First economic measures from Hungarian government related to coronavirus

Relief for industries, payment moratorium for borrowers

First economic measures from Hungarian government related to coronavirus

The first case of the coronavirus infection in Hungary was reported on 4 March 2020, and the first death caused by the disease on 15 March. The Hungarian government set up the Operational Group for Protection against the Coronavirus Epidemic. Following the first measures concentrating mostly on countries which are centres of the disease, on 11 March a state of emergency was declared, indoor public events for more than 100 people were banned and universities were closed. On 13 March the closure of all educational institutions was announced, then on Monday 16 March the opening hours of restaurants and cafes were restricted, all public events were banned, and the borders were closed for any non-Hungarian citizens.

Set of economic measures

The first five economic measures were announced by Prime Minister Viktor Orbán on 18 March, when he indicated that further measures would follow. One part of Government Decree 47/2020 (III.18) on the immediate measures necessary to alleviate the effects of the coronavirus pandemic on the Hungarian economy brings relief for debtors, another part alleviates the strain on the industry sectors hardest hit by the pandemic, and it also contains amendments to certain provisions of the Hungarian Labour Code.

Payment moratorium

According to the decree, during the term of the state of emergency, debtors can postpone payment of their principal, interest and fee payment liabilities arising from credit and loan contracts or financial lease contracts offered by lenders on a business basis. The payment moratorium will last until 31 December 2020, but may be extended further by the government. Modifying the performance date of the contracts will also change the performance and penalty obligations ensuring the contract.

The deadline for fulfilling contractual obligations and the period of obligation is extended with the period of the payment moratorium. Any contracts expiring during the term of the state of emergency will be extended until 31 December 2020. The payment moratorium rules have to be applied for loans disbursed based on contracts in force at midnight on 18 March 2020. For any loans based on contracts concluded after the decree took effect, the annual percentage rate (APR) of consumer loans not secured by a lien shall not exceed the base interest rate of the central bank (currently 0.9%) plus 5 percentage points.

Under the decree, the state, local governments and businesses subject to the laws outlined in Section 39 of Act CXXXIX of 2013 on the National Bank of Hungary are not considered debtors.

Special sectoral measures

Special measures are to be implemented in the sectors which have been hit the hardest: tourism, hospitality, entertainment, gambling, film, performing arts, event organisation and sport service sectors.

In these sectors there is a ban on terminating rental agreements for premises serving non-residential purposes until 30 June 2020, which may be extended by the government, while rentals cannot be raised during the term of the state of emergency, even if this is otherwise permitted by the contract.

In the four months between March and June, the following shall apply for the employees of businesses operating in the specific sectors:

  • employers are exempt from paying taxes and contributions on wages,
  • from the contributions payable on wages, only the in-kind health insurance contribution obligation applies, with the proviso that its monthly rate cannot exceed the monthly amount of the health care service contribution, or HUF 7,710 (roughly EUR 21,5).

Those obliged to pay a tourism development contribution will not be required to pay such contribution from 1 March 2020 until 30 June 2020. During this period, no tourism development contribution shall be assessed or declared.

In addition to the above-mentioned sectors, taxpayers conducting passenger transportation services and subject to the flat-rate tax for small businesses are exempted from paying their tax for four months from March until June 2020.

Labour law measures

In accordance with the provisions on the Labour Code, the following shall apply until 30 days after the termination of the state of emergency:

  • employers may modify the set working hours up to 96 hours before the start of the given working day,
  • employers may unilaterally order employees to work from home or remotely,
  • employers may take necessary and justified steps to check the health condition of employees.

While the decree is in force, no provisions of any collective agreements differing from these rules shall be applied, furthermore the decree also stipulates that during this period employees and employers may conclude special agreements which deviate from the provisions of the Labour Code.

WTS Klient Hungary will do everything to provide up-to-date information on the quick changes anticipated during this state of emergency, and 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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