Company Liquidation in Hungary

There are several ways a company in Hungary can cease operations and settle its debts. This article clarifies the different procedures involved like company liquidation in Hungary.

Solvent vs. Insolvent Companies

The process depends on the company’s financial health. If a company’s assets exceed its liabilities (solvent), it can initiate a voluntary liquidation procedure (végelszámolás).

However, if the company is insolvent (assets are less than liabilities), two main options exist:

Bankruptcy procedure (csődeljárás): This aims to restructure the company’s debts to allow it to continue operating after reaching an agreement with creditors.
Insolvency procedure (felszámolási eljárás): This leads to the company’s liquidation, focusing solely on selling assets and distributing the proceeds to creditors.

Transparency and Creditor Rights

All procedures are governed by clear regulations to ensure transparency. Business partners can claim outstanding debts throughout these processes, potentially impacting the outcome. For instance, a company initiating voluntary company liquidation in Hungary might be declared insolvent and undergo an insolvency procedure instead.

Involuntary Company Liquidation in Hungary

Another option is involuntary company liquidation in Hungary (kényszertörlés), triggered by a court order due to the company’s inactivity. This could be because the company is unreachable at its registered address or has lost its tax ID. Similar to other procedures, creditors can still claim their dues, and an involuntary liquidation can evolve into an insolvency procedure.

Enforcement Proceedings vs. Company Liquidation in Hungary

It’s important to distinguish between enforcement proceedings, which aim to collect debts from a solvent company, and liquidation procedures. If a company appears insolvent, it’s wiser to initiate an insolvency procedure directly. While unsuccessful enforcement can lead to insolvency proceedings anyway, a third-party initiated process would still terminate the enforcement action.

The article concludes by mentioning that a court-ordered grace period during insolvency proceedings automatically suspends enforcement actions. If a successful agreement is reached with creditors, the enforcement is terminated altogether.

This excerpt details the processes for initiating bankruptcy and insolvency procedures in Hungary, highlighting the roles of debtors, creditors, and courts.

Initiating Bankruptcy by the Debtor

Sole authority: Only the debtor company can file for bankruptcy.
Mandatory legal counsel: An attorney is required to represent the company throughout the process.
Automatic dismissal grounds:
- Existing bankruptcy or insolvency procedure against the company.
- Unsettled claims from a previous creditor arrangement.
- Less than two years since the termination of the last bankruptcy procedure.
- Dismissed application within the past year.
Decision-making: The company’s general meeting approves the application, typically by a simple majority vote (unless articles of association specify otherwise).
Information dissemination: The company must inform employees, unions, and the work council (if applicable).
Manager’s duties: The managing director submits:
- A statement detailing significant financial changes since the last accounts.
- A comprehensive list of creditors and company bank accounts.
- A declaration to inform banks and avoid actions jeopardizing the moratorium or discriminating against creditors.

Initiating Insolvency by the Debtor

The process largely mirrors that of bankruptcy, with the following key points:

Approval and representation: General meeting approval is required, and the company must engage an attorney.
Employee and committee notification: Similar obligations exist as in bankruptcy.
Manager’s duties: The managing director fulfills the same responsibilities as in bankruptcy.

Initiating Insolvency by a Creditor

A creditor can initiate insolvency proceedings if they believe the debtor is insolvent. The application should detail the debt, its due date, and the reasoning behind the insolvency claim.

Grounds for Creditor-initiated Insolvency:

Debtor’s failure to pay or dispute a contractual debt within 20 days after a written dunning letter (for claims exceeding HUF 200,000).
Debtor’s non-payment of a debt established in a final verdict or order.
Unsuccessful enforcement proceedings against the debtor.
Unsuccessful bankruptcy procedure or breach of a creditor agreement.
Voluntary liquidation revealing insufficient assets to cover liabilities, with shareholders not covering the shortfall.

Important Note:

Cases a) and b) for creditor-initiated insolvency require the claim amount to exceed HUF 200,000.

Hungary’s Bankruptcy Procedure: Reorganization or Company Liquidation in Hungary?

This section explains the two main outcomes of a bankruptcy procedure in Hungary: reorganization through a composition agreement or liquidation through insolvency proceedings.

The Moratorium Period: A Chance for Revival

Upon receiving a bankruptcy application, the court grants a 120-day moratorium (suspension of debt collection) before ruling on the case. This period can be extended if a bankruptcy administrator requests it.
Exempt Claims: Certain privileged claims like salaries, taxes, and utilities are not subject to the moratorium.

Debtor’s Role in Rescue

The debtor has 60 days to invite registered creditors to negotiate a composition agreement, a plan to restore solvency. This plan is publicized in national newspapers.
The debtor also prepares a reorganization program outlining the path to financial recovery.

Creditor Participation and Voting

Creditors have voting rights based on their claim amount (excluding interest and fees). Every HUF 50,000 of a claim equals one vote.
Creditors can:
- Reject the initial reorganization program and request revisions.
- Approve a moratorium extension (up to one year total).
- Enter into a composition agreement, requiring majority approval from both secured and unsecured creditor groups.

The Composition Agreement: A Win-Win Solution

A composition agreement aims to restore the debtor’s solvency through various measures:

Partial or complete debt write-off
Claim transfer
Deferred payments
Securing claims with assets
Issuing debtor shares to creditors

Failure to Agree: Transition to Insolvency

If no agreement is reached or approved by the court, the bankruptcy procedure ends, and insolvency proceedings begin.

Insolvency Proceedings: Company Liquidation in Hungary for Debt Settlement

The goal of insolvency proceedings is to sell the company’s assets and distribute the funds to creditors. The court may grant the debtor a maximum 45-day deferment before commencing this process.

Limited Escape from Company Liquidation in Hungary

Even during insolvency, the company can avoid liquidation in two scenarios:

Reaching a Composition Agreement: This requires approval from a majority vote across all creditor classes, with those approving creditors representing at least two-thirds of the total claim value.
Settling All Debts: The debtor can pay all undisputed claims and provide guarantees for disputed claims and procedure costs.

The Fate of Unsalvaged Companies

If neither option above is achieved, the court will order asset division among creditors according to Hungarian law.

Conclusion: Company liquidation in Hungary

The provided articles outlined the options available to Hungarian companies facing financial difficulties. The key takeaway is that companies have a chance to avoid complete liquidation through proactive measures.

Bankruptcy Procedure: This process offers a 120-day moratorium and the opportunity to negotiate a composition agreement with creditors. This agreement allows for debt restructuring and the company’s potential revival.
Insolvency Procedure: If a composition agreement fails, insolvency proceedings lead to company liquidation and asset distribution to creditors. However, even during insolvency, a last-minute composition agreement or full debt settlement can prevent liquidation.

The importance of seeking legal counsel and maintaining transparency throughout these procedures is emphasized. By understanding the available options and acting promptly, companies facing financial challenges can potentially achieve a successful reorganization and avoid complete closure.

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Expansion of Information Exchange Rules Regarding Crypto Assets: DAC8 Amendment

The European Council has adopted a Directive amending the EU rules on administrative cooperation in taxation. These amendments primarily focus on reporting and automatic exchange of information regarding income from transactions involving crypto assets and advance tax rulings for affluent individuals.

The Directive’s aim is to strengthen the existing legislative framework by broadening the scope of obligations concerning registration, reporting, and overall administrative cooperation among tax administrations.

Additional asset and income categories, such as crypto assets, will now be included in the exchange. Tax authorities will engage in mandatory automatic exchange of information obtained from reports provided by service providers in the crypto asset sphere. Until now, the decentralized nature of crypto assets has made it challenging for tax administrations of member states to ensure compliance with tax laws.

This directive encompasses a wide spectrum of crypto assets, relying on definitions outlined in the Markets in Crypto Assets Regulation (MiCA). The exchange sphere also encompasses crypto assets issued in a decentralized manner, as well as stablecoins, including electronic money tokens and certain non-fungible tokens (NFTs).

Transfer Pricing: An In-Depth Guide

Transfer pricing is a critical facet of modern business operations, impacting taxation and corporate structuring, especially in the realm of multinational corporations. This practice revolves around the prices that affiliated companies charge each other for a range of transactions, including goods, services, intellectual property, and asset usage.

Understanding Transfer Pricing

In essence, transfer pricing serves as a mechanism for multinational corporations to distribute costs and profits among their diverse subsidiaries, often located across different countries. By manipulating transfer prices, these corporations can strategically shift income from jurisdictions with higher tax rates to those with lower ones, ultimately minimizing their overall tax liability.

Nonetheless, governments closely scrutinize transfer pricing practices to counter the potential for profit manipulation. Tax authorities enforce the concept of “arm’s length,” whereby transfer prices should approximate the rates that unrelated entities would charge in uncontrolled transactions. This principle aims to prevent companies from artificially altering transfer prices to evade taxes.

Methods of Transfer Pricing

Related parties have the flexibility to adopt transfer pricing methods that best suit their specific transactions. Several common methods include:

Comparable Uncontrolled Price Method: This bases the transfer price on the rate charged for similar products between unrelated entities under comparable circumstances.
Resale Price Method: Here, a suitable gross profit margin is subtracted from the final resale price to determine the transfer price. The margin is established based on profit levels achieved in analogous uncontrolled transactions.
Cost Plus Method: Transfer prices are set by adding an appropriate markup to the costs. This markup mirrors the profit margin observed in comparable uncontrolled transactions.
Profit Split Method: This method divides the combined operating profits from controlled transactions among related parties using financial data and industry benchmarks.

Other techniques, such as the transactional net margin method, can also be applied in specific scenarios.

Documentation and Compliance

Tax authorities demand comprehensive documentation to substantiate the transfer pricing methodologies adopted by taxpayers. This documentation includes:

Master File: This offers an overview of the multinational company’s global business operations, organizational structure, and transfer pricing policies.
Local File: This document delineates how transfer prices were determined for transactions in each country, complete with comparability analysis details.
Country-by-Country Reports: These reports furnish high-level insights into multinational companies’ revenues, profits, taxes paid, and business activities within each tax jurisdiction they operate.

Transfer Pricing Adjustments and Penalties

In instances where tax authorities identify non-arm’s length transfer prices through documentation review, they can execute transfer pricing adjustments. This entails substituting an arm’s length price for the existing price and recalculating the taxable profits accordingly. Adjustments usually result in higher tax liabilities.

Non-compliance with documentation requisites can attract penalties. Therefore, multinationals are motivated to establish arm’s length transfer prices and maintain robust documentation. Sound transfer pricing practices are essential to mitigate tax risks and preempt disputes.

In-Depth Insights into Transfer Pricing

Transfer pricing is a pivotal aspect of modern business landscapes, directly influencing tax outcomes and the organizational structure of multinational corporations. This practice centers on the intricate pricing dynamics that affiliated entities employ for various transactions, encompassing goods, services, intellectual property, and asset utilization.

The Role of Transfer Pricing

At its core, transfer pricing empowers multinational corporations to distribute costs and profits across their diverse subsidiaries, often situated in varying global jurisdictions. Through deft manipulation of transfer prices, these corporations strategically channel income from high-tax regions to those with more favorable tax rates, systematically trimming their overall tax liabilities.

Governments, however, are vigilant about the potential for profit manipulation and tax evasion inherent in transfer pricing. To counter these challenges, tax authorities enforce the principle of “arm’s length,” wherein transfer prices should mirror what unrelated entities would charge in uncontrolled transactions. This safeguard ensures companies don’t artificially tweak transfer prices to gain undue tax advantages.

Diverse Transfer Pricing Approaches

Parties with mutual interests possess the flexibility to adopt transfer pricing strategies tailored to their unique transactions. A few prominent methods include:

Comparable Uncontrolled Price Method: Anchored in rates charged for comparable products between unrelated entities in similar circumstances.
Resale Price Method: Deducts an appropriate gross profit margin from the final resale price to determine the transfer price, considering profit levels achieved in comparable uncontrolled transactions.
Cost Plus Method: Sets transfer prices by adding a suitable markup to costs, mirroring profit margins witnessed in analogous uncontrolled transactions.
Profit Split Method: Divides combined operating profits from controlled transactions among related parties, guided by financial data and industry benchmarks.

In specific situations, other methodologies such as the transactional net margin method may be employed.

Compliance and Documentation Imperatives

Authorities require meticulous documentation to validate the transfer pricing methodologies adopted by taxpayers. This documentation encompasses:

Master File: Offering a panoramic view of the multinational’s global business operations, organizational structure, and transfer pricing policies.
Local File: Detailing the rationale behind transfer price determinations for transactions within each jurisdiction, complete with comprehensive comparability analysis.
Country-by-Country Reports: Providing a high-level glimpse into the multinational’s revenues, profits, taxes, and operational footprint across various tax jurisdictions.

Adjustments and Penalties

When authorities identify transfer prices that don’t align with arm’s length standards via meticulous documentation scrutiny, they can implement transfer pricing adjustments. This entails substituting an arm’s length price for the existing one and recalculating taxable profits accordingly, often resulting in elevated tax obligations.

Failure to meet documentation prerequisites can lead to penalties. Thus, multinationals are incentivized to establish arm’s length transfer prices and uphold robust documentation practices. Such conscientious transfer pricing approaches are pivotal to managing tax risks and preempting potential disputes.

The end of the tax-free era: Bermuda prepares for change

An important announcement from the Government of Bermuda: the country has reached an agreement with the OECD and is coming to a decision to end its tax-free status. As part of this initiative, Bermuda plans to implement a corporate income tax, as well as taxes on capital gains and dividends. An important step will also be joining the global initiative to introduce a 15% income tax for international corporations.

Immediately after the announcement of the government, public consultations will begin, the results of which will be announced in a few months. It is planned to introduce new tax rates from January 1, 2025. Bermuda’s leaders are convinced that to remain attractive to global business, they will need to rethink existing tax liabilities, such as payroll taxes and customs duties.

Although the use of Bermuda companies is not a popular practice in many regions of the world, this event deserves attention, as it reflects the general trend towards the abandonment of classic offshore jurisdictions, which one by one are transforming their tax policies.

Company registration in Hong Kong: An Attractive Business Hub – 8 Key Benefits

Hong Kong has been ranked as the fourth-easiest country to do business by the World Bank in 2019. Its strategic location and numerous advantages make it an attractive destination for entrepreneurs looking to set up a company. Here, we highlight eight key benefits of establishing a business in Hong Kong, brought to you by Tetra Consultants.

An International Junction: Situated at the heart of Asia, Hong Kong provides access to some of the world’s largest and robust economies. It serves as a gateway to the Chinese market and offers convenient connections to Asia and beyond, making it an ideal connecting point between the West and East for business ventures;
Free Trade Policy: Hong Kong benefits from the Closer Economic Partnership Arrangement (CEPA), a bilateral free trade agreement with mainland China. This agreement allows Hong Kong-made goods exported to China to enjoy zero tariffs. CEPA also streamlines access for Hong Kong-based service suppliers, facilitating trade and investment between Hong Kong and mainland China;
Low and Simple Tax: Hong Kong boasts a straightforward and low tax system, which is a significant advantage for businesses. With a corporate tax rate of 15% and no withholding tax on dividends and interest, it provides a tax-friendly environment. Additionally, there is no value-added tax (VAT) or goods and services tax (GST), further enhancing the appeal for entrepreneurs and investors;
Limited Liability Company (LLC) Setup: The option of establishing a Limited Liability Company (LLC) is the most popular incorporation choice in Hong Kong. Operating as an LLC protects directors and shareholders from unlimited liability, as they are only liable for their invested capital. Incorporation can be done in English or Chinese, making the registration process easily accessible;
Availability of Productive Workforce: Hong Kong’s workforce is highly trained, flexible, and energetic. With English as their second official language, language barriers are minimized, making it easier for businesses to operate in the region.
Intellectual Property Protection: Hong Kong has stringent regulations to safeguard intellectual property rights. Registered designs, patents, copyrights, and Intellectual Property Rights (IPR) are well-protected by the reputable Intellectual Property Department of Hong Kong;
Relatively Hassle-Free Setup: Compared to mainland China, setting up a company in Hong Kong is relatively simple and fast. Hong Kong’s legal system operates separately from mainland China, based on English common law, offering an open economy and free trade. The bureaucratic process and intellectual property registration are straightforward and consistent;
No Requirement for a Local Director or Shareholder: Unlike some Southeast Asian countries, such as Singapore, Hong Kong does not require companies to have a local director or shareholder. This reduces costs and simplifies management decisions, making it an attractive option for foreign investors.

In conclusion, the benefits of setting up a company in Hong Kong, including low taxes, straightforward incorporation, a productive workforce, and more, make it a top choice for entrepreneurs. For a smooth and hassle-free registration process, Tetra Consultants offers comprehensive services, including business entity selection, registration, license acquisition, corporate bank account opening, and ensuring compliance with government regulations.

Italy is changing the tax system: key points of the reform

Italy has initiated a large-scale transformation of its tax system. On March 16, 2023, the Council of Ministers approved a set of general principles and criteria for the forthcoming reform. This marks the most significant overhaul of Italy’s tax system in over 50 years.

Key points of the fiscal system transformation in Italy include:

Comprehensive revision of traditional taxes such as IRES, VAT, and IRPEF.
Reduction in the number of deductions.
Elimination of criminal penalties for tax evasion due to objective reasons beyond the taxpayer’s control.

The expected outcome of the tax burden reduction is to stimulate economic growth and increase birth rates in the country.

The Italian government asserts that these changes will make the system more manageable and facilitate the fight against tax evasion, which, according to the latest data from the Treasury, amounted to €90 billion in 2020.

Income tax for individuals in Italy (Imposta sul Reddito delle Persone Fisiche):

The reforms envision a structural review of the taxation system for individuals. The Italian government aims to establish a unified range of fiscal benefits and equal tax burden, regardless of the category of income received.

Additionally, there are plans to reduce the number of tax brackets from 4 to 3. It is worth noting that Italy currently operates a progressive income tax scale for individuals.

Corporate tax in Italy (Imposta sul Reddito delle Società):

As part of the tax reform in Italy, the government plans to reduce the tax on corporate and organizational incomes from 24% to 15%. However, businesses can only avail of this benefit if they meet two conditions over two tax periods:

The income received (fully or partially) is directed towards business investments or hiring new personnel.
The profits are not distributed or allocated to activities unrelated to commercial operations.

VAT in Italy:

The Italian authorities seek to carry out significant transformations regarding VAT. Their plans include:

Optimizing the number and sizes of tax rates.
Revising the criteria for tax liability and exemptions.
Modifying the deduction mechanism.
Simplifying calculation and application rules for VAT payers.

Regional production tax in Italy (imposta regionale sulle attività produttive):

IRAP is a regional tax levied in Italy on enterprises engaged in production, trade, services, and other types of activities. The standard rate is 3.9%, but it may vary based on the region and the nature of the activity. IRAP is paid in addition to the corporate income tax (IRES).

During the reform, there are plans to completely replace this tax with IRES. By increasing the latter, Italian authorities aim to ensure sustained revenue for the state treasury and guarantee:

Additional Fixed Tax

One of the most significant innovations of the 2023 Italian reform is the introduction of a fixed tax rate of 15%, which is set to apply to all wage earners. Currently, this tax is only applicable to the following categories:

Self-employed individuals
Professionals such as lawyers, accountants, notaries, etc.
Individuals engaged in artistic activities

This tax will only be levied on income exceeding the average citizen’s income level for the past 3 years but not exceeding a maximum limit of €40,000. The additional fixed tax will replace the higher standard IRPEF tax.

Combatting Tax Evasion in Italy

Italian authorities acknowledge substantial budget losses due to tax evasion. Therefore, the reform will significantly address this issue. The plans include:

Simplifying the declaration mechanism;
Reviewing taxpayer rights;
Introducing tools such as global agreements with creditors and activating economic conflict resolution through negotiations;
Implementing motivational instruments for taxpayers who admit their guilt and show remorse in their actions;
Actively digitizing processes at all levels and stages of taxation, including customs and the judicial system.

Regarding the revision of criminal tax penalties, special attention will be given to cases where the taxpayer is unable to fulfill tax obligations due to reasons beyond their control.

Reduction in the Number of Tax Deductions

To ensure the successful implementation of the reform, Italian authorities need to find necessary resources. To achieve this, there are plans to significantly reduce the number of tax deductions, of which there are approximately 600 in Italy. This measure aims to provide annual budget revenues of €5 billion to €10 billion.

The availability of deductions will be reduced based on an increase in the taxpayer’s income. Authorities also intend to introduce a one-time payment for citizens with low-income levels.

Empowering Municipalities

The proposed law envisions expanding the powers of local authorities in making decisions regarding taxation. Furthermore, municipalities will receive more financial autonomy and the freedom to manage their revenues.

New Fuel Excise Taxes

The proposed law supports producers of renewable energy actively. The authorities seek to increase the share of electricity, methane gas, or natural gas produced from biomass or other renewable resources. Certificates will be issued to provide benefits or exemptions from excise taxes.

Additionally, excise duties on natural gas, electricity, and renewable energy sources will be revised based on the actual cost of sold products and invoices.

New Taxes on Capital Gains

The 2023 tax reform includes a reorganization of capital and financial income taxes. These are planned to be combined into a single category of taxable income based on cash and compensatory principles.

Currently, Italy has a capital gains tax rate of 26% on any annual capital gain. After the implementation of the changes, taxpayers will only have such obligations during asset realization. Furthermore, taxation of the accumulated part of pensions will be canceled, and the mechanism for tax collection from pension funds will be revised.

It is essential to note that the tax reform in Italy will affect all aspects of life and business, including non-residents. After approval by the Council of Ministers, the enabling law project will be examined in a joint conference. The head of state will then submit the draft law to the chambers. From this point, the parliamentary process will start, expected to conclude in May, followed by the second phase of implementing the tax reform in Italy.

Introduction of the European Sustainability Reporting Standards (ESRS)

On July 31, 2023, the European Sustainability Reporting Standards (ESRS) were approved and will now become mandatory for companies covered by the Accounting Directive and required to provide sustainability information. This applies to public companies whose shares are listed on stock exchanges.

The Accounting Directive, as amended by the Corporate Sustainability Reporting Directive (CSRD), adopted in 2022, was designed to provide comparable and reliable sustainability information from companies in the European Union. ESRS is introduced based on these two directives.

The core idea of the ESRS is the principle of “double materiality”, which means that companies are required to report not only on their impact on people and the environment, but also on how social and environmental issues can affect financial sustainability and prospects. companies.

The ESRS covers 12 core areas to help companies more accurately and comprehensively assess and document their sustainable practices and sustainability risks. This decision opens a new stage in strengthening the sustainability and responsibility of business in the European Union.

Israel has plans to create a beneficiary-owner registry.

The Ministry of Justice in Israel has recently published the fundamental principles for the establishment of a UBO (Ultimate Beneficial Owner) registry that aims to include both Israeli and foreign companies with a significant link to the state and pose risks related to money laundering and terrorism financing. The disclosure requirements are not limited to corporate entities and will extend to other types of structures as well.

The UBO information to be collected should encompass the full name, identification number, citizenship, and address. Additionally, details about the conditions under which the ultimate owner exercises control (e.g., ownership of shares exceeding 25%) must also be provided.

It is important to note that the registry itself will not be publicly accessible.

Regarding the duty to disclose information about the ultimate beneficial owner, the proposal suggests placing the responsibility on the ultimate owner directly, in addition to the obligations imposed on the companies themselves.

Cyprus is preparing an electronic register of beneficiaries in accordance with EU requirements

Cyprus plans to implement an electronic register of ultimate beneficiaries of companies (UBO) by the end of September in order to comply with the requirements of the European Union. Cyprus is the only EU country where such a registry has not yet been created in electronic form. At the moment, the register already exists in written form, and now work is underway to digitize it. This project is financed by EU funds within the framework of the country’s reconstruction and development program.

The Cypriot private company that won the public tender is responsible for the creation and launch of the UBO electronic registry. Representatives of the company registration department assure that the work on the digital registry is almost completed, and its launch is expected on time. It will also be connected to the single European platform in December.

If the launch of the digital version of the registry is delayed, Cyprus could face fines and loss of funding from the EU. However, representatives of the department assure that they will not allow this and will comply with the deadlines.

In order to protect the rights to respect for private life and protect the personal data of citizens, the Court of Justice of the European Union decided in 2022 to restrict citizens’ access to the register of ultimate beneficiaries of companies operating in the EU. Access to the register will be limited and available only to public organizations of the EU member states, Europol and the Council of Europe Committee of Experts on the Evaluation of Measures to Combat Money Laundering (Moneyval).

Brussels believes that a single European platform, which will collect data on the ultimate owners of companies registered in the EU, will help fight terrorist financing, money laundering and tax evasion.

Global Fintech Investments Decline by 57% in 2023

Investments in fintech have experienced a significant decline of 57% during the first half of 2023, reflecting a global trend of reduced fintech deals in terms of both volume and value. In the first six months of this year, there were a total of 2,153 fintech deals worldwide, amounting to $52.4 billion, compared to 2,885 deals totaling $63.2 billion in the second half of the previous year.

This decline is attributed to the prevailing economic uncertainty, which has affected fintech investments worldwide. Despite this global slump, the United Kingdom has managed to maintain its position as a leading European financial hub, as reported by KPMG.

In the first half of 2023, the total volume of fintech investments in the UK decreased to $5.9 billion (approximately £4.6 billion), experiencing a sharp drop from the $13.8 billion registered during the same period last year. Factors contributing to this decline include rising interest rates, swift inflation growth, and geopolitical tensions, all of which have undermined investor confidence.

Despite the slowdown, British fintech companies continue to attract more funding compared to their counterparts in other parts of Europe, the Middle East, and Africa.