Following the measures announced on 18 March, at midnight on 23 March the Hungarian Gazette published the second economic rescue package compiled by legislators to alleviate the impact of the coronavirus pandemic on the Hungarian economy.
Exemption from social contribution tax and contributions for certain activities
Based on this economic rescue package the following entities are exempted from their liability to pay social contribution tax (employer’s contribution): businesses offering passenger transport by taxi, accommodation providers, hospitality providers; any entity carrying out creative, artistic, entertainment, sport or other leisure activities; gambling, betting; film, video, TV production, music publishing; conference organisers, daily newspaper and magazine publishers, programme directors and broadcasters. For the above, as part of the employee’s contributio, only the 4% in-kind health insurance contribution obligation needs to be paid on income subject to contribution payments, but this may not exceed HUF 7,710 (roughly EUR 22). The exemption from the social contribution tax payment obligation and the employee contribution payment as per the above paragraph are applicable for tax and contribution payment obligations pertaining to March, April, May and June 2020.
Pursuant to the regulation, exemption from social contribution tax shall apply for taxpayers who earned most, but no less than 30%, of their income from the activities listed above in the six months before the regulation took effect.
Additional relief for taxpayers subject to the above-mentioned contribution payment is that no vocational training contribution payment obligation shall be payable for March, April, May and June 2020, and for the same activities the rate of the rehabilitation contribution is reduced to two-thirds of the rehabilitation contribution, and anyone subject to such contribution payment shall not need to pay any advances on it.
Economic rescue package for “KATA” taxpayers
Pursuant to Government Decree 61/2020 (III.23) taxpayers subject to payment of the KATA (flat-rate tax for small businesses) are exempted from paying such flat-rate tax for March, April, May and June 2020. Exemption from paying the tax does not affect entitlement to social security benefits and the amounts thereof. The decree lists the 26 activities to which tax-exemption applies, which include hairdressing, cosmetics, painting, glasswork, installation of electrical wiring and fittings, performing arts, plumbing, carpentry, in- and outpatient care, dentistry, conference organisation, hotel services and gambling.
Any flat-rate tax debt of small taxpayers due before 1 March 2020 can be deferred and paid in equal instalments over 10 months – until the 12th day of each month the instalments are due – from the first month after the quarter in which the state of emergency is ended. The Hungarian Tax and Customs Administration will not impose any additional charges on tax debts until the first month after the quarter in which the state of emergency is ended, and for the period of the instalment payments.
In accordance with Government Decree 57/2020 (III.23) on enforcements as published in the Hungarian Gazette, no enforcements shall be served during the state of emergency, any documents shall be served via the postal service or electronic means pursuant to the rules on electronic communication.
No on-site procedures or regular auctions may be conducted until the state of emergency is lifted.
Any orders to evacuate properties shall only be executed after the state of emergency ends. If the 15th day after the end of the state of emergency falls between 15 November and 30 April, the execution of such orders may only commence on the 15th day after 30 April. Orders to sell debtor properties at auctions or to de-register seized vehicles may also only be enforced 15 days after the end of the state of emergency.
Enforcement proceedings of the tax authority are also suspended until the 15th day following the end of the state of emergency.
Contactless payments – limit raised
Pursuant to Government Decree 60/2020 (III.23) on the measures necessary to increase health safety during contactless payments with regard to the state of emergency, payment service providers shall not apply strong client authentication procedures (PIN code identification) if the amount of any individual contactless electronic payment does not exceed fifteen thousand forints.
New economic rescue package addresses families with small children too
Government Decree 59/2020 (III.23) on the extension of entitlement to certain health insurance and family support benefits on caring for and raising children extends the child care allowance and child care benefit entitlements.
WTS Klient Hungary is doing everything it can to provide up-to-date information on the quick changes anticipated during this 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.