16.04.2020

Retail tax and special credit institution tax on the way

New taxes will be channelled into the Pandemic Fund

Retail tax and special credit institution tax on the way

Hungary is to introduce a special tax on credit institutions and a retail tax on 1 May. Government Decrees 108/2020 and 109/2020 on filling up the Pandemic Fund established to execute the Economy Protection Action Plan were published in the Hungarian Gazette on 14 April.

Special tax on credit institutions
  • Taxpayer: credit institutions
  • Tax assessment, payment: The special tax obligation shall be assessed on a separate form by 10 June 2020 and shall be paid in three equal instalments until 10 June, 10 September and 10 December.
  • Tax base: The base of the special tax is the amount exceeding the HUF 50 billion (roughly EUR 143 million) tax base threshold for the 2020 fiscal year assessed according to the 2006 special taxes act.
  • Rate:19%
Retail tax

Pursuant to Government Decree 109/2020 introducing the retail tax, any retail activity as well as the sale of goods to a customer in Hungary by a person or organisation resident abroad is taxable. 

Payer of retail tax

The payer of the retail tax is the Hungarian or foreign person or organisation conducting the above taxable activities in a business-like manner.

Base of retail tax

The base of the retail tax is the net sales revenue (sales revenue defined separately in the decree) for the entire fiscal year that includes the period from the regulation taking effect until the end of the state of emergency. The tax base includes the sales revenue stemming from services provided by the taxpayer – in connection with the sale of the acquired goods – to the supplier (manufacturer, distributor) of the goods acquired for retail sale, as well as the amount of any discount granted by the supplier to the taxpayer on the goods acquired for retail sale. For persons or organisations resident abroad and not operating through a branch office in Hungary, any consideration less VAT received for the sale of goods in Hungary is considered sales revenue. The decree specifies special detailed rules for the tax assessment of related companies.

Rate of retail tax

The rate of the tax on retail activities shall be defined as follows:

  • 0% on any amount not exceeding the tax base threshold of HUF 500 million (roughly EUR 1.4 million),
  • 1% on any amount exceeding the tax base threshold of HUF 500 million (roughly EUR 1.4 million), but not exceeding HUF 30 billion (roughly EUR 86 million),
  • 4% on any amount exceeding the tax base threshold of HUF 30 billion (roughly EUR 86 million), but not exceeding HUF 100 billion (roughly EUR 285 million),
  • 5% on any amount exceeding the tax base threshold of HUF 100 billion (roughly EUR 285 million).

The tax payable is the amount determined based on the tax assessed with the above rates, Considering the sales revenue of related companies too (but only in certain cases), for the period from when the decree takes effect until the end of the state of emergency, in proportion to the amount this represents in relation to all the calendar days of the entire fiscal year.

Procedural provisions

The retail tax obligation shall be determined and declared on a special form by the 30th day after the end of the year including the state of emergency, or if the fiscal year ends during the state of emergency, then by the 30th day after the end of the state of emergency. The monthly amount of the tax advance shall be declared until 31 May 2020. Its calculation shall be based on the provisions of the decree. Any taxpayer not subject to paying the tax is not bound by an obligation to file a tax advance return.

WTS Klient Hungary is doing everything it can to provide up-to-date information on the further details of the economy protection action plan launched as a result of the state of emergency, and to help its clients in these tough times too. If you have any questions on how the new measures will impact on your business, and what opportunities the current regulation brings with regard to tax payments for instance, feel free to contact us.

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