Legal advice - Dr Hernádi Ügyvédi Iroda

Legal representation in financial matters and finance advice

Dr. Hernádi Law Firm’s main profile is business, corporate, and economic law, and this is why
we also offer finance advice in addition to legal consultation.

We briefly describe the most general and common questions on the above topics.

Petty cash

The audits and accounting records of companies, and documents thereto, must be true and
correct. In addition, the tax authority also assumes that the company’s accounting reflects real
economic events and real transactions.

However, there may be situations when the entries in the accounting record incorrect data. A
typical case is when the company’s accounting record shows a large amount of cash in the petty
cash, but the amount is not actually physically present there.

The above situation can lead to a problem for us when the company is declared insolvent and a
liquidation proceeding is ordered.

The tax authority pays particular attention to requirements related to cash deficits. If the above
detailed circumstances exist, the managing director of the company may face numerous tax and
even criminal consequences.

The above situation can be resolved by depositing the amount recorded in the accountings into
the petty cash. To put this into practice, legal and tax advice is required so you can make the
right decision in the given situation while avoiding the time and energy-consuming stressful tax
or possible criminal proceedings.

If you are facing the aforementioned problem, please do not hesitate to contact us!

Member loan

Granting a member’s loan to a company is not prohibited, but its improper administration and
accounting can raise a number of problems. It often happens that a member loan is incorrectly or
erroneously entered into the accounting, meaning that it is recorded as a current liability instead
of a subordinated liability.

In cases of larger amounts of members’ loans, you can expect the tax authority to conduct an
audit. In this case, the person granting the member’s loan to the company will have to prove the
source of the member’s loan. If the owner cannot prove this, not only the company’s assets but
also the owner’s private assets could be at risk.

If, during the investigation, the tax authority identifies a tax deficit in the company, the tax
authority will oblige the company to pay the tax deficit, and a significant tax penalty will be
imposed on the company, which could mean the end of the company. In this case, there is also
the possibility of initiating a criminal proceeding against the person who provided the member’s
loan for fiscal fraud.

If a tax investigation is not yet pending, we can offer a number of legal and accounting solutions
for the proper handling of the member’s loan.

Legal representation in tax proceedings

Should you or your company face any of the above problems and, as a result, be subject to a tax
proceeding, our lawyers will represent you in cooperation with our tax advisor partners.