With the tax payment relief the Hungarian government wants to mitigate the economic losses of companies hit hardest by the restrictions implemented due to the second, autumn wave of the coronavirus pandemic. The first round of measures ordering restrictions for 30 days and the related tax payment relief were announced in issue 242 of the Hungarian Gazette on 10 November 2020.
Which sectors are impacted by the tax payment relief?
Pursuant to Government Decree 485/2020 (XI.10) on certain economic protection measures during the state of emergency, companies whose actual core activity includes one of the activities below are entitled to receive tax payment relief for November 2020:
- Restaurants and mobile catering
- Event catering
- Beverage service
- Film projections
- Organisation of conventions and trade shows
- Sports and recreation education
- Performing arts
- Support activities for performing arts
- Operation of arts facilities
- Museum activities
- Operation of botanical and zoological gardens and nature reserves
- Operation of sports facilities
- Activities of sport clubs
- Fitness facilities
- Other sport activities
- Activities of amusement parks and theme parks
- Physical well-being services or
- Other amusement and recreation activities n.e.c.
Based on the government decree, an activity is considered an actual core activity if, in the six months prior to the decree taking effect, the payer or small business taxpayer received most of its income, but no less than 30% thereof, from this activity.
What tax types fall under the tax payment relief?
Taxpayers whose core activity is included in the list above do not have to fulfil their social contribution tax payment obligation for the natural persons in their employment in November, and no vocational training contribution arises for them either.
Furthermore, payers operating in the sectors above and obliged to pay the rehabilitation contribution are exempted from paying the monthly amount, and no more advances on the rehabilitation contribution must be paid for 2020.
The fourth part of the tax payment relief impacts those in the KIVA system (small business tax). This is because small-business taxpayers do not have to include staff costs in the small business tax base when determining their small business tax obligation for November.
What other support can companies expect?
Besides the tax payment relief, sectors struck the hardest by the restrictions may receive 50% wage support for November. In accordance with the Government Decree, employers operating in the above-listed sectors can receive support equivalent to 50% of the gross wages of its employees in line with the labour market programme, on the condition that the employee is still employed on the last day of the period for which the support is granted and the wage has been paid out. The claim for support must be submitted to the county government office of the registered office or permanent establishment of the company. The government office has eight days to assess the claim and subsequently transfer the support.
Based on the decree, accommodation providers are entitled to additional support. With regard to accommodation registered at the National Tourism Data Supply Centre, the Hungarian government will reimburse 80% of the net revenue from bookings registered until 8 November, since hotels are not allowed to receive tourists – only guests arriving for business or education purposes – from 11 November when the decree took effect. One of the conditions for the support is for the accommodation provider to maintain the employment of those employed on 11 November all through the month, and pay their wages for November.
Government Decree 485/2020 (XI.10) detailing the tax payment relief introduced as a result of the second wave of the coronavirus pandemic in Hungary took effect on 11 November, a few hours after its announcement.
New rules for remote work
One day after the tax payment relief announcement, in the evening of Wednesday 11 November Government Decree 487/2020 (XI.11) on the rules applicable for remote work during the state of emergency was published too. The new rules are the following:
- During the state of emergency announced due to the coronavirus pandemic, Section 86/A on remote work of Act XCIII of 1993 on Occupational Health and Safety will not be applicable. Where remote work is ordered, the employer must inform employees about the rules on the conditions necessary for safe and healthy workplaces, and employees must choose their place of work taking these working conditions into account.
- During the state of emergency, an amount previously defined by the parties paid as a reimbursement in connection with remote work under an employment contract may be accounted as a cost without further supporting documents, but no more than 10% each month of the monthly minimum wage valid on the first day of the tax year. If remote work was not prescribed for the entire month, the amount must be defined proportionately. The condition for eligibility as a cost is that the employee must not account any other expenses connected to remote work as defined in the Act on Personal Income Tax (e.g. internet use, rent of workplace, utility costs).
- During the state of emergency, the employer and the employee may deviate from Section 196 on remote work of Act I of 2012 on the Hungarian Labour Code.
The decree on the application of the rules related to remote work during the state of emergency took effect on Thursday 12 November 2020 and will be repealed on 8 February 2021.
WTS Klient Hungary is doing everything it can to provide up-to-date information on the economic measures of the Hungarian government in relation to the second wave of coronavirus pandemic, 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.
