1. Hungarian Business Register
Coverage of the
Hungarian Business Register
Zsolt Völfinger
18th Roundtable on Business Survey Frames
Session 5

2. Registration of business units
The business registration is based on the tax number. The business units (legal units) are identified with tax number.
Since 1997 the Business Register of the Statistical Office is linked with the administrative bodies of the business registration system.

3. Registration of business units
Administrative bodies of the business registration system:
Tax Office
Registry Courts
Ministry of Interior
Ministry of Finance
The common identifier is the first 8 digit of the tax number.

4. Registration of business units
The administrative sources do not include any thresholds.
The authorities of the business registration system transfer the data to the statistical business register.
The BR includes data for all registered units without thresholds.

5. Registered units of the BR
The registration without threshold indicates a large number of registered units. At the end of 2003 the BR covered 1 million 264 thousand legal units.
Of which: companies: 210 thousand,
partnerships: 250 thousand,
sole proprietors: 717 thousand,
non-profit units: 71 thousand, government units: 16 thousand.

6. Number of registered units
Reasons for the high number of registered units:
Relatively simple and inexpensive way of registration.
High number of sole proprietors with tax number.
Pseudo-entrepreneurs and part-time activities of entrepreneurs.
Policy of registration authorities.

7. Definition of activity
The administrative bodies are interested in to reach all economic operators. The BR is based on administrative sources, therefore numerous dormant units are included.
It is a need to create an attribute to every legal unit to decide it is active or not.

8. Definition of activity
Units are considered as active:
- which were established in the reference year or in the previous year,
- or were data supplier in the reference year or in the previous year,
or had tax reports (corporate tax, VAT, etc.) with any turnover or investment or labour cost.
Enterprises which fulfill one of these conditions are marked as active.

9. Active units in the BR BR - Dec 2003 Registered units Active units %
Companies
209 641
185 606
86%
Partnerships
250 564
223 659
89%
Sole Proprietors
716 729
473 238
66%
with license
488 198
420 605
with tax number
228 531
52 633
23%
Enterprises total
1 176 934
882 503
75%

10. Active units in the BR
At the end of per cent of the enterprises of the BR were considered as active, 25 per cent were dormant.
The ratio of active units in case of relevant legal forms is per cent.
The 883 thousand active enterprises form the survey frame for 2004.

11. Active units in the BR
The definition of the activity has no thresholds; therefore even the group of active units of the register could include not really relevant units.
The definition could overestimate the number of the survey frame units.

12. Business Demography investigations
Business Demography investigations apply a more strict methodology for the definition of activity.
Business Demography data for 2002 indicates that 86 per cent of the active units of the register had reported turnover or employment for the reference year.

13. Business Demography investigations
BD/BR
Active (BR)
Active (BD) %
Companies
171 584
83%
Partnerships
213 760
75%
Sole Proprietors
with license
424 571
92%
Enterprises total
809 915
86%

14. Business Demography investigations
For the year per cent of the survey frame enterprises were confirmed as active using business demography data.
This means that according statistical surveys and tax data for the year per cent of the active enterprises of the business register survey frame had not carried out economic activity.

15. Relevance of units
It is difficult to decide a unit is relevant or not for statistical purposes.
But! 9 per cent of the active units according to business demography did not reach the 1000 € turnover in 2002.
As slight as 1000 € turnover probably cover secondary or part-time jobs or activities of pensioners.

16. Undercoverage of the BR
Some units are out of scope of the BR.
Wrongly coded units which are marked as ceased and are not part of the registered units.
Active units marked as dormant. Business demography data show that close to 2 per cent of the dormant enterprises in the business register carried out economic activity in 2002.

17. Summary
- The administrative system of the Hungarian business registration covers all units with tax number.
- The administrative bodies have no particular interest in cessation of non active dormant units.
- The business register of the HSCO covers all registered legal units and this indicates overcoverage in the registration.
- The business register requires an attribute for activity, 25 per cent of the registered units are considered as non-active. Moreover in Hungary even the definition of activity overestimates the range of relevant units.

18. Summary
- Business demography investigations show overcoverage as well.
- Even one part of the active units with turnover or employment seems to be non-relevant; these units cover part-time jobs and are “pseudo enterprise” relations.
- The number of active units of the register is not comparable with data from other business registers with thresholds.