The majority of Hungarian businesses need to meet their obligations to prepare and publish financial statements and to file tax returns and pay taxes until 30 September. The latest tax relief measures related to the coronavirus pandemic appeared in Government Decree 140/2020 (IV.21) published in the Hungarian Gazette on 21 April.
Tax returns, tax payments, tax advance payments
The decree takes effect on the day after it is promulgated, i.e. on 22 April 2020. So taxpayers have until 30 September 2020 to assess, declare and pay the annual and unscheduled amounts of
- corporate tax,
- small business tax,
- energy supplier income tax,
- local business tax
- and innovation contribution
as well as to assess and declare any corporate tax advances, which will be due in the period between the decree taking effect and 30 September.
Taxpayers may request the reduction of tax and contribution advances before they become due if, according to their calculations, the taxes and contributions for 2020 will not reach the amount of the tax and contribution advances.
If they fall within the period between the decree taking effect and 30 September 2020, the deadlines for financial statement preparation, publication, filing and disclosure as well as their submission are postponed until 30 September 2020, and any due dates for further accounting obligations based on these financial statements shall be calculated from this date (this does not apply for public-interest entities).
Besides the allowances outlined in the Act on Rules of Taxation, the Hungarian tax authority allows taxpayers to defer payment of taxes of no more than HUF 5 million (roughly EUR 14,000) on one occasion for a maximum of 6 months, without any surcharge, or to pay the tax in no more than 12 monthly instalments, without any surcharge, based on a duty-free request submitted by the taxpayer by no later than the 30th day after the end of the state of emergency, provided that the taxpayer verifies and presumes upon submitting the request that the payment difficulty arose as a result of the state of emergency. The administration deadline for such requests is 15 days.
One important new rule is that if an entity submits a request (exempt from duties too) by the 30th day after the end of the state of emergency, the tax authority may reduce the taxpayer’s debt once, by no more than 20% but by an amount not exceeding HUF 5 million (roughly EUR 14,000), if paying the tax debt would make it impossible to continue the business activity of the taxpayer for reasons attributable to the state of emergency. A tax reduction may be requested for one tax type only.
Social contribution tax
From 1 July 2020 the social contribution tax rate will be 15.5% of the tax base.
Further tax relief measures
- The amount payable to employees on their Széchenyi Rest Cards as a fringe benefit is raised to HUF 800,000 (roughly EUR 2,230) (annual allowance) for employers not qualifying as budgetary institutions and such benefits are exempt from social contribution tax (exemption shall be applied from the decree taking effect until 30 June 2020).
- Tourism tax does not have to be paid for guest nights from the 5th day after the promulgation until 31 December 2020, and businesses obliged to collect the tax do not have to collect or pay the tax, but they have to declare uncollected amounts to the tax authority. Assessed tax does not have to be declared if it amounts to 0.
- No reliable taxpayer ratings shall be downgraded based on ratings carried out during or after the state of emergency with reference to a tax difference determined for the taxpayer as a result of violating a tax payment obligation due in the course of the state of emergency or within 30 days of it ending.
- EKAER: During the state of emergency and until the 30th day after it ends, taxpayers are exempt from providing risk collateral, and the Hungarian Tax and Customs Administration shall arrange for the repayment to taxpayers of any risk collateral paid into separate escrow accounts before the decree took effect, and for the sending of its approval to the relevant financial institution as is required to cancel any guarantee. Authorisation for exemption from submitting route data shall remain valid throughout the state of emergency, and conditions shall not be checked during this time.
- During the state of emergency, any employee on unpaid leave as a result of the state of emergency is entitled to healthcare services. In such cases the employer shall assess, declare and pay the health service contribution (HUF 7,710 – roughly EUR 21.5 per month) for the employee (at the employer’s request, the employer may be granted permission to pay such health service contribution until the 60th day after the end of the state of emergency).
- The KIVA rate will be reduced by one percentage point, to 11%, from 2021.
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.