When establishing a company or embarking on sole entrepreneurship, it is crucial to define the main activity and the scope of activities. Consequently, the term "TEÁOR number" or "scope of activities" is becoming increasingly familiar. Understanding the purpose and the rules for classifying by these code numbers is also necessary. Here, you will find essential information regarding TEÁOR numbers.
Understanding TEÁOR Activity Codes
The acronym TEÁOR stands for the Uniform System of Economic Activity Classification. In practice, it serves as a standardized classification of economic activities used for collecting, analyzing, and evaluating statistical data at the Community level. TEÁOR numbers are of significant importance at the EU level. In Hungary, the Hungarian Central Statistical Office (KSH) oversees all activities related to TEÁOR numbers, including the publication, registration, or updating of occupational activity codes.
TEÁOR '03 was released by KSH in anticipation of Hungary's accession to the EU and was subsequently superseded by TEÁOR '08. A conversion table, available at Kiadvány_4_szj_FK_TEAOR_03_08_2007_07_09 (ksh.hu), illustrates the differences between the two code systems. TEÁOR codes are, in fact, the national equivalents of the NACE codes — the latter being the European Union's standard introduced in 1970. The most significant change to the system was introduced in 2006 by Regulation (EC) No 1893/2006, which is still in force for all Member States from 1 January 2008.
TEÁOR Numbers: Applicable Legislation
Currently, Act CLV of 2016 on Official Statistics and Government Decree No. 184/2017 (5 July 2017) on its implementation are applicable. However, the relevant provisions of the so-called Companies Act (Act V of 2006 on company registration, court proceedings, and winding-up) are of greater relevance for TEÁOR numbers.
- In all cases, the main activity of the company and its additional activities must be recorded in the business register, using the TEÁOR nomenclature.
- When applying for registration, the company must at least indicate its principal activity - the company court will notify the National Tax and Customs Office (NAV) of this at the time of registration. There is no obstacle to indicating other activities at the time of incorporation.
- Changes to both the main activity and the additional activities of the company must be notified to the NAV, but the lawyer must update the articles of association at the next registration of the change. The organization notifies the Companies Court electronically, and the Court registers and publishes the changes ex officio.
TEÁOR Numbers: Composition
Each TEÁOR number is an occupational code number consisting of one letter and four digits. For the sake of simplicity, let's take the example of legal activities, which is covered by the TEÁOR code M6910.
The letter M indicates the sector of the economy, which in this case refers to professional, scientific, and technical activities. There are 21 economic sectors in total, designated from A to U (for example, education (P), construction (F), hotels and restaurants (I), arts (R), etc.).
The number 69 refers to the second level, i.e., the division — legal, accounting, tax consultancy. There are 88 divisions, numbered 01 to 99.
Next is the sub-division designation. In our example, this corresponds to legal activities, to which the number 691 refers. The first two numbers indicate the division, while the third number refers to the sub-division (there are 272 in total). This is where we distinguish between legal activities (691) and accounting and tax consultancy activities (692).
Finally, we arrive at the most detailed level of classification of activities, namely the specialized branches. In our case, this will also be legal activities, to which we will assign the specialization code 6910 — 0 indicates that there are no further specializations. As you can see, not all sub-divisions are further subdivided to this level, but for example, within business consultancy (702), there is PR and communication (7021).
Enterprise Activities: Main and Ancillary
Among the activities of the company, a distinction is made between principal activities and ancillary activities. The former is defined as the activity that contributes most to the total value added of the company. It is important to note that a company can have only one main activity, while it may have several secondary or ancillary activities. A company may choose any number of the latter — what these are is regulated by the HCSO.
Here are the valid TEÁOR numbers by classification:
https://ksh.hu/docs/osztalyozasok/ovtj2/ovtj_tartalom_2019_11.pdf?lang=hu
Registration of Activities
All companies are required to include and register their principal activity at the time of incorporation. This, as well as any modification, requires the assistance of a lawyer, as there is an obligation to register with the Companies Court.
However, an additional activity can be added at any time later without any procedural costs - you just have to notify your accountant, who will take care of this with the NAV. There is no legal limit on the number of activities that can be taken up as a secondary activity, but it is always advisable to choose one that the company actually carries out.
Nevertheless, it is crucial to be aware that certain activities may require a license or specific qualifications. This also means that they cannot be conducted or invoiced without a valid license. Otherwise, the company could face serious financial and legal consequences.