17 May Interview with Matty Ryan, Managing Director of Vistra Hungary
BF: Over the past 35 years, Vistra has built a prominent international presence in 40 countries across the globe, including Hungary. In the Hungarian market, Vistra is one of the leading players in the country’s corporate management and financial services sectors. As managing director of Vistra Hungary, could you give us an overview of Vistra Hungary, its main service lines, its expertise and positioning?
Matty Ryan: Vistra has been in Hungary since 2014. We are a late entrant to this market. We were part of a company called Trinity Corporate Services, a CEE entity focusing principally on corporate services, mainly accounting, payroll, and company secretarial services. I was appointed to create the presence of Trinity in Hungary, but once I set up Trinity Hungary Corporate Services, we were acquired by Vistra; within six months. We then became Vistra Corporate Services. Our services today are still the same. We are a CEE entity headquartered in Poland. Our services are still the same, which are a little bit different from Vistra in the other countries. Our services are simple and basic and it’s what we’re good at. Accounting is by far the number one service offering, as well as tax compliance, reporting, payroll, corporate secretarial and directorship services.
I spent my first two years setting up relationships with our ‘feeders,’ the legal companies in Budapest. That was difficult because each of the legal companies already had their existing preferred service providers. I knew I had to be better than them in order to get on the referral lists. The only variable on which I could really compete was speed. When clients couldn’t get a quick enough answer from their preferred service providers, they would come to me. I provide a one-hour response time on all new client-related traffic, including all the materials/details/attachments that are required to move forward. That’s my strategy: you will always get what you want in one hour. And it paid off: people started paying attention.
Today, several of the biggest international legal companies refer exclusively to Vistra, which is a considerable achievement. It’s a bit thing, because by referring exclusively, they are kind of exposing themselves. Most legal companies will have three choices, and it’s up to the client to choose one of the three. They refer exclusively to me because I will give an answer within one hour. They can go to another company that will take 24 or even 48 hours, and so they often simply go to me instead. That was key for Vistra Hungary and I am staying with it.
BF: Despite the ongoing conflict in Ukraine, disruptions in supply chains, and high inflation, the Hungarian economy still managed to grow by 6% in the first half of 2022. What is your outlook for the Hungarian economy and service sector for 2023? How has the current context impacted Vistra Hungary, and how have you had to adapt your business operations to meet the current market changes and economic demand?
Matty Ryan: Our business outlook is still very strong: in January alone, I had nine new clients, which is amazing, and half of my revenue for 2023 is already in my backlog. I have never had a pipeline so strong, and I’ve never seen Hungary so strong. Of course, some sectors may be suffering a little bit, but others are fueled principally by South Korea and China. For me, the economy is booming. I acknowledge that inflation is very high, and the war is in a neighboring country, but I can’t see it affect my pipeline.
BF: As one of Vistra’s 40 global branches, Vistra Hungary offers a complete range of services and tailor-made, market-specific solutions to businesses in Hungary. What is the company’s strategy for growth and expansion in the Hungarian market, and how does Vistra Hungary differentiate itself from competitors in the corporate management and financial services industries?
Matty Ryan: I’m expanding by continuing to do what I have been doing. We have a huge number of new proposals and new clients every month. My biggest focus now is hiring. The market is so hot that it’s almost impossible to find good accountants. The salaries are going through the roof, and you have to go in there and chase with the other companies, looking for the best talent. For the longest time we were dealing with recruitment companies, and they were giving us who they had, which was a waste of time. The fact that these people were on the market meant that they weren’t fit for purpose. The people that we need are actively working for our competitors. We have to go and steal them, otherwise you die. We hired five people in Q4, and now we need another five! We have intensive training for every new hire, but we aren’t big enough yet to have our own recruiters and specific training department or a shared service center. We are now working with the five biggest recruitment companies, and they are fighting for exclusivity. For the junior accountants, we have been able to find them within one month. For a good senior accountant, it’s difficult. For example, we poached one just last week. He handed in his resignation and he then got a promotion to stay.
BF: The recent pandemic saw extraordinary shifts and innovation in conventional business models and operations across real estate, with many businesses changing their rental agreements. What is Vistra’s strategy for keeping its support services up to date and navigating the fast-moving and ever-changing business world and its needs?
Matty Ryan: COVID is not an inhibitor. Within the first week of the pandemic, we figured out that we could work from home because we have good technology. I personally have not really returned to the office since; it’s just too easy for me. COVID didn’t really disrupt the market too much, so for me, it’s not a serious variable.
BF: Hungary not only secured a record-breaking €5.9 billion in investments last year but also ranked seventh in this year’s Tax Competitiveness Index, highlighting its appeal as a preferred destination for foreign direct investment in the EU. What are some of the key attractions and incentives Hungary offers investors and business owners, particularly from the U.S.?
Matty Ryan: In the early 2000s, before the financial crisis, Hungary, with a population of 10 million, had more foreign direct investment than Poland, which had a population of 40 million. Then came the crisis. At the time, Hungary was expecting the tax intake to quadruple with all the foreign investments, but there was no change. The Hungarian government became a bit agitated, so they commissioned a team of experts from the Big 4 to study the situation. After a month of research, they came back and told the government that everything was legitimate because of mechanisms like transfer pricing adjustments. The government was surprised and wanted to know how this was possible. The person representing the Big 4 proclaimed it was them. The government then realized that they had spent a lot of money on this study to discover that the reason why they weren’t receiving any tax was because of something that this group provided and charged to the clients. The government was very annoyed by this, so they started taxing employment. At the time, if you were paying someone a salary of, say, 100, you would have to pay an additional 35 on top of the 100. Some companies left and the ones that stayed already had invested a fair amount. Eventually, things improved, and the 35 burden started reducing gradually. There was another downturn, and Hungary had learned from the employment surcharge, so to speak. They brought in taxes aimed specifically at multinational investors, and companies had to pay up because they had no choice. Then again, things turned upwards but Hungary had no FDIs. In an effort to restore FDI, the government decided to introduce a very competitive corporate tax rate. The lowest tax rate in the EU at the time was in Bulgaria, at 10%. Hungary decided to settle on 9%.
HIPA, the Hungarian Investment Promotion Agency, is key. The government tasked them to get the FDIs back to the starting point, bigger than Poland’s, whatever was required for that, and they are doing it. Today, in Debrecen, there are several South Korean and Chinese companies manufacturing batteries for electric cars. Right now, if an inbound investor is looking at CEE they may look at places like Prague, Krakow, Bratislava, as well as Budapest. Budapest wins. The investors go to HIPA, because of HIPA’s aid package. The 9% corporate income tax on its own is good, but if you pair it with the zero percent withholding tax, that’s the crunch. You can pay a dividend to a legal entity outside of Hungary without any withholding tax here. We have very favorable double tax treaties in Hungary. On top of that, we have an extensive university structure in all the key cities, with young, cheap, graduates. That’s a big attraction for a lot of companies.
That’s the mission of HIPA: to have more FDIs than Poland. Each year, Hungary attracts more and more foreign direct investments. My pipeline is full because of all these investors. There are around 100 service providers in town, but the new investors typically will not go to a local service provider. They want a service provider with an international footprint, where English is the language, so it boils down to five. And since I’m faster than the other four, I often win.
BF: Vistra makes considerable annual investments in technology to offer clients market-leading technology solutions and platforms. Could you tell us more about how Vistra leverages digital technologies to provide clients with best services?
Matt Ryan: For me, it’s easy. Our headquarters are in Poland, so I invest nothing. They have one pool of experts. In Poland, they invest and they’re very smart about what they invest in. They try it for themselves and make a few changes, and when it’s fit for purpose for them, they give it to us. This is intentional. My role here is to grow the business. We have about 500 people working in our headquarters in Warsaw, 150 of whom are in a separate funds business. In Hungary, Czech Republic, Bulgaria and Romania we are all between 20 and 25 employees and one of us is expected to grow to 50 or 75. Right now, that’s Hungary because our pipeline is much bigger here.
BF: What’s your final message to the readers of USA Today?
Matty Ryan: Hungary is intentionally competitive. Good talent is much cheaper here than, for example, in Luxembourg or the U.S. We have a good university system here. The tax regime is highly attractive and is at the top of the list. The international tax advisers have Hungary in their top three, which is very helpful for me.
HIPA is also very helpful. If you intend to invest a significant amount of money and hire 100 employees, they will help you with massive funding and find a location for you. So, HIPA, the tax regime, and good, qualified, relatively cheap resources are key. We want to keep away from the politics, but sometimes people look in and assume that there is a political risk. The savvy investors know that the political risk is more perceived than real. The corporate sector here is incredibly strong. The focus points are IT and renewable energy. The government is offering a fair number of incentives for FDI’s in this sector. The investors are looking at these tax incentives, and when the tax advisers mention Hungary again, you put two and two together. It’s not rocket science.