Nowadays, more and more people are setting up a company or self-employment, so the term TEÁOR or scope of activity is becoming more familiar. However, few people are aware of the purpose and rules of the classification by these code numbers. In this article we have collected the most important facts about TEÁOR numbers.
Meaning of TEÁOR, occupation codes
The acronym TEÁOR stands for the Standard Industrial Classification of Activities. In practice, it is a uniform classification of economic activities for the collection, analysis and evaluation of statistical data at Community level. TEÁOR is also of major importance at EU level, and in Hungary the Hungarian Central Statistical Office (KSH) is responsible for all activities related to TEÁOR numbers, including the publication, registration or updating of the occupational activity codes.
The HCSO published TEÁOR’03 in preparation for Hungary’s accession to the EU, which was replaced by TEÁOR’08. The differences between the two code systems are explained in a translation table is provided. The TEÁOR codes are in fact the national equivalents of the NACE codes – the latter being the European Union’s own standard introduced in 1970. The most important 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: what legislation applies to them?
The basis for the classification of TEÁOR numbers was previously laid down in Act V of 1973 on Statistics, which has not been in force since 1993. 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 in relation to 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 main activity – the company court will notify the National Tax and Customs Office (NAV) of this at the time of registration. Of course, 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 reported to the NAV, but the lawyer must update the articles of association at the next change registration. The organisation notifies the Companies Court electronically, and the Court registers and publishes the changes ex officio.
TEÁOR numbers: how are they built up?
The TEÁOR numbers are all occupational code numbers 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. In total, there are 21 economic activities, which are designated from A to U (education (P), construction (F), hotels and restaurants (I), arts (R), etc.)
- The number 69 refers to the second level, the sector – legal, accounting, tax consultancy. There are 88 sectors, numbered 01 to 99.
- Next is the subsector designation. In our example, this corresponds to legal activities, which is assigned the number 691. The first two numbers refer to the sector, while the third number is to be understood by subsector (there are 272 in total). In other words, this is where legal activities (691) and accounting and tax consultancy activities (692) are separated.
- Finally, we come to the most detailed level of classification of activities, namely the branches. In our case, this will also be legal activities, to which we will assign the activity code 6910 – 0 indicates that there are no further activities. As you can see, not all subsectors are further subdivided to this level, but for example, within business consultancy (702) there is a PR, communication (7021).
Enterprise activities: main and auxiliary activities
Among the activities of the company, a distinction is made between the main activity and complementary activities. The former is defined as the activity that contributes most to the total value added of the firm. It is important to note that a firm can have only one main activity, while any other activity chosen from among the TEÁOR numbers is secondary or ancillary. A firm may already have more than one of the latter – exactly what these are is regulated by the HCSO.
Registration of activities
All companies are required to include and register their main 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, you can take up an additional activity at any time later on without incurring any procedural costs – you just need 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 included as a secondary activity, but it is always advisable to choose one that the company actually carries out.
TEÁOR numbers: the invoice
The question often arises as to whether the invoice issued can only include activities that the company has already included. In the past, businesses registered all activities so that they could issue invoices freely – a practice which has made the original purpose of the TEÁOR numbering and coding system much more difficult. This is no longer the case, which means that any company or business can now issue an invoice without restriction for a field of activity that it does not have.
However, it is important to be aware that certain activities may require a licence or specific qualifications. This also means that they cannot be carried out or invoiced without a valid licence. Otherwise, the company could face serious financial and legal consequences.
