorities, as required in each speci c project. This is done by the Municipality on behalf of the investor. The authorization from ANTSZ costs HUF 8,700, which is added to the cost of the construction license. Due Page 16   to the fact that the Municipality reaches out to ANTSZ on behalf of the permission document. The documents identify BuildCo’s responsibilities to Doing receive 2018connection’s a sewage Business Hungary approval. 8 Request and obtain construction license 45 days HUF 113,700 Agency : Mayor’s O ce of the District Municipality The investor applies for the construction license through the ETDR online system, which was introduced on October 1, 2013. The construction license will be issued in 45 days if all documents are submitted properly. When an application is submitted for a construction license, the Municipality is responsible for contacting the National Public Health and Medical O cer Service (ANTSZ) for their approval of the construction project, as well as other special authorities, as required in each speci c project. This is done by the Municipality on behalf of the investor. The authorization from ANTSZ costs HUF 8,700, which is added to the cost of the construction license. Due to the fact that the Municipality reaches out to ANTSZ on behalf of the investor, this fee is included in this procedure. 9 Receive on-site inspection from the Municipality 1 day no charge Agency : Mayor’s O ce of the District Municipality Once BuildCo applies for the construction license, the Building Department informs BuildCo through the “ÉTDR” online application system of the date of the on-site inspection. The Building Department will inspect whether the submitted plans comply with the site, and whether any construction has taken place. If any construction has taken place prior to the issuance of the construction license, BuildCo is required to pay a penalty fee. 10 Set up e-construction log 0.5 days HUF 7,000 Agency : Lechner Knowledge Center (Lechner Tudásközpont) Hungary introduced an e-construction log system in 2013 which improved the e ciency of the internal administrative process. In order to open an account on this system, BuildCo must rst pay the account fee to Lechner Nonpro t Ltd. which can also be done electronically. To set up the log, BuildCo must submit the project’s implementation plan, all of the work contracts and information on the workers. Moreover, BuildCo is required to update the log on a daily basis during construction with the following information: - The type of work completed on the site - The number of people who worked - The updated certi cates on the waste removals The regulations regarding the implementation process, as well as the usage of the e-construction log is regulated in Regulation No. 191/2009 (IX. 15.). 11 Receive unscheduled inspection from Building Control Authority. 1 day no charge Agency : Building Control Authority The Building Control Authority of the Municipality comes to the construction site at least once to conduct an unscheduled technical inspection. This is stipulated in the Government Regulation 313/2012, in force since June 30, 2013. 12 Request and obtain water connection from Budapest Waterworks Ltd. 10 days HUF 361,100 Agency : Budapest Water Works BuildCo is responsible for setting up the water pit within one meter from the property line. The water pit is needed because the meter will be placed there Page 17   by the utility. After the water pit is installed, BuildCo sends back the contract This is stipulated in the Government Regulation 313/2012, in force since June Doing 30, 2013. Business 2018 Hungary 12 Request and obtain water connection from Budapest Waterworks Ltd. 10 days HUF 361,100 Agency : Budapest Water Works BuildCo is responsible for setting up the water pit within one meter from the property line. The water pit is needed because the meter will be placed there by the utility. After the water pit is installed, BuildCo sends back the contract and pays the external connection fee along with the utility public development contribution fee (a fee for a new water connection). Then BuildCo informs Budapest Waterworks Ltd. in order to check that the installation of the water pit was properly installed. The utility then installs the pipes in order to connect the external and internal network, disinfects the pipes, ensures a pressure-, functional-, impermeability-, geodetic measure tests, and then installs the water meter. The process of installing the connection can take place anytime prior, during or after the construction of the warehouse or the on-site pipes or even before granting BuildCo the construction license. However, it has to be completed before obtaining the occupancy permit. 13 Request and obtain sewerage connection 21 days HUF 363,659 Agency : Budapest Sewage Works The connection work is done by BuildCo’s hired technician. Until the water meter is installed by Budapest Waterworks Ltd., the sewage service cannot be used because the water meter monitors the monthly billing of the sewage usage as well. BuildCo noti es the utility after the connection work is completed, and the utility subsequently inspects the site to verify whether the connection was done. After the connection has been successfully completed, and BuildCo has returned the signed contract and paid the inspection fee and the public utility development contribution fee (fee for any new sewage connection), the utility will issue the occupancy permit for the sewage network. For more complex buildings, there is generally a requirement to obtain a utility statement on capacity from the sewage authorities, but for the Doing Business case study, this requirement does not apply because the sewage main is available. Close e-construction log 0.5 days no charge 14 Agency : Lechner Knowledge Center (Lechner Tudásközpont) BuildCo closes the e-construction log once all of the work is completed on- site and must upload the following documents: - Daily, detailed updates on the type of work completed on the site - Certi cates on the waste removals - Operational and maintenance instructions to the warehouse - Warranty documents - Report indicating that the site manager has handed the site over to BuildCo, which proves that the construction has been completed on the site The closure of the log serves as BuildCo's noti cation to the Building and Heritage Protection Unit and to the Building Department of the completion of the construction. 15 Submit the new geodetic map to the land Registry 10 days HUF 800 Agency : Land Registry BuildCo must obtain a new geodetic map drawn by a hired surveyor any time after the construction is completed on-site. The hired surveyor submits the Page 18   map to the Land Registry. According to the 2004. CXL. Law, the Land Registry Heritage Protection Unit and to the Building Department of the completion Doing of the construction. Business 2018 Hungary 15 Submit the new geodetic map to the land Registry 10 days HUF 800 Agency : Land Registry BuildCo must obtain a new geodetic map drawn by a hired surveyor any time after the construction is completed on-site. The hired surveyor submits the map to the Land Registry. According to the 2004. CXL. Law, the Land Registry reviews and authorizes the new geodetic map (the map includes the newly built warehouse) from a cartographic point of view. After the Land Registry approves the new geodetic map, the hired surveyor submits it to the “OÉNY” National Building Register online platform before or at the same time requesting the occupancy permit. This is an open source database, where anyone can obtain information on any property. During the authorization process of the occupancy permit, the Building Department also reviews the new geodetic map to verify whether it complies with construction license regulations. Receive on-site inspection to check on the quality of water 10 days HUF 29,000 16 Agency : National Public Health and Medical O cer Service (ANTSZ) A representative from the National Public Health and Medical O cer Service (ANTSZ) comes to inspect the quality of water. The representative takes a sample of the water and sends it to the lab for testing. The approval is issued within 10 days. Obtaining approval on the cleanliness of water is one of the conditions that the Public Health Unit set before its approval for construction license. These condition must be completed prior to applying for the occupancy permit of the building since the Public Health Unit requires this document in order to approve the occupancy permit. It has to be done before the occupancy permit, and after the water and sewage network were installed. 17 Receive nal inspection from the Fire Protection Department 1 day no charge Agency : Fire Protection Department BuildCo must request the occupancy permit through the “ÉTDR” online platform system attesting that they complied with the standards concerning each of the specialized authorities. The Fire Protection Unit mandates that the re alarm occupancy permit be issued before the construction occupancy permit can be requested. A specialist from the Fire Protection Unit visits the site and inspects whether the re taps and the re water system of the building comply with regulations. Once the on-site inspection is done, the Fire Protection Unit issues a declaration that the building has been completed in compliance with the technical plans. Receive nal inspection from the Public Health Department 1 day no charge 18 Agency : Public Health Department A specialist from the Public Health Unit visits the site and inspects whether the conditions for worker safety and private locations (i.e., locker rooms, restrooms, smoking zones, etc.) comply with the health regulations. Receive nal inspection from the Building Department 1 day no charge 19 Agency : Municipality There is an option for all of the authorities to visit the site together on the same day; however in practice the authorities inspect the building separately. The Building Department conducts its nal inspection of the Page 19   warehouse and its surroundings to ensure they comply with the technical the conditions for worker safety and private locations (i.e., locker rooms, Businesssmoking Doing restrooms, 2018 zones, etc.) comply with the health regulations. Hungary Receive nal inspection from the Building Department 1 day no charge 19 Agency : Municipality There is an option for all of the authorities to visit the site together on the same day; however in practice the authorities inspect the building separately. The Building Department conducts its nal inspection of the warehouse and its surroundings to ensure they comply with the technical and architectural plans and with the relevant laws and regulations. 20 Obtain occupancy permit and register the building with the Land 51 days HUF 120,300 Registry Agency : Municipality After receiving the nal inspection, BuildCo applies for the occupancy permit through the ETDR online system, which was introduced on October 1, 2013. Once the occupancy permit is granted, the Building Department noti es the Land Registry directly in order for the Land Registry to update the site ownership certi cate and the site map. The Land Registry will note the function of the newly built warehouse on the site ownership certi cate, as well as the shape and the function of the new warehouse on the site map. After it is completed, the warehouse can be sold. BuildCo does not have to apply for the registration of the building. BuildCo just has to submit the new geodetic map prior to requesting the occupancy permit application/or the same time. After it is granted the Building Department noti es the Land Registry, so the process is automatic. Howerver, BuildCo only has to pay the processing fee of HUF 6,600 as it is noted at "Register the building with the Land Registry O ce". Takes place simultaneously with previous procedure. Details – Dealing with Construction Permits in Hungary – Measure of Quality Answer Score Building quality control index (0-15) 13.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly speci ed in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during Inspections by 1.0 Page 20   construction? (0-2) in-house Takes place simultaneously with previous procedure. Doing Business 2018 Hungary Details – Dealing with Construction Permits in Hungary – Measure of Quality Answer Score Building quality control index (0-15) 13.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly speci ed in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during Inspections by 1.0 construction? (0-2) in-house engineer; Unscheduled inspections. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a nal inspection required by law to verify that the building was built in Yes, nal 2.0 accordance with the approved plans and regulations? (0-2) inspection is done by government agency. Do legally mandated nal inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural aws or problems in the Architect or 1.0 building once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Construction company; Owner or investor. Which parties (if any) are required by law to obtain an insurance policy to cover No party is 0.0 possible structural aws or problems in the building once it is in use (Latent Defect required by law Page 21   Liability Insurance or Decennial Insurance)? (0-1) to obtain company; Owner Doing Business 2018 Hungary or investor. Which parties (if any) are required by law to obtain an insurance policy to cover No party is 0.0 possible structural aws or problems in the building once it is in use (Latent Defect required by law Liability Insurance or Decennial Insurance)? (0-1) to obtain insurance . Professional certi cations index (0-4) 4.0 What are the quali cation requirements for the professional responsible for verifying Minimum 2.0 that the architectural plans or drawings are in compliance with existing building number of years regulations? (0-2) of experience; University degree in architecture or engineering; Passing a certi cation exam. What are the quali cation requirements for the professional who supervises the Minimum 2.0 construction on the ground? (0-2) number of years of experience; University degree in engineering, construction or construction management; Being a registered architect or engineer; Passing a certi cation exam. Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tari s index measures reliability of supply, transparency of tari s and the price of electricity. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions are (number) used. Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the receiving all necessary inspections data are also collected for the second largest business city. Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is purchasing material for these works in an area with no physical constraints. For example, the property is not Concluding any necessary supply contract and near a railway. obtaining final supply - Is a new construction and is being connected to electricity for the rst time. Page 22   Time required to complete each procedure - Has two stories with a total surface area of approximately 1,300.6 square certi cation exam. Doing Business 2018 Hungary Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tari s index measures reliability of supply, transparency of tari s and the price of electricity. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions are (number) used. Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the receiving all necessary inspections data are also collected for the second largest business city. Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is purchasing material for these works in an area with no physical constraints. For example, the property is not Concluding any necessary supply contract and near a railway. obtaining final supply - Is a new construction and is being connected to electricity for the rst time. Time required to complete each procedure - Has two stories with a total surface area of approximately 1,300.6 square (calendar days) meters (14,000 square feet). The plot of land on which it is built is 929 Is at least 1 calendar day square meters (10,000 square feet). Each procedure starts on a separate day Does not include time spent gathering The electricity connection: information - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, Reflects the time spent in practice, with little when 1 kVA = 1 kilowatt (kW). follow-up and no prior contact with officials - Has a length of 150 meters. The connection is to either the low- or Cost required to complete each procedure (% of medium-voltage distribution network and is either overhead or income per capita) underground, whichever is more common in the area where the Official costs only, no bribes warehouse is located and requires works that involve the crossing of a 10- meter road (such as by excavation or overhead lines) but are all carried out Value added tax excluded on public land. There is no crossing of other owners’ private property The reliability of supply and transparency of because the warehouse has access to a road. tari s index (0-8) - Does not require work to install the internal wiring of the warehouse. This has already been completed up to and including the customer’s service Duration and frequency of power outages (0–3) panel or switchboard and the meter base. Tools to monitor power outages (0–1) Tools to restore power supply (0–1) The monthly consumption: Regulatory monitoring of utilities’ performance - It is assumed that the warehouse operates 30 days a month from 9:00 (0–1) a.m. to 5:00 p.m. (8 hours a day), with equipment utilized at 80% of capacity Financial deterrents limiting outages (0–1) on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours Transparency and accessibility of tariffs (0–1) (kWh); hourly consumption is 112 kWh. Price of electricity (cents per kilowatt-hour)* - If multiple electricity suppliers exist, the warehouse is served by the Price based on monthly bill for commercial cheapest supplier. warehouse in case study - Tari s e ective in March of the current year are used for calculation of the price of electricity for the warehouse. Although March has 31 days, for * N o t e : Doing Business m e a s u r e s t h e p r i c e o f calculation purposes only 30 days are used. electricity, but it is not included in the distance to frontier score nor the ranking on the ease of getting electricity. Page 23   Standardized Connection frontier score nor the ranking on the ease of getting electricity. Doing Business 2018 Hungary Standardized Connection Price of electricity (US cents per kWh) 23.4 Name of utility Budapesti Elektromos Művek Rt. (ELMű Rt) City Covered Budapest OECD high OECD high Indicator Hungary income income Overall Best Performer Procedures (number) 5 4.7 4.7 2 (United Arab Emirates) Time (days) 257 79.1 79.1 10 (United Arab Emirates) Cost (% of income per capita) 90.3 63.0 63.0 0.00 (Japan) Reliability of supply and transparency of tariff 7 7.4 7.4 8.00 (28 Economies) index (0-8) Figure – Getting Electricity in Hungary and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 90.33: Czech Republic (Rank: 15) 84.44: Regional Average (OECD high income) 81.35: Poland (Rank: 54) 74.65: Moldova (Rank: 80) 63.26: Hungary (Rank: 110) 54.80: Bulgaria (Rank: 141) Note: The ranking of economies on the ease of getting electricity is determined by sorting their distance to frontier scores for getting electricity. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Getting Electricity in Hungary – Procedure, Time and Cost Time Cost 100 250 80 Cost (% of income per capita) 200 Time (days) 150 60 100 40 50 20 Page 24   getting electricity. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Hungary Figure – Getting Electricity in Hungary – Procedure, Time and Cost Time Cost 100 250 80 Cost (% of income per capita) 200 Time (days) 150 60 100 40 50 20 0 0 1 2 *3 *4 5 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Getting Electricity in Hungary and comparator economies – Measure of Quality 9 8 8 7.4 7 7 7 7 6 6 Index score 5 4 3 2 1 0 Hungary Bulgaria Czech Republic Moldova Poland OECD high income Details – Getting Electricity in Hungary – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Submit application to ELMŰ Hálózati Kft. and await estimate 25 calendar days HUF 0 Agency : ELMŰ Hálózati Kft. The application can be submitted by e-mail, in-person or by mail. The application must provide a site map that shows the connection point, the requested voltage level, and a proof of the applicant’s eligibility to request the external connection. The utility overviews the application and proposes an o er- the “technical-economic plan”- which includes the preliminary technical details, the time frame and the estimated cost of the grid connection. This document de nes the utility’s technical responsibilities on the expansion of the network, on the meter installation, and on the nal connection. It also de nes the customer’s responsibility during the course of Page 25   the project, such as the requirement of installing a meter box and to place Hungary Bulgaria Czech Republic Moldova Poland OECD high income Doing Business 2018 Hungary Details – Getting Electricity in Hungary – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Submit application to ELMŰ Hálózati Kft. and await estimate 25 calendar days HUF 0 Agency : ELMŰ Hálózati Kft. The application can be submitted by e-mail, in-person or by mail. The application must provide a site map that shows the connection point, the requested voltage level, and a proof of the applicant’s eligibility to request the external connection. The utility overviews the application and proposes an o er- the “technical-economic plan”- which includes the preliminary technical details, the time frame and the estimated cost of the grid connection. This document de nes the utility’s technical responsibilities on the expansion of the network, on the meter installation, and on the nal connection. It also de nes the customer’s responsibility during the course of the project, such as the requirement of installing a meter box and to place equipment within the box. 2 Obtain external connection works by ELMŰ Hálózati Kft. 224 calendar days HUF 3,094,800 Agency : ELMŰ Hálózati Kft. The utility prepares the design and carries out the external connection works. The utility also obtains all necessary approvals on behalf of the customer. Based on the o er accepted by the customer after applying for connection, the utility prepares the grid connection contract which includes a detailed project plan and its timeframe, the invoice of the connection, the payment deadlines, and the deadline for placing the meter box. The applicant has to sign the grid connection contract and pay 10% of the total connection fee. Simultaneously, the utility hires an external electrical engineer to prepare an implementation plan and design the project for the external network. The electrical engineer obtains all the required maps from the gas, telecommunication, water and sewage utilities in order to examine whether there is any con ict with the existing underground networks. The electrical engineer draws the implementation plan and has it approved by the utility’s project manager. Once this implementation map is cleared internally, it is submitted for approval by gas, telecommunication, water and sewage utilities. Authorizations have to be obtained from all interested public authorities, such as the notary from the Mayor’s O ce of the local Municipality and specialized authorities (Environment Protection Authority, local Road Department, Hungarian Road Authority, etc.). Each authority has maximum 30 days to review the plans. In practice, this can take longer. The authorization process is regulated by the governmental Regulation no. 382/2007 (XII.23.). Simultaneously, permission have to be obtained from the owners of neighboring lands whose properties are impacted by constructing the cables. Oftentimes, there are multiple interested parties that need to be noti ed. Once all approvals have been obtained, the new geodetic map with the underground cables has to be authorized for registration by the local Land Registry. The Land Registry overviews the map from a cartographic point of view. After the Land Registry registered the map, the utility requests a construction right from the Measurement and Technical Safety Authority (Budapest Capital City Government O ce). The authority reviews the new geodetic map to verify whether it complies with regulations. The construction right allows the utility to access the customer’s and all of the Page 26   view. After the Land Registry registered the map, the utility requests a construction right from the Measurement and Technical Safety Authority Business Doing (Budapest 2018 City Capital Hungary Government O ce). The authority reviews the new geodetic map to verify whether it complies with regulations. The construction right allows the utility to access the customer’s and all of the relevant parties’ properties to place the cables. It also gives right to the utility to access the installed cables in the future, should any further work be needed. The process of obtaining the cable right is regulated by the Electricity Law (2007. LXXXVI.). The Measurement and Technical Safety Authority has maximum 60 days to overview and authorize the plans. After the construction right is granted, the department informs the utilities (gas, telecommunication, water and sewage), the relevant specialized authorities, and the owners of the interested lands. These parties can appeal the decision within 15 days after receiving the notice from the department. Once the appeal period expires, the construction license of the cables is legally binding and ELMŰ Hálózati Kft. can start the connection works. Once the construction license of the cables is legally binding, the Land Registry calculates the exact size of the area a ected by the new cables. This calculation takes into account regulations on safety distances and on the size limits of the cables installed on public and private lands. The Land Registry adds the results of the calculations to all of the properties’ site ownership certi cate and the site map. 15 days before the connection works starts, the utility noti es all the relevant parties (the Measurement and Technical Safety Authority, the local notary, the neighbors) on the exact date of the power outage due to the construction on site. Before the construction can start, the applicant is required to pay the remaining 90% of the connection fee. The external connection works takes around 2-3 days. All the project related documents during the construction are submitted electronically to the e-construction log. 3 Request and obtain a permit to install the cables within the meter box 16 calendar days HUF 0 from the utility Agency : Measurement Technology and Meter Controlling Department, ELMŰ Hálózati Kft. The customer needs to obtain a permit from the Measurement Technology and Meter Controlling Department of the utility to install the cables within the meter box. These cables are connecting the external cables to the internal one. This step is required in order to connect the warehouse with electricity, and it can be done at any time after the grid connection application is obtained. Typically, the customer requests the approval once the starting date of the external connection work is given by the utility. 4 Request and obtain a statement on the agreement to provide electricity 3 calendar days HUF 0 from a supplier Agency : Licensed electricity supplier The customer chooses the most suitable electricity supplier from the market. The supplier sends to the customer the supply contract, which includes a statement on the agreement to provide electricity. The customer forwards the statement on the agreement to provide electricity to the utility. This statement is required before making a request for meter installation, and can be obtained at any time after grid connection application is obtained. Typically, the customer requests the agreement once the starting date of the external connection work is given by the utility. 5 Sign contracts and obtain meter installation, nal connection and 8 calendar days HUF 0 electricity ow Agency : ELMŰ Hálózati Kft. The customer has to sign the grid usage contract, grid connection contract and supply contract. These three contracts are not necessarily signed in Page 27   obtained. Typically, the customer requests the agreement once the starting Doing date 2018 connection of the external Business Hungary work is given by the utility. 5 Sign contracts and obtain meter installation, nal connection and 8 calendar days HUF 0 electricity ow Agency : ELMŰ Hálózati Kft. The customer has to sign the grid usage contract, grid connection contract and supply contract. These three contracts are not necessarily signed in parallel. Upon connection, the grid charge becomes due and payable, while the date of conclusion of the supply contract is up to the customer. The rst two contracts take only few hours (sample contracts to ll in) while the third one takes some days. The installation of the meter and the start of supply of electricity require all three contracts to be signed. The meter is not installed at the same time as when the connection is done. The utility (Measurement technology and meter controlling department) is installing the meter. Takes place simultaneously with previous procedure. Details – Getting Electricity in Hungary – Measure of Quality Answer Reliability of supply and transparency of tari index (0-8) 7 Total duration and frequency of outages per customer a year (0-3) 2 System average interruption duration index (SAIDI) 3.1 System average interruption frequency index (SAIFI) 1.4 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on Yes reliability of supply? Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face nes by the regulator (or both) if outages Yes exceed a certain cap? Communication of tari s and tari changes (0-1) 1 Are e ective tari s available online? Yes Link to the website, if available online http://njt.hu/cgi_bin/ njt_doc.cgi? docid=173040.28606 8 Are customers noti ed of a change in tari ahead of the billing cycle? Yes Page 28   Note: Takes place simultaneously with previous procedure. Doing Business 2018 Hungary Details – Getting Electricity in Hungary – Measure of Quality Answer Reliability of supply and transparency of tari index (0-8) 7 Total duration and frequency of outages per customer a year (0-3) 2 System average interruption duration index (SAIDI) 3.1 System average interruption frequency index (SAIFI) 1.4 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on Yes reliability of supply? Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face nes by the regulator (or both) if outages Yes exceed a certain cap? Communication of tari s and tari changes (0-1) 1 Are e ective tari s available online? Yes Link to the website, if available online http://njt.hu/cgi_bin/ njt_doc.cgi? docid=173040.28606 8 Are customers noti ed of a change in tari ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tari index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has ve dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. Page 29   If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Doing Business 2018 Hungary Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has ve dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable To make the data comparable across economies, several assumptions property (number) about the parties to the transaction, the property and the procedures are used. Preregistration procedures (for example, checking for liens, notarizing sales agreement, The parties (buyer and seller): paying property transfer taxes) - Are limited liability companies (or the legal equivalent). Registration procedures in the economy's largest - Are located in the periurban area of the economy’s largest business city. business citya. For 11 economies the data are also collected for the second largest Postregistration procedures (for example, filling business city. title with municipality) - Are 100% domestically and privately owned. Time required to complete each procedure - Have 50 employees each, all of whom are nationals. (calendar days) - Perform general commercial activities. Does not include time spent gathering information The property (fully owned by the seller): - Has a value of 50 times income per capita, which equals the sale price. Each procedure starts on a separate day - though - Is fully owned by the seller. procedures that can be fully completed online - Has no mortgages attached and has been under the same ownership for are an exception to this rule the past 10 years. Procedure is considered completed once final - Is registered in the land registry or cadastre, or both, and is free of title document is received disputes. No prior contact with officials - Is located in a periurban commercial zone, and no rezoning is required. Cost required to complete each procedure (% of - Consists of land and a building. The land area is 557.4 square meters property value) (6,000 square feet). A two-story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in Official costs only (such as administrative fees, good condition, has no heating system and complies with all safety duties and taxes). standards, building codes and legal requirements. The property, Value Added Tax, Capital Gains Tax and illicit consisting of land and building, will be transferred in its entirety. payments are excluded - Will not be subject to renovations or additional construction following the Quality of land administration index (0-30) purchase. - Has no trees, natural water sources, natural reserves or historical Reliability of infrastructure index (0-8) monuments of any kind. Transparency of information index (0–6) - Will not be used for special purposes, and no special permits, such as for Geographic coverage index (0–8) residential use, industrial plants, waste storage or certain types of agricultural activities, are required. Land dispute resolution index (0–8) - Has no occupants, and no other party holds a legal interest in it. Equal access to property rights index (-2–0) Standard Property Transfer Property value HUF 171,322,424.10 City Covered Budapest Page 30   OECD high OECD high Doing Business 2018 Hungary Standard Property Transfer Property value HUF 171,322,424.10 City Covered Budapest OECD high OECD high Indicator Hungary income income Overall Best Performer Procedures (number) 4 4.6 4.6 1.00 (4 Economies) Time (days) 17.5 22.3 22.3 1.00 (3 Economies) Cost (% of property value) 5.0 4.2 4.2 0.00 (5 Economies) Quality of the land administration index (0-30) 26.0 22.7 22.7 29.00 (Singapore) Figure – Registering Property in Hungary and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 82.60: Moldova (Rank: 20) 80.09: Hungary (Rank: 29) 79.68: Czech Republic (Rank: 32) 76.81: Regional Average (OECD high income) 76.49: Poland (Rank: 38) 69.30: Bulgaria (Rank: 67) Note: The ranking of economies on the ease of registering property is determined by sorting their distance to frontier scores for registering property. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Registering Property in Hungary – Procedure, Time and Cost Time Cost 4.5 16 4 14 3.5 Cost (% of property value) 12 3 Time (days) 10 2.5 8 2 6 1.5 4 1 2 0.5 0 0 1 2 3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Page 31   Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for registering property. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Hungary Figure – Registering Property in Hungary – Procedure, Time and Cost Time Cost 4.5 16 4 14 3.5 Cost (% of property value) 12 3 Time (days) 10 2.5 8 2 6 1.5 4 1 2 0.5 0 0 1 2 3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Registering Property in Hungary and comparator economies – Measure of Quality 30 26.0 25.0 25 22.0 22.7 19.0 19.5 20 Index score 15 10 5 0 Hungary Bulgaria Czech Republic Moldova Poland OECD high income Details – Registering Property in Hungary – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Obtain a certi ed title record at the Land Registry O ce Less than a day Hard copy certificate Agency : Land Registry o ce (online procedure) HUF 6,250; Electronic certificate HUF 3,600; Obtain an original certi ed title sheet at the Land Registry O ce to check the and Uncertified current data of the property. The title sheet includes information on liens sheet HUF 1,000 and outstanding taxes. According to the Hungarian law, the countersigning lawyer may use a title sheet which is issued within 30 days preceding the signing. Due to the amendment of the land registry rules, the fee of the hard copy of a certi ed title record was increased to HUF 6,250. Since January 1, 2010, the request for electronic land registry sheet is also possible for HUF 3,600 for certi ed sheet and for HUF 1,000 uncerti ed sheet. Please note that the printed form of the electronic certi ed sheet is not considered as Page 32   certi ed land registry sheet. Hungary Bulgaria Czech Republic Moldova Poland OECD high income Doing Business 2018 Hungary Details – Registering Property in Hungary – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Obtain a certi ed title record at the Land Registry O ce Less than a day Hard copy certificate Agency : Land Registry o ce (online procedure) HUF 6,250; Electronic certificate HUF 3,600; Obtain an original certi ed title sheet at the Land Registry O ce to check the and Uncertified current data of the property. The title sheet includes information on liens sheet HUF 1,000 and outstanding taxes. According to the Hungarian law, the countersigning lawyer may use a title sheet which is issued within 30 days preceding the signing. Due to the amendment of the land registry rules, the fee of the hard copy of a certi ed title record was increased to HUF 6,250. Since January 1, 2010, the request for electronic land registry sheet is also possible for HUF 3,600 for certi ed sheet and for HUF 1,000 uncerti ed sheet. Please note that the printed form of the electronic certi ed sheet is not considered as certi ed land registry sheet. 2 The sale and purchase agreement is signed by a lawyer 1 day 1% of the purchase Agency : Lawyer price (lawyer’s fees) – subject to the After the negotiations between parties, a written sale and purchase parties’ agreement agreement is required, and each page has to be initialed/signed by the parties. The contract becomes valid by the countersignature of a lawyer (signature, stamp and dry stamp on each page). The countersignature certi es the identity of the signing parties and that the content of the agreement is in accordance with the legal regulations and the will of the parties. The lawyers fees are subject to the parties agreement and may vary between 0.5 and 3% of the property value. Current market conditions have been pushing fees down to around 1% of the property value. 3 Obtain the extract of the purchaser from the Court of Registry 1 day HUF 5,000 Agency : The Court of Registry, the Ministry of Administration and Justice, and notary public Since the parties of the property transfer are companies, they should obtain an extract from the commercial registry both for the buyer and the seller. The extract (as well as the specimen of signature) is to be led for both parties to the Land Registry O ce. With the data indicated in the extract the o cer can check that the legal entity really exists and that the manager is really entitled to sign for the company. The commercial register is public, so anybody can go there and ask for a company extract. The extract has to contain the deleted and actual data of the company, and may not be issued earlier than 30 days preceding the sale. In case the data of the seller have not been amended as of the date of purchase (or any further ling), it is su cient to refer to this fact on the standardized application form, together with the case number in which the required documents had been led. If no such reference is made, the cost of the extract is payable both in relation to the seller and the buyer. The cost varies according to the issuing agencies and the length of the extract. Generally, the cost is between HUF 3,000 and 7,000. An electronic extract can be obtained via the e-mail (cegszolgalat@im.gov.hu) with pre-payment of the cost (HUF 1,980). 4 Register the title at the Land Registry O ce 15 calendar days 4% of property value Agency : Land Registry O ces of Capital Budapest Government O ce (expedited (Stamp duty) up to Procedure), or value HUF 1 billion Page 33   As of January 1, 2010 there are two Land Registry O ces operating in 30 calendar days (or 2% for values An electronic extract can be obtained via the e-mail (cegszolgalat@im.gov.hu) Doing with 2018 of the pre-payment Business cost (HUF 1,980). Hungary 4 Register the title at the Land Registry O ce 15 calendar days 4% of property value Agency : Land Registry O ces of Capital Budapest Government O ce (expedited (Stamp duty) up to Procedure), or value HUF 1 billion As of January 1, 2010 there are two Land Registry O ces operating in 30 calendar days (or 2% for values Budapest. The land registry o ces accept specimen of signatures both from (regular Procedure) above with a cap of notary public and from attorney-at-law. HUF 200 million) + HUF 16,600 A new fast-track procedure has been introduced to reduce the registration time at the Land Registry for a higher registration fee of HUF 16,600. The (registration fee, registration fee for the regular procedure is HUF 6,600 according to Act 122 expedited of 2006, e ective February 4, 2007. As of January 2006, it is possible to Procedure), or retrieve a standardized application form online at: www.takarnet.hu. HUF 6,600 The Registry o ce only accepts this standard form. Once the application has (registration fee, been submitted to the Land Registry O ce, one set of the documents are regular Procedure) forwarded to the stamp duty o ce. The purchaser then receives a letter from the stamp duty o ce and will pay stamp duty by postal check or bank transfer. Note: Usually, if the purchaser does not pay the full purchase price at the signing of the contract, the vendor retains its ownership. (Such retention may be registered until the payment of the full purchase price). The application may request the registration of the sale with retention of ownership, or the registration of title. As of a regulation issued in January 2006, the seller may declare that he/she will request registration of the purchaser's title at a certain date, but no later than 6 months from the date of the agreement. During this time period the registration is pending and no other registrations or applications may be ful lled regarding the property. In the event that the land registry o ce does not receive the consent from the owner of the property, the pending application is deleted. The fact of sale with retention of ownership is indicated on a side note within 24 hours from the submission. This means that some kind of application was submitted with regard to the property but it was not veri ed by the Land Registry O ce yet (not registered, not refused). For sales with retention of ownership, a declaration has to be submitted stating that the title may be registered, simultaneously with the deletion of the retention of ownership. Following the submission of the declaration, a new side note will be indicated, and the title of the purchaser will be registered. Transfers of property might be subject to a 27% VAT. As of 2010, the general duty rate on the transfer of property for consideration was reduced to 4% from 10% on up to HUF 1 billion (1,000,000,000) of the property value. The documentation shall include: (i) The standardized application form; (ii) Two original copies and one photocopy of the contract; (iii) Original extract of the purchaser from the commercial register; (iv) The company extract and the specimen of signature of both the seller and the purchaser are to be led. Takes place simultaneously with previous procedure. Details – Registering Property in Hungary – Measure of Quality Answer Score Quality of the land administration index (0-30) 26.0 Page 34   Reliability of infrastructure index (0-8) 8.0 Takes place simultaneously with previous procedure. Doing Business 2018 Hungary Details – Registering Property in Hungary – Measure of Quality Answer Score Quality of the land administration index (0-30) 26.0 Reliability of infrastructure index (0-8) 8.0 What is the institution in charge of immovable property registration? Land Registry O ce of District XI of Capital Budapest Government O ce and Land Registry O ce of District XIV of Capital Budapest Government O ce In what format are the majority of title or deed records kept in the largest business city Computer/Fully 2.0 —in a paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Land Registry O ce of District XI of Capital Budapest Government O ce and Land Registry O ce of District XIV of Capital Budapest Government O ce In what format are the majority of maps of land plots kept in the largest business city— Computer/Fully 2.0 in a paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for recording boundaries, checking plans and providing Yes 1.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the Di erent 1.0 cadastral or mapping agency kept in a single database, in di erent but linked databases databases but or in separate databases? linked Do the immovable property registration agency and cadastral or mapping agency use Yes 1.0 the same identi cation number for properties? Transparency of information index (0–6) 3.5 Who is able to obtain information on land ownership at the agency in charge of Anyone who 1.0 immovable property registration in the largest business city? pays the o cial fee Is the list of documents that are required to complete any type of property transaction Yes, online 0.5 made publicly available–and if so, how? Page 35   immovable property registration in the largest business city? pays the o cial Doing Business 2018 Hungary fee Is the list of documents that are required to complete any type of property transaction Yes, online 0.5 made publicly available–and if so, how? Link for online access: http://www.comp lex.hu/jr/gen/hje gy_doc.cgi? docid=99700141. TV; http://net.jogtar. hu/jr/gen/hjegy_ doc.cgi? docid=99900109. FVM  Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available– and if so, how? Link for online access: http://www.foldhi vatal.hu/content/ view/82/119/; http://net.jogtar. hu/jr/gen/hjegy_ doc.cgi? docid=99600085. TV; http://net.jogtar. hu/jr/gen/hjegy_ doc.cgi? docid=99000093. TV Does the agency in charge of immovable property registration commit to delivering a Yes, online 0.5 legally binding document that proves property ownership within a speci c time frame– and if so, how does it communicate the service standard? Link for online access: http://njt.hu/cgi_ bin/njt_doc.cgi? docid=30824.254 786;   http://njt.hu/cgi_ bin/njt_doc.cgi? docid=41465.259 948    Is there a speci c and separate mechanism for ling complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Are there publicly available o cial statistics tracking the number of transactions at the No 0.0 immovable property registration agency? Number of property transfers in the largest business city in 2015: Who is able to consult maps of land plots in the largest business city? Anyone who 0.5 pays the o cial fee Page 36   Is the applicable fee schedule for accessing maps of land plots made publicly available Yes, online 0.5 Number Doing of property Business 2018 transfers in the largest business city in 2015: Hungary Who is able to consult maps of land plots in the largest business city? Anyone who 0.5 pays the o cial fee Is the applicable fee schedule for accessing maps of land plots made publicly available Yes, online 0.5 —and if so, how? Link for online access: http://www.foldhi vatal.hu/content/ view/173/1/ Does the cadastral or mapping agency commit to delivering an updated map within a No 0.0 speci c time frame—and if so, how does it communicate the service standard? Link for online access: Is there a speci c and separate mechanism for ling complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 8.0 Are all privately held land plots in the economy formally registered at the immovable Yes 2.0 property registry? Are all privately held land plots in the largest business city formally registered at the Yes 2.0 immovable property registry? Are all privately held land plots in the economy mapped? Yes 2.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 6.5 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private Yes 0.5 guarantee? Is there a speci c compensation mechanism to cover for losses incurred by parties who Yes 0.5 engaged in good faith in a property transaction based on erroneous information certi ed by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a Yes 0.5 property transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Lawyer. Does the legal system require veri cation of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Lawyer. Is there a national database to verify the accuracy of identity documents? Yes 1.0 Page 37   For a standard land dispute between two local businesses over tenure rights of a Metropolitan If yes, who is responsible for verifying the identity of the parties? Registrar; Doing Business 2018 Hungary Notary; Lawyer. Is there a national database to verify the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a Metropolitan property worth 50 times gross national income (GNI) per capita and located in the Court of largest business city, what court would be in charge of the case in the rst instance? Budapest (Fővárosi Törvényszék) How long does it take on average to obtain a decision from the rst-instance court for Between 1 and 2 2.0 such a case (without appeal)? years Are there any statistics on the number of land disputes in the rst instance? No 0.0 Number of land disputes in the largest business city in 2015: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes 0.0 Do married men and married women have equal ownership rights to property? Yes 0.0 Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the e ectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions Rights of borrowers and lenders through through 2 sets of indicators. The depth of credit information index collateral laws (0-10) measures rules and practices a ecting the coverage, scope and Protection of secured creditors’ rights through accessibility of credit information available through a credit registry or a bankruptcy laws (0-2) credit bureau. The strength of legal rights index measures the degree to Depth of credit information index (0–8) which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined Scope and accessibility of credit information whether a unitary secured transactions system exists. Then two case distributed by credit bureaus and credit scenarios, case A and case B, are used to determine how a nonpossessory registries (0-8) security interest is created, publicized and enforced according to the law. Credit bureau coverage (% of adults) Special emphasis is given to how the collateral registry operates (if Number of individuals and firms listed in largest registration of security interests is possible). The case scenarios involve a credit bureau as a percentage of adult population secured borrower, company ABC, and a secured lender, BizBank. Credit registry coverage (% of adults) In some economies the legal framework for secured transactions will allow Number of individuals and firms listed in credit only case A or case B (not both) to apply. Both cases examine the same set registry as a percentage of adult population of legal provisions relating to the use of movable collateral. Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. Page 38   The case scenarios also involve assumptions. In case A, as collateral for the Do married men and married women have equal ownership rights to property? Yes 0.0 Doing Business 2018 Hungary Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the e ectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions Rights of borrowers and lenders through through 2 sets of indicators. The depth of credit information index collateral laws (0-10) measures rules and practices a ecting the coverage, scope and Protection of secured creditors’ rights through accessibility of credit information available through a credit registry or a bankruptcy laws (0-2) credit bureau. The strength of legal rights index measures the degree to Depth of credit information index (0–8) which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined Scope and accessibility of credit information whether a unitary secured transactions system exists. Then two case distributed by credit bureaus and credit scenarios, case A and case B, are used to determine how a nonpossessory registries (0-8) security interest is created, publicized and enforced according to the law. Credit bureau coverage (% of adults) Special emphasis is given to how the collateral registry operates (if Number of individuals and firms listed in largest registration of security interests is possible). The case scenarios involve a credit bureau as a percentage of adult population secured borrower, company ABC, and a secured lender, BizBank. Credit registry coverage (% of adults) In some economies the legal framework for secured transactions will allow Number of individuals and firms listed in credit only case A or case B (not both) to apply. Both cases examine the same set registry as a percentage of adult population of legal provisions relating to the use of movable collateral. Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. OECD high OECD high Indicator Hungary income income Overall Best Performer Strength of legal rights index (0-12) 10 6.0 6.0 12.00 (4 Economies) Depth of credit information index (0-8) 5 6.6 6.6 8.00 (34 Economies) Page 39   Credit registry coverage (% of adults) 0.0 18.3 18.3 100.00 (3 Economies) possible). ABC keeps ownership and possession of the assets. Doing Business 2018 Hungary OECD high OECD high Indicator Hungary income income Overall Best Performer Strength of legal rights index (0-12) 10 6.0 6.0 12.00 (4 Economies) Depth of credit information index (0-8) 5 6.6 6.6 8.00 (34 Economies) Credit registry coverage (% of adults) 0.0 18.3 18.3 100.00 (3 Economies) Credit bureau coverage (% of adults) 89.8 63.7 63.7 100.00 (23 Economies) Figure – Getting Credit in Hungary and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 75.00: Hungary (Rank: 29) 75.00: Poland (Rank: 29) 70.00: Bulgaria (Rank: 42) 70.00: Czech Republic (Rank: 42) 70.00: Moldova (Rank: 42) 63.03: Regional Average (OECD high income) Note: The ranking of economies on the ease of getting credit is determined by sorting their distance to frontier scores for getting credit. These scores are the distance to frontier score for the sum of the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Hungary and comparator economies 12 10 10 9 8 8 Index score 7 7 6.0 6 4 2 0 Hungary Bulgaria Czech Republic Moldova Poland OECD high income Details – Legal Rights in Hungary Strength of legal rights index (0-12) 10 Does an integrated or uni ed legal framework for secured transactions that extends to the creation, publicity and Yes enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a speci c description of collateral? Page 40   Hungary Bulgaria Czech Republic Moldova Poland OECD high income Doing Business 2018 Hungary Details – Legal Rights in Hungary Strength of legal rights index (0-12) 10 Does an integrated or uni ed legal framework for secured transactions that extends to the creation, publicity and Yes enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a speci c description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring Yes a speci c description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds Yes or replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and Yes obligations be secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is uni ed geographically Yes and by asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? Yes Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be Yes performed online by any interested third party? Are secured creditors paid rst (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency Yes procedure? Are secured creditors paid rst (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised No reorganization procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and/or sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law Yes allow the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Hungary and comparator economies 10 8 8 7 6.6 Index score 6 6 5 5 4 2 0 Hungary Bulgaria Czech Republic Moldova Poland OECD high income Details – Credit Information in Hungary Page 41   0 Hungary Doing Business 2018 Bulgaria Hungary Czech Republic Moldova Poland OECD high income Details – Credit Information in Hungary Credit Credit Depth of credit information index (0-8) bureau registry Score Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and financial institutions - No No 0 distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more No No 0 than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or credit registry? Yes No 1 Can banks and financial institutions access borrowers’ credit information online (for example, Yes No 1 through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help banks and financial No No 0 institutions assess the creditworthiness of borrowers? Score ("yes" to either public bureau or private registry) 5 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 5,710,240 0 Number of firms 219,658 0 Total 5,929,898 0 Percentage of adult population 89.8 0.0 Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related-party transactions The business (Buyer): Extent of director liability index (0–10): Ability of - Is a publicly traded corporation listed on the economy’s most important minority shareholders to sue and hold interested stock exchange. If the number of publicly traded companies listed on that directors liable for prejudicial related-party exchange is less than 10, or if there is no stock exchange in the economy, it is assumed that Buyer is a large private company with multiple Page 42   transactions; Available legal remedies (damages, Percentage of adult population 89.8 0.0 Doing Business 2018 Hungary Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related-party transactions The business (Buyer): Extent of director liability index (0–10): Ability of - Is a publicly traded corporation listed on the economy’s most important minority shareholders to sue and hold interested stock exchange. If the number of publicly traded companies listed on that directors liable for prejudicial related-party exchange is less than 10, or if there is no stock exchange in the economy, it transactions; Available legal remedies (damages, is assumed that Buyer is a large private company with multiple disgorgement of profits, fines, imprisonment, shareholders. rescission of the transaction) - Has a board of directors and a chief executive o cer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not speci cally Ease of shareholder suits index (0–10): Access to required by law. internal corporate documents; Evidence - Has a supervisory board (applicable to economies with a two-tier board obtainable during trial and allocation of legal system) on which 60% of the shareholder-elected members have been expenses appointed by Mr. James, who is Buyer’s controlling shareholder and a Extent of conflict of interest regulation index member of Buyer’s board of directors. (0–10): Simple average of the extent of disclosure, - Has not adopted any bylaws or articles of association that di er from extent of director liability and ease of default minimum standards and does not follow any nonmandatory codes, shareholder indices principles, recommendations or guidelines relating to corporate Extent of shareholder rights index (0-10): governance. Shareholders’ rights and role in major corporate - Is a manufacturing company with its own distribution network. decisions Extent of ownership and control index (0-10): The transaction involves the following details: Governance safeguards protecting shareholders - Mr. James owns 60% of Buyer and elected two directors to Buyer’s ve- from undue board control and entrenchment member board. Extent of corporate transparency index (0-10): - Mr. James also owns 90% of Seller, a company that operates a chain of Corporate transparency on ownership stakes, retail hardware stores. Seller recently closed a large number of its stores. compensation, audits and financial prospects - Mr. James proposes that Buyer purchase Seller’s unused eet of trucks to expand Buyer’s distribution of its food products, a proposal to which Buyer Extent of shareholder governance index (0–10): agrees. The price is equal to 10% of Buyer’s assets and is higher than the Simple average of the extent of shareholders market value. rights, extent of ownership and control and - The proposed transaction is part of the company’s ordinary course of extent of corporate transparency indices business and is not outside the authority of the company. Strength of minority investor protection index - Buyer enters into the transaction. All required approvals are obtained, (0–10): Simple average of the extent of conflict of and all required disclosures made (that is, the transaction is not interest regulation and extent of shareholder fraudulent). governance indices - The transaction causes damages to Buyer. Shareholders sue Mr. James and the other parties that approved the transaction. OECD high OECD high Indicator Hungary income income Overall Best Performer Extent of conflict of interest regulation index (0- 4 6.4 6.4 9.3 (New Zealand) 10) Extent of shareholder governance index (0-10) 6 6.4 6.4 Page 43   9.00 (Kazakhstan) and the other parties that approved the transaction. Doing Business 2018 Hungary OECD high OECD high Indicator Hungary income income Overall Best Performer Extent of conflict of interest regulation index (0- 4 6.4 6.4 9.3 (New Zealand) 10) Extent of shareholder governance index (0-10) 6 6.4 6.4 9.00 (Kazakhstan) Figure – Protecting Minority Investors in Hungary and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 70.00: Bulgaria (Rank: 24) 66.67: Moldova (Rank: 33) 63.93: Regional Average (OECD high income) 61.67: Poland (Rank: 51) 58.33: Czech Republic (Rank: 62) 50.00: Hungary (Rank: 108) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their distance to frontier scores for protecting minority investors. These scores are the simple average of the distance to frontier scores for the extent of con ict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Hungary and comparator economies – Measure of Quality Hungary 7 4 2 5 6 6 Bulgaria 9 2 10 5 8 8 Czech Republic 5 6 2 7 6 9 Moldova 8 4 7 5 8 8 Poland 8 2 7 5 6 9 OECD high income 7.3 5.6 6.5 5.2 6.3 7.4 0 5 10 15 20 25 30 35 40 45 Sub-Indicator Score Extent of corporate transparency index (0­10) Extent of director liability index (0­10) Extent of disclosure index (0­10) Extent of ownership and control index (0­10) Extent of shareholder rights index (0­10) Ease of shareholder suits index (0­10) Details – Protecting Minority Investors in Hungary – Measure of Quality Answer Score Page 44   Extent of ownership and control index (0­10) Extent of shareholder rights index (0­10) Ease of shareholder suits index (0­10) Doing Business 2018 Hungary Details – Protecting Minority Investors in Hungary – Measure of Quality Answer Score Extent of con ict of interest regulation index (0-10) 4 Extent of disclosure index (0-10) 2 Which corporate body is legally su cient to approve the Buyer-Seller transaction? (0-3) CEO alone 0.0 Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his con ict of interest to the board of directors? (0-2) No disclosure 0.0 obligation Must Buyer disclose the transaction in published periodic lings (annual reports)? (0-2) Disclosure on 1.0 the transaction only Must Buyer immediately disclose the transaction to the public and/or shareholders? (0- Disclosure on 1.0 2) the transaction only Extent of director liability index (0-10) 4 Can shareholders representing 10% of Buyer's share capital sue directly or derivatively Yes 1.0 for the damage the transaction caused to Buyer? (0-1) Can shareholders hold the interested director liable for the damage the transaction Liable if negligent 1.0 caused to Buyer? (0-2) Can shareholders hold the other directors liable for the damage the transaction caused Liable if negligent 1.0 to Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay pro ts made from the transaction upon a successful claim by No 0.0 shareholders? (0-1) Is Mr. James disquali ed or ned and imprisoned upon a successful claim by No 0.0 shareholders? (0-1) Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of 0.0 fraud or bad faith Ease of shareholder suits index (0-10) 6 Before suing can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plainti obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plainti request categories of documents from the defendant without Yes 1.0 identifying speci c ones? (0-1) Can the plainti directly question the defendant and witnesses at trial? (0-2) No 0.0 Page 45   Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can the plainti request categories of documents from the defendant without Yes 1.0 identifying Doing Business c ones? Hungary speci 2018 (0-1) Can the plainti directly question the defendant and witnesses at trial? (0-2) No 0.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can shareholder plainti s recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 6 Extent of shareholder rights index (0-10) 6 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of Yes 1.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new No 0.0 shares? Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the a ected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require No 0.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all members consent to add a new No 0.0 member? Assuming that Buyer is a limited company, must a member rst o er to sell their Yes 1.0 interest to the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 5 Is it forbidden to appoint the same individual as CEO and chair of the board of Yes 1.0 directors? Must the board of directors include independent and nonexecutive board members? Yes 1.0 Can shareholders remove members of the board of directors without cause before the Yes 1.0 end of their term? Must the board of directors include a separate audit committee exclusively comprising Yes 1.0 board members? Must a potential acquirer make a tender o er to all shareholders upon acquiring 50% Yes 1.0 of Buyer? Must Buyer pay declared dividends within a maximum period set by law? No 0.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender No 0.0 Page 46   Is a subsidiary Doing Business prohibited from acquiring shares issued by its parent company? 2018 Hungary No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender No 0.0 o er to all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute pro ts within a No 0.0 maximum period set by law? Extent of corporate transparency index (0-10) 7 Must Buyer disclose direct and indirect bene cial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and No 0.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? Yes 1.0 Can shareholders representing 5% of Buyer’s share capital put items on the general Yes 1.0 meeting agenda? Must Buyer's annual nancial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? No 0.0 Assuming that Buyer is a limited company, can members representing 5% put items on Yes 1.0 the meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual nancial statements be Yes 1.0 audited by an external auditor? Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as measures the administrative burden in paying taxes and contributions. The most recent round of data collection for the project was completed on June 30, 2017 covering for the Paying Taxes indicator calendar year 2016 (January 1, 2016 – December 31, 2016). Last year (Doing Business 2017) the scope of data collection was expanded to better understand the overall tax environment in an economy. The questionnaire was expanded to include new questions on post- ling processes: VAT refund and tax audit. The data shows where post ling processes and practices work e ciently and what drives the di erences in the overall tax compliance cost across economies. The new section covers both the legal framework and the administrative burden on businesses to comply with post ling processes. See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory 2016 (number per year adjusted for electronic and contributions a medium size company must pay in a year, and measures joint ling and payment) the administrative burden of paying taxes, contributions and dealing with post ling processes. Information is also compiled on frequency of ling Total number of taxes and contributions paid, and payments, time taken to comply with tax laws, time taken to comply including consumption taxes (value added tax, with the requirements of post ling processes and time waiting. sales tax or goods and service tax) Page 47   Method and frequency of filing and payment To make data comparable across economies, several assumptions are Assuming that Buyer is a limited company, must Buyer's annual nancial statements be Yes 1.0 audited by an external auditor? Doing Business 2018 Hungary Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as measures the administrative burden in paying taxes and contributions. The most recent round of data collection for the project was completed on June 30, 2017 covering for the Paying Taxes indicator calendar year 2016 (January 1, 2016 – December 31, 2016). Last year (Doing Business 2017) the scope of data collection was expanded to better understand the overall tax environment in an economy. The questionnaire was expanded to include new questions on post- ling processes: VAT refund and tax audit. The data shows where post ling processes and practices work e ciently and what drives the di erences in the overall tax compliance cost across economies. The new section covers both the legal framework and the administrative burden on businesses to comply with post ling processes. See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory 2016 (number per year adjusted for electronic and contributions a medium size company must pay in a year, and measures joint ling and payment) the administrative burden of paying taxes, contributions and dealing with post ling processes. Information is also compiled on frequency of ling Total number of taxes and contributions paid, and payments, time taken to comply with tax laws, time taken to comply including consumption taxes (value added tax, with the requirements of post ling processes and time waiting. sales tax or goods and service tax) Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: Time required to comply with 3 major taxes - TaxpayerCo is a medium-size business that started operations on January (hours per year) 1, 2015. It produces ceramic flowerpots and sells them at retail. All taxes Collecting information, computing tax payable and contributions recorded are paid in the second year of operation Completing tax return, filing with agencies (calendar year 2016). Taxes and mandatory contributions are measured at all levels of government. Arranging payment or withholding Preparing separate tax accounting books, if The VAT refund process: required - In June 2016, TaxpayerCo. makes a large capital purchase: the value of the Total tax and contribution rate (% of pro t before machine is 65 times income per capita of the economy. Sales are equally all taxes) spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income per Profit or corporate income tax capita divided by 12). The machinery seller is registered for VAT and excess Social contributions, labor taxes paid by input VAT incurred in June will be fully recovered after four consecutive employer months if the VAT rate is the same for inputs, sales and the machine and Property and property transfer taxes the tax reporting period is every month. Input VAT will exceed Output VAT Dividend, capital gains, financial transactions in June 2016. taxes The corporate income tax audit process: Waste collection, vehicle, road and other taxes - An error in calculation of income tax liability (for example, use of incorrect Post ling Index tax depreciation rates, or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income Time to comply with a VAT refund tax underpayment. TaxpayerCo. discovered the error and voluntarily Time to receive a VAT refund noti ed the tax authority. The value of the underpaid income tax liability is Time to comply with a corporate income tax audit 5% of the corporate income tax liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax Time to complete a corporate income tax audit return, but within the tax assessment period. OECD high OECD high Indicator Hungary income income Overall Best Performer Payments (number per year) 11 10.9 10.9 3 (Hong Kong SAR, China) Page 48   return, but within the tax assessment period. Doing Business 2018 Hungary OECD high OECD high Indicator Hungary income income Overall Best Performer Payments (number per year) 11 10.9 10.9 3 (Hong Kong SAR, China) Time (hours per year) 277 160.7 160.7 55 (Luxembourg) Total tax and contribution rate (% of profit) 46.5 40.1 40.1 18.47% (32 Economies) Postfiling index (0-100) 63.94 83.45 83.45 99.38 (Estonia) Figure – Paying Taxes in Hungary and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 84.55: Moldova (Rank: 32) 83.07: Regional Average (OECD high income) 79.42: Poland (Rank: 51) 79.26: Czech Republic (Rank: 53) 71.78: Bulgaria (Rank: 90) 71.49: Hungary (Rank: 93) Note: The ranking of economies on the ease of paying taxes is determined by sorting their distance to frontier scores on the ease of paying taxes. These scores are the simple average of the distance to frontier scores for each of the four component indicators – number of tax payments. time, total tax rate and post ling index – with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax rate. The nonlinear distance to frontier for the total tax rate is equal to the distance to frontier for the total tax rate to the power of 0.8. The threshold is de ned as the total tax rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Hungary and comparator economies – Measure of Quality 100 90.75 90.79 90 83.45 77.36 80 69.30 70 63.94 Index score 60 50 40 30 20 10 0 Hungary Bulgaria Czech Republic Moldova Poland OECD high income Details – Paying Taxes in Hungary Total tax and Tax or mandatory Payments Notes on Time contribution rate Notes contribution (number) Payments (hours) Statutory tax rate Tax base (% of profit) on TTR Page 49   Social tax 1 online 146 27% gross salaries 30.46 Doing Business 2018 Hungary Figure – Paying Taxes in Hungary and comparator economies – Measure of Quality 100 90.75 90.79 90 83.45 77.36 80 69.30 70 63.94 Index score 60 50 40 30 20 10 0 Hungary Bulgaria Czech Republic Moldova Poland OECD high income Details – Paying Taxes in Hungary Total tax and Tax or mandatory Payments Notes on Time contribution rate Notes contribution (number) Payments (hours) Statutory tax rate Tax base (% of profit) on TTR Social tax 1 online 146 27% gross salaries 30.46 Local business tax 1 online 2% adjusted net 5.89 revenue Corporate income 1 online 35 10-19% taxable profit 3.99 tax Rehabilitation 1 online HUF 964,500 5% of the 1.83 contribution employees Training 0 jointly 1.5% gross salaries 1.69 contribution Property tax 1 online HUF 1,842 per building area 1.08 square meter Innovation 1 online 0.3% adjusted net 0.88 contribution revenue Fringe benefit tax 0 jointly 15% plus (14% or fringe benefit 0.36 27% of 1.18 times value) Land tax 1 online HUF 336 per land area 0.24 square meter Vehicle tax 1 online HUF 850 per vehicle weight 0.11 100kg plus half load Value added tax 1 online 96 27% value added 0.00 not (VAT) included Fuel tax 1 included into the 0.00 small fuel price amount Employee paid - 0 jointly 18.5% gross salaries 0.00 withheld Social security Page 50   Fuel tax 1 included into the 0.00 small Doing Business 2018 Hungary fuel price amount Employee paid - 0 jointly 18.5% gross salaries 0.00 withheld Social security contributions Environmental tax 1 online fixed fee depends on 0.00 small nature and type amount of pollution Totals 11 277 46.5 Details – Paying Taxes in Hungary – Tax by Type Taxes by type Answer Profit tax (% of profit) 9.9 Labor tax and contributions (% of profit) 34.3 Other taxes (% of profit) 2.3 Details – Paying Taxes in Hungary – Measure of Quality Answer Score Post ling index (0-100) 63.94 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process None Percentage of cases exposed to a VAT audit (%) 50% - 74% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 15.0 70 Time to obtain a VAT refund (weeks) 15.2 76.9 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 25% - 49% Time to comply with a corporate income tax audit (hours) 12.0 80.73 Time to complete a corporate income tax audit (weeks) 23.0 28.13 Notes: Names of taxes have been standardized. For instance income tax, pro t tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The post ling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with Page 51   a corporate income tax audit and time to complete a corporate income tax audit. Notes: Names of taxes have been standardized. For instance income tax, pro t tax, tax on company's income are all named corporate income tax in this table. Doing The Business hours 2018 all Hungary for VAT include the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The post ling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax audit and time to complete a corporate income tax audit. N/A = Not applicable. Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tari s) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. Given the importance of trade digitalization, in Doing Business 2018, the Trading across Borders questionnaire included research questions on the availability and status of implementation of Electronic Data Interchange (EDI) and Single Window (SW) systems. With this information, Doing Business built a comprehensive dataset on the adoption and level of sophistication of electronic platforms in 190 economies. These data are not used to compute the distance to frontier score or ranking of the ease of doing business. The new dataset on EDI and SW systems is available here. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 or border handling in origin economy days are recorded as 22×24=528 hours). If customs clearance takes 7.5 Obtaining, preparing and submitting documents hours, the data are recorded as is. Alternatively, suppose documents are required by destination economy and any transit submitted to a customs agency at 8:00a.m., are processed overnight and economies can be picked up at 8:00a.m. the next day. The time for customs clearance Covers all documents required by law and in would be recorded as 24 hours because the actual procedure took 24 practice, including electronic submissions of hours. information Border compliance Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Customs clearance and inspections Contributors are asked to convert local currency into U.S. dollars based on Inspections by other agencies (if applied to more the exchange rate prevailing on the day they answer the questionnaire. than 20% of shipments) Contributors are private sector experts in international trade logistics and Handling and inspections that take place at the are informed about exchange rates. economy’s port or border Assumptions of the case study: - For all 190 economies covered by Doing Domestic transport Business, it is assumed a shipment is in a warehouse in the largest Loading or unloading of the shipment at the business city of the exporting economy and travels to a warehouse in the warehouse or port/border largest business city of the importing economy. - It is assumed each Transport between warehouse and port/border economy imports 15 metric tons of containerized auto parts (HS 8708) Traffic delays and road police checks while from its natural import partner—the economy from which it imports the largest value (price times quantity) of auto parts. It is assumed each shipment is en route economy exports the product of its comparative advantage (de ned by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. - The mode of transport is the one most widely used for the chosen export or import product and the trading partner, as is the seaport, or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport, airport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road Page 52   police, border guards, standardization agencies, ministries or departments a corporate income tax audit and time to complete a corporate income tax audit. N/A = Not applicable. Doing Business 2018 Hungary Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tari s) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. Given the importance of trade digitalization, in Doing Business 2018, the Trading across Borders questionnaire included research questions on the availability and status of implementation of Electronic Data Interchange (EDI) and Single Window (SW) systems. With this information, Doing Business built a comprehensive dataset on the adoption and level of sophistication of electronic platforms in 190 economies. These data are not used to compute the distance to frontier score or ranking of the ease of doing business. The new dataset on EDI and SW systems is available here. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 or border handling in origin economy days are recorded as 22×24=528 hours). If customs clearance takes 7.5 Obtaining, preparing and submitting documents hours, the data are recorded as is. Alternatively, suppose documents are required by destination economy and any transit submitted to a customs agency at 8:00a.m., are processed overnight and economies can be picked up at 8:00a.m. the next day. The time for customs clearance Covers all documents required by law and in would be recorded as 24 hours because the actual procedure took 24 practice, including electronic submissions of hours. information Border compliance Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Customs clearance and inspections Contributors are asked to convert local currency into U.S. dollars based on Inspections by other agencies (if applied to more the exchange rate prevailing on the day they answer the questionnaire. than 20% of shipments) Contributors are private sector experts in international trade logistics and Handling and inspections that take place at the are informed about exchange rates. economy’s port or border Assumptions of the case study: - For all 190 economies covered by Doing Domestic transport Business, it is assumed a shipment is in a warehouse in the largest Loading or unloading of the shipment at the business city of the exporting economy and travels to a warehouse in the warehouse or port/border largest business city of the importing economy. - It is assumed each Transport between warehouse and port/border economy imports 15 metric tons of containerized auto parts (HS 8708) Traffic delays and road police checks while from its natural import partner—the economy from which it imports the largest value (price times quantity) of auto parts. It is assumed each shipment is en route economy exports the product of its comparative advantage (de ned by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. - The mode of transport is the one most widely used for the chosen export or import product and the trading partner, as is the seaport, or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport, airport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 53   of agriculture or industry, national security agencies and any other Doing Business 2018 Hungary government authorities. OECD high OECD high Indicator Hungary income income Overall Best Performer Time to export: Border compliance (hours) 0 12.7 12.7 0 (17 Economies) Cost to export: Border compliance (USD) 0 149.9 149.9 0.00 (19 Economies) Time to export: Documentary compliance 1 2.4 2.4 1.0 (25 Economies) (hours) Cost to export: Documentary compliance (USD) 0 35.4 35.4 0.00 (19 Economies) Time to import: Border compliance (hours) 0 8.7 8.7 0.00 (21 Economies) Cost to import: Border compliance (USD) 0 111.6 111.6 0.00 (27 Economies) Time to import: Documentary compliance 1 3.5 3.5 1.0 (30 Economies) (hours) Cost to import: Documentary compliance (USD) 0 25.6 25.6 0.00 (30 Economies) Figure – Trading across Borders in Hungary and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 97.41: Bulgaria (Rank: 21) 93.92: Regional Average (OECD high income) 92.32: Moldova (Rank: 35) 100.00: Czech Republic (Rank: 1) 100.00: Hungary (Rank: 1) 100.00: Poland (Rank: 1) Note: The ranking of economies on the ease of trading across borders is determined by sorting their distance to frontier scores for trading across borders. These scores are the simple average of the distance to frontier scores for the time and cost for documentary compliance and border compliance to export and import (domestic transport is not used for calculating the ranking). Figure – Trading across Borders in Hungary – Time and Cost Time Cost 1.2 1.2 1 1 1 1 0.8 0.8 Time (hours) Cost (USD) 0.6 0.6 0.4 0.4 0.2 0.2 0 0 0 0 0 0 0 0 Export - Border Compliance Export - Documentary Compliance Import - Border Compliance Import - Documentary Compliance Page 54   Doing Business 2018 Hungary Figure – Trading across Borders in Hungary – Time and Cost Time Cost 1.2 1.2 1 1 1 1 0.8 0.8 Time (hours) Cost (USD) 0.6 0.6 0.4 0.4 0.2 0.2 0 0 0 0 0 0 0 0 Export - Border Compliance Export - Documentary Compliance Import - Border Compliance Import - Documentary Compliance Details – Trading across Borders in Hungary Characteristics Export Import Product HS 85 : Electrical machinery and equipment and parts thereof; sound recorders and HS 8708: Parts and reproducers, television image and sound recorders and reproducers, and parts and accessories of motor accessories of such articles vehicles Trade partner Germany Germany Border Hungary- Slovak Republic border crossing Hungary- Slovak Republic border crossing Distance (km) 200 200 Domestic 3 3 transport time (hours) Domestic 400 400 transport cost (USD) Details – Trading across Borders in Hungary – Components of Border Compliance Time to Complete Associated Costs (hours) (USD) Export: Clearance and inspections required by customs authorities 0.0 0.0 Export: Clearance and inspections required by agencies other than customs 0.0 0.0 Export: Port or border handling 0.0 0.0 Import: Clearance and inspections required by customs authorities 0.0 0.0 Import: Clearance and inspections required by agencies other than customs 0.0 0.0 Import: Port or border handling 0.0 0.0 Page 55   (USD) Doing Business 2018 Hungary Details – Trading across Borders in Hungary – Components of Border Compliance Time to Complete Associated Costs (hours) (USD) Export: Clearance and inspections required by customs authorities 0.0 0.0 Export: Clearance and inspections required by agencies other than customs 0.0 0.0 Export: Port or border handling 0.0 0.0 Import: Clearance and inspections required by customs authorities 0.0 0.0 Import: Clearance and inspections required by agencies other than customs 0.0 0.0 Import: Port or border handling 0.0 0.0 Details – Trading across Borders in Hungary – Trade Documents Export Import CMR waybill CMR waybill Commercial invoice Commercial invoice EKAER number EKAER number Packing list Packing list Intrastat Intrastat Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local rst-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and e ciency in the court system. The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract courts (calendar days) between 2 domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes Time to file and serve the case the case from simple debt enforcement. Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses Time to enforce the judgment several assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller courts (% of claim) and Buyer), both located in the economy’s largest business city. For 11 Attorney fees economies the data are also collected for the second largest business city. - The buyer orders custom-made goods, then fails to pay. Court fees - The value of the dispute is 200% of the income per capita or the Enforcement fees equivalent in local currency of USD 5,000, whichever is greater. Quality of judicial processes index (0-18) - The seller sues the buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000. Court structure and proceedings (-1-5) Page 56   - The seller requests a pretrial attachment to secure the claim. Case management (0-6) Intrastat Intrastat Doing Business 2018 Hungary Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local rst-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and e ciency in the court system. The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract courts (calendar days) between 2 domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes Time to file and serve the case the case from simple debt enforcement. Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses Time to enforce the judgment several assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller courts (% of claim) and Buyer), both located in the economy’s largest business city. For 11 Attorney fees economies the data are also collected for the second largest business city. - The buyer orders custom-made goods, then fails to pay. Court fees - The value of the dispute is 200% of the income per capita or the Enforcement fees equivalent in local currency of USD 5,000, whichever is greater. Quality of judicial processes index (0-18) - The seller sues the buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000. Court structure and proceedings (-1-5) - The seller requests a pretrial attachment to secure the claim. Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. Alternative dispute resolution (0-3) - The seller enforces the judgment through a public sale of the buyer’s movable assets. Standardized Case Claim value HUF 6,592,654.00 Court name Pest or Buda Central District Court City Covered Budapest OECD high OECD high Indicator Hungary income income Overall Best Performer Time (days) 605 577.8 577.8 164.00 (Singapore) Cost (% of claim value) 15.0 21.5 21.5 9.00 (Iceland) Quality of judicial processes index (0-18) 14.0 11.0 11.0 15.50 (Australia) Figure – Enforcing Contracts in Hungary and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 73.75: Hungary (Rank: 13) 67.04: Bulgaria (Rank: 40) 66.76: Regional Average (OECD high income) Page 57   of judicial processes Quality Business Doing index (0-18) 2018 Hungary 14.0 11.0 11.0 15.50 (Australia) Figure – Enforcing Contracts in Hungary and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 73.75: Hungary (Rank: 13) 67.04: Bulgaria (Rank: 40) 66.76: Regional Average (OECD high income) 63.44: Poland (Rank: 55) 60.87: Moldova (Rank: 62) 58.21: Czech Republic (Rank: 91) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their distance to frontier scores for enforcing contracts. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Enforcing Contracts in Hungary – Time and Cost Time Cost 685 700 40 611 33.8 605 564 585 577.8 35 600 Cost (% of claim value) 28.6 30 500 Time (days) 21.5 25 400 18.6 19.4 20 300 15.0 15 200 10 100 5 0 0 Bulgaria Czech Republic Hungary Moldova OECD high income Poland Figure – Enforcing Contracts in Hungary and comparator economies – Measure of Quality Hungary 3 4 2.5 4.5 Bulgaria 2.5 2.5 2 3.5 Czech Republic 2 3 3 1.5 Moldova 2.5 3 2 2 Poland 3 1.5 1.5 4.5 OECD high income 2.5 2.9 2 3.6 0 2 4 6 8 10 12 14 Page 58   16 0 0 Bulgaria Czech Republic Hungary Moldova OECD high income Poland Doing Business 2018 Hungary Figure – Enforcing Contracts in Hungary and comparator economies – Measure of Quality Hungary 3 4 2.5 4.5 Bulgaria 2.5 2.5 2 3.5 Czech Republic 2 3 3 1.5 Moldova 2.5 3 2 2 Poland 3 1.5 1.5 4.5 OECD high income 2.5 2.9 2 3.6 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Alternative dispute resolution (0­3) Case management (0­6) Court automation (0­4) Court structure and proceedings (­1­5) Details – Enforcing Contracts in Hungary Indicator Time (days) 605 Filing and service 60 Trial and judgment 365 Enforcement of judgment 180 Cost (% of claim value) 15.0 Attorney fees 5 Court fees 8 Enforcement fees 2 Quality of judicial processes index (0-18) 14.0 Court structure and proceedings (-1-5) 4.5 Case management (0-6) 4.0 Court automation (0-4) 2.5 Alternative dispute resolution (0-3) 3.0 Details – Enforcing Contracts in Hungary – Measure of Quality Page 59   Alternative dispute resolution (0-3) 3.0 Doing Business 2018 Hungary Details – Enforcing Contracts in Hungary – Measure of Quality Answer Score Quality of judicial processes index (0-18) 14.0 Court structure and proceedings (-1-5) 4.5 1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, but manual 0.5 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 4.0 1. Time standards 1.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) Yes 1.0 time to disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the No 0.0 competent court? 5. Are there any electronic case management tools in place within the competent court Yes 1.0 for use by judges? 6. Are there any electronic case management tools in place within the competent court Yes 1.0 for use by lawyers? Court automation (0-4) 2.5 1. Can the initial complaint be led electronically through a dedicated platform within Yes 1.0 the competent court? 2. Is it possible to carry out service of process electronically for claims led before the No 0.0 competent court? Page 60   1. Can the initial complaint be led electronically through a dedicated platform within Yes 1.0 Businesscourt? the competent Doing 2018 Hungary 2. Is it possible to carry out service of process electronically for claims led before the No 0.0 competent court? 3. Can court fees be paid electronically within the competent court? Yes 1.0 4. Publication of judgments 0.5 4.a Are judgments rendered in commercial cases at all levels made available to the No general public through publication in o cial gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme Yes court level made available to the general public through publication in o cial gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 3.0 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there nancial incentives for parties to attempt mediation or conciliation (i.e., Yes if mediation or conciliation is successful, a refund of court ling fees, income tax credits or the like)? Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered Page 61   if mediation or conciliation is successful, a refund of court ling fees, income tax credits or the like)? Doing Business 2018 Hungary Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are Measured in calendar years used: Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 Cost required to recover debt (% of debtor’s estate) suppliers. The hotel experiences nancial di culties. Measured as percentage of estate value - The value of the hotel is 100% of the income per capita or the equivalent Court fees in local currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over Fees of insolvency administrators the hotel’s real estate. The hotel cannot pay back the loan, but makes Lawyers’ fees enough money to operate otherwise. Assessors’ and auctioneers’ fees In addition, Doing Business evaluates the adequacy and integrity of the Other related fees existing legal framework applicable to liquidation and reorganization Outcome proceedings through the strength of insolvency framework index. The index tests whether economies adopted internationally accepted good Whether business continues operating as a going practices in four areas: commencement of proceedings, management of concern or business assets are sold piecemeal debtor’s assets, reorganization proceedings and creditor participation. Recovery rate for creditors Measures the cents on the dollar recovered by secured creditors Outcome for the business (survival or not) determines the maximum value that can be recovered Official costs of the insolvency proceedings are deducted Depreciation of furniture is taken into account Present value of debt recovered Strength of insolvency framework index (0- 16) Sum of the scores of four component indices: Commencement of proceedings index (0-3) Management of debtor’s assets index (0-6) Reorganization proceedings index (0-3) Creditor participation index (0-4) OECD high OECD high Indicator Hungary income income Overall Best Performer Recovery rate (cents on the dollar) 43.7 71.2 71.2 93.1 (Norway) Time (years) 2.0 1.7 1.7 0.4 (Ireland) Page 62   Cost (% of estate) 14.5 9.1 9.1 1.00 (Norway) Creditor participation index (0-4) Doing Business 2018 Hungary OECD high OECD high Indicator Hungary income income Overall Best Performer Recovery rate (cents on the dollar) 43.7 71.2 71.2 93.1 (Norway) Time (years) 2.0 1.7 1.7 0.4 (Ireland) Cost (% of estate) 14.5 9.1 9.1 1.00 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 10.0 12.1 12.1 15.00 (6 Economies) Figure – Resolving Insolvency in Hungary and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 77.71: Poland (Rank: 22) 76.69: Czech Republic (Rank: 25) 76.12: Regional Average (OECD high income) 60.02: Bulgaria (Rank: 50) 54.75: Hungary (Rank: 62) 52.56: Moldova (Rank: 65) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their distance to frontier scores for resolving insolvency. These scores are the simple average of the distance to frontier scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Hungary – Time and Cost Time Cost 3.5 3.3 17.0 18 15.0 3.0 15.0 16 3 14.5 2.8 14 2.5 Cost (% of estate) 2.1 12 Time (years) 2.0 2 9.0 1.7 9.1 10 1.5 8 6 1 4 0.5 2 0 0 Bulgaria Czech Republic Hungary Moldova OECD high income Poland Figure – Resolving Insolvency in Hungary and comparator economies – Measure of Quality Hungary 5 2.5 2 0.5 Page 63   0 0 Bulgaria Czech Republic Hungary Moldova OECD high income Poland Doing Business 2018 Hungary Figure – Resolving Insolvency in Hungary and comparator economies – Measure of Quality Hungary 5 2.5 2 0.5 Bulgaria 4 2.5 4 2.5 Czech Republic 5.5 2.5 2 3 Moldova 4 2.5 3 2.5 Poland 6 3 2 3 OECD high income 5.4 2.8 2.3 1.9 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0­6) Commencement of proceedings index (0­3) Creditor participation index (0­4) Reorganization proceedings index (0­3) Figure – Resolving Insolvency in Hungary and comparator economies – Recovery Rate Recovery Rate (cents on the dollar) 80 71.2 70 67.0 63.1 60 50 43.7 40 36.0 28.0 30 20 10 0 Hungary Bulgaria Czech Republic Moldova Poland OECD high income Details – Resolving Insolvency in Hungary Indicator Answer Explanation Proceeding liquidation Banks usually have a standard procedure to initiate liquidation, if a debtor defaults on a loan and remains in default for a certain period of time. Bizbank is not entitled to initiate reorganization, as it can only be filed by the debtor. As the most likely initial procedure is liquidation, it will not convert into any other procedure. Outcome piecemeal sale The goal of liquidation proceedings is to provide satisfaction to the creditors of an insolvent debtor upon its winding-up without succession. Mirage has too much credits and, therefore, it will not be able to operate further. Time (in years) 2.0 The court commences the liquidation proceedings of Mirage within 60 days upon receipt of BizBank's request. Once the order on the liquidation proceedings of Mirage becomes final, the court forthwith appoints the liquidator and orders the disclosure of such order in the Companies' Gazette. The creditors shall announce their claims within 40 days from the Page 64   date Hungary Bulgaria Czech Republic Moldova Poland OECD high income Doing Business 2018 Hungary Details – Resolving Insolvency in Hungary Indicator Answer Explanation Proceeding liquidation Banks usually have a standard procedure to initiate liquidation, if a debtor defaults on a loan and remains in default for a certain period of time. Bizbank is not entitled to initiate reorganization, as it can only be filed by the debtor. As the most likely initial procedure is liquidation, it will not convert into any other procedure. Outcome piecemeal sale The goal of liquidation proceedings is to provide satisfaction to the creditors of an insolvent debtor upon its winding-up without succession. Mirage has too much credits and, therefore, it will not be able to operate further. Time (in years) 2.0 The court commences the liquidation proceedings of Mirage within 60 days upon receipt of BizBank's request. Once the order on the liquidation proceedings of Mirage becomes final, the court forthwith appoints the liquidator and orders the disclosure of such order in the Companies' Gazette. The creditors shall announce their claims within 40 days from the date of the above order. The creditors may also announce their claims after the 40 days' deadline but within 180 days, however, such claims will only be satisfied, once every other claim have been satisfied in accordance with the general waterfall rules. The first meeting of the creditors shall be held within 75 days after the disclosure of the liquidation order to form the creditors’ committee or appoint the creditors’ representative. In case the creditors established their committee, such may adopt a decision within 100 days from the publication date of the liquidation order to operate Mirage as a going concern during the insolvency proceedings (in case the creditors' committee has been established at a later stage, the decision on the operation of Mirage as a going concern during the insolvency proceedings may be adopted within 60 days from the establishment of the creditors' committee). The liquidator shall sell Mirage's assets through public sales. If the received amounts is sufficient to cover the claims of the creditors, the liquidator may prepare an interim financial statement following the deadline for the notification of claims and submit such to the competent court. The court may approve such interim financial statements within 30 days. The deadline for the submission of the final balance sheet is 24 months from the date of the publication of the order on liquidation proceedings. Cost (% of 14.5 The majority of the expenses are comprised of: - legal fees: up to 5%; - fees of the insolvency estate) administrator: up to 5%; - fees of other professionals that may be hired by the insolvency administrator: up to 3%; - fees of the auctioneer: 1%; - registration fee: 1% of the value of the estate. Recovery rate (cents on the 43.7 dollar) Details – Resolving Insolvency in Hungary – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 10.0 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency (a) Debtor may 1.0 proceedings? le for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to le for insolvency of the debtor? (b) Yes, but a 0.5 Page 65   dollar) Doing Business 2018 Hungary Details – Resolving Insolvency in Hungary – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 10.0 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency (a) Debtor may 1.0 proceedings? le for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to le for insolvency of the debtor? (b) Yes, but a 0.5 creditor may le for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (c) Both (a) and 1.0 insolvency framework? (b) options are available, but only one of them needs to be complied with Management of debtor's assets index (0-6) 5.0 Does the insolvency framework allow the continuation of contracts supplying essential Yes 1.0 goods and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit Yes 1.0 after commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 0.5 Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5 Does the insolvency framework require that dissenting creditors in reorganization No 0.0 receive at least as much as what they would obtain in a liquidation? Are the creditors devided into classes for the purposes of voting on the reorganization No 0.0 plan, does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 2.0 Does the insolvency framework require approval by the creditors for selection or Yes 1.0 appointment of the insolvency representative? Page 66   Creditor Doing participation Business 2018 index (0-4) Hungary 2.0 Does the insolvency framework require approval by the creditors for selection or Yes 1.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request No 0.0 information from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to Yes 1.0 decisions accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice”. Labor Market Regulation Doing Business presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on these indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. Detailed data collected on labor market regulation are available on the Doing Business website (http://www.doingbusiness.org/data/exploretopics/labor-market-regulation). The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions (i) whether xed-term contracts are prohibited for about the worker and the business are used. permanent tasks; (ii) maximum cumulative duration of xed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether nonpregnant - Operates a supermarket or grocery store in the economy’s largest and nonnursing women can work same night hours business city. For 11 economies the data are also collected for the second as men; (v) length of paid annual leave. largest business city. - Has 60 employees. Redundancy rules - Is subject to collective bargaining agreements if such agreements cover (i) whether redundancy can be basis for terminating more than 50% of the food retail sector and they apply even to rms that workers; (ii) whether employer needs to notify are not party to them. and/or get approval from third party to terminate 1 - Abides by every law and regulation but does not grant workers more redundant worker and a group of 9 redundant bene ts than those mandated by law, regulation or (if applicable) collective workers; (iii) whether law requires employer to bargaining agreements. reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for Page 67   work of equal value and nondiscrimination based on the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice”. Doing Business 2018 Hungary Labor Market Regulation Doing Business presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on these indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. Detailed data collected on labor market regulation are available on the Doing Business website (http://www.doingbusiness.org/data/exploretopics/labor-market-regulation). The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions (i) whether xed-term contracts are prohibited for about the worker and the business are used. permanent tasks; (ii) maximum cumulative duration of xed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether nonpregnant - Operates a supermarket or grocery store in the economy’s largest and nonnursing women can work same night hours business city. For 11 economies the data are also collected for the second as men; (v) length of paid annual leave. largest business city. - Has 60 employees. Redundancy rules - Is subject to collective bargaining agreements if such agreements cover (i) whether redundancy can be basis for terminating more than 50% of the food retail sector and they apply even to rms that workers; (ii) whether employer needs to notify are not party to them. and/or get approval from third party to terminate 1 - Abides by every law and regulation but does not grant workers more redundant worker and a group of 9 redundant bene ts than those mandated by law, regulation or (if applicable) collective workers; (iii) whether law requires employer to bargaining agreements. reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of ve fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Details – Labor Market Regulation in Hungary Answer Hiring Page 68   Fixed-term contracts prohibited for permanent tasks? No days of sick leave a year; (vi) eligibility requirements for unemployment protection. Doing Business 2018 Hungary Details – Labor Market Regulation in Hungary Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single xed-term contract (months) 60.0 Maximum length of xed-term contracts, including renewals (months) 60.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 467.7 Ratio of minimum wage to value added per worker 0.3 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 5.0 Premium for night work (% of hourly pay) 15.0 Premium for work on weekly rest day (% of hourly pay) 50.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? No Restrictions on overtime work? Yes Paid annual leave for a worker with 1 year of tenure (working days) 20.0 Paid annual leave for a worker with 5 years of tenure (working days) 21.0 Paid annual leave for a worker with 10 years of tenure (working days) 23.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 21.3 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party noti cation if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party noti cation if nine workers are dismissed? No Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Page 69   Third-party Doing approval Business 2018 if nine workers are dismissed? Hungary No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure 6.4 Notice period for redundancy dismissal for a worker with 10 years of tenure 7.9 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 6.2 Severance pay for redundancy dismissal for a worker with 1 year of tenure 0.0 Severance pay for redundancy dismissal for a worker with 5 years of tenure 8.7 Severance pay for redundancy dismissal for a worker with 10 years of tenure 13.0 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 7.2 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? Yes Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 168.0 Receive 100% of wages on maternity leave? No Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? Yes Minimum contribution period for unemployment protection (months)? 12.0 Business Reforms in Hungary In the year ending June 1, 2017, 119 economies implemented 264 total reforms across the di erent areas measured by Doing Business. Doing Business has recorded more than 2,900 regulatory reforms making it easier to do business since 2004. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are the reforms for Hungary implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more di cult to do business. DB2018 Enforcing Contracts: Hungary made enforcing contracts easier by introducing a system that allows users to pay court fees electronically. DB2017 Paying Taxes: Hungary made paying taxes less costly for small and medium-sized businesses by allowing additional deduction for new acquisitions of land and buildings. Page 70   Enforcing Contracts: Hungary made enforcing contracts easier by introducing an electronic ling system. Minimum contribution period for unemployment protection (months)? 12.0 Doing Business 2018 Hungary Business Reforms in Hungary In the year ending June 1, 2017, 119 economies implemented 264 total reforms across the di erent areas measured by Doing Business. Doing Business has recorded more than 2,900 regulatory reforms making it easier to do business since 2004. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are the reforms for Hungary implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more di cult to do business. DB2018 Enforcing Contracts: Hungary made enforcing contracts easier by introducing a system that allows users to pay court fees electronically. DB2017 Paying Taxes: Hungary made paying taxes less costly for small and medium-sized businesses by allowing additional deduction for new acquisitions of land and buildings. Enforcing Contracts: Hungary made enforcing contracts easier by introducing an electronic ling system. Labor Market Regulation: Hungary amended legislation to remove restrictions limiting the operating hours for retail shops. DB2016 Labor Market Regulation: Hungary adopted legislation limiting the operating hours for retail shops. DB2015 Starting a Business: Hungary made starting a business more di cult by increasing the paid-in minimum capital requirement. Getting Credit: Hungary improved access to credit by adopting a new legal regime on secured transactions that implements a functional approach to secured transactions, extends security interests to the products and proceeds of the original asset and establishes a modern, notice-based collateral registry. Paying Taxes: Hungary made paying taxes easier and less costly for companies by abolishing the special tax that had been temporarily introduced in 2010 and by reducing the vehicle tax rate. DB2014 Labor Market Regulation: Hungary reduced the premium for night work and weekly holiday work and increased the minimum wage. DB2013 Starting a Business: Hungary made starting a business more complex by increasing the registration fees for limited liability companies and adding a new tax registration at the time of incorporation and enforcing a requirement for mandatory registration with the Hungarian Chamber of Commerce and Industry. Getting Credit: Hungary improved access to credit information by passing its rst credit bureau law mandating the creation of a database with positive credit information on individuals. Paying Taxes: Hungary made paying taxes easier for companies by abolishing the community tax. At the same time, Hungary increased health insurance contributions paid by the employer. Trading across Borders: Hungary reduced the time to export and import by allowing electronic submission of customs declarations and other documents. DB2012 Getting Credit: Hungary reduced the amount of credit information available from private credit bureaus by shortening the period for retaining data on defaults and late payments (if repaid) from 5 years to 1 year. Paying Taxes: Hungary made paying taxes costlier for rms by introducing a sector-speci c surtax Page 71   DB2011 period for retaining data on defaults and late payments (if repaid) from 5 years to 1 year. Doing Business Paying Hungary 2018 made Taxes: Hungary paying taxes costlier for rms by introducing a sector-speci c surtax DB2011 Dealing with Construction Permits: Hungary implemented a time limit for the issuance of building permits. Registering Property: Hungary reduced the property registration fee by 6% of the property value. Paying Taxes: Hungary simpli ed taxes and tax bases. Resolving Insolvency: Amendments to Hungary’s bankruptcy law encourage insolvent companies to consider reaching agreements with creditors out of court so as to avoid bankruptcy. DB2010 Starting a Business: Hungary made starting a business easier by implementing online registration, with registration con rmed 1 hour after application. DB2009 Starting a Business: Hungary made starting a business easier by reducing the minimum capital requirement, introducing online ling and publication and making the use of notaries optional. Registering Property: Hungary established a new registry o ce in Budapest, which speeded up property registration by reducing the time required to register a title. DB2008 Starting a Business: Hungary made starting a business easier through a new company act and corporate procedure act introducing standardized forms, a “silence is consent” rule and electronic registration. Registering Property: Hungary made property registration faster by opening a second land registry o ce in Budapest, which reduced the time required to submit an application to the land registry and to register the title. Paying Taxes: Hungary made paying taxes more costly for companies by increasing the health insurance contribution rate. Resolving Insolvency: Hungary enhanced its insolvency process through an amendment to its bankruptcy legislation granting secured creditors priority over their pledged security. Page 72   Resolving Insolvency: Hungary enhanced its insolvency process through an amendment to its bankruptcy legislation granting secured 2018 over creditors priority Doing Business their pledged security. Hungary Page 73