“Highly regarded” tax experts on the ITR World Tax Leaders 2022 list include professionals recognised by tax consultants and the broader market, and who can demonstrate significant professional achievements. This is the sixth time that Tamás Gyányi, senior partner of WTS Klient, has won this recognition.

After his years at a Big4 company, Tamás Gyányi joined Klient in 2004. His name is synonymous with the establishment of the company’s tax consulting division, which has since become one of the strongest bastions of WTS Klient. In 2014, he was appointed a tax partner of the firm, then in March 2022, a senior partner of the tax advisory and payroll division.

A ITR World Tax Leaders 2022: WTS Klient senior partner among the best bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

The International Tax Review (ITR), the world’s leading tax magazine, has announced – for the 18^th time – the competition of the best tax advisory firms, teams and professionals in the categories of transfer pricing, tax law and indirect tax in 34 countries across Europe, Africa and the Middle East. The jury of the ITR EMEA Tax Awards 2022 (Europe, Middle East and Africa Tax Awards) also assessed achievements in the areas of tax technology, innovation, compliance and reporting, diversity, fairness and inclusion.

WTS Klient has reached the final, i.e. is among the five best, in three of the four categories in Hungary in the ITR EMEA Tax Awards 2022 – Hungary Tax Firm of the Year, Hungary Indirect Tax Firm of the Year and Hungary Transfer Pricing Firm of the Year.

WTS Global member companies operating in more than 100 countries occupy a total of 16 places on the shortlist. In addition to WTS Klient, Sorainen based in the Baltic states and the Italian Studio Biscozzi Nobili Piazza each made it to the final in one category, the Swedish Svalner Skatt & Transaktion in two categories, and the Portuguese VdA, the Dutch Atlas Tax Lawyers and WTS Germany in three categories. In addition to the national awards, WTS Germany is also in contention for the title of Tax Technology Provider of the Year for the whole region, competing against four other competitors in the final.

“We are extremely pleased to have reached the finals of the EMEA Tax Awards in almost every category in Hungary this year, and we are also proud that our network founder and headquarters, WTS Germany, is considered by the judges to be one of the best tax technology companies in Europe. This shows that the direction we have taken at WTS, the development and efficient use of new tax-specific IT solutions and digital development, is indeed the right direction” – said Tamás Gyányi, Senior Partner at WTS Klient, in relation to the results of the ITR EMEA Tax Awards 2022 competition.

The final winners of the ITR EMEA Tax Awards 2022 will be announced at the Awards Ceremony in Hilton London Bankside on 15 September.

A ITR EMEA Tax Awards 2022: WTS Klient in the running for three awards bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

What could be the impact of the minimum wage increase?

The minimum wage increase from a gross HUF 167,400 (roughly EUR 457) to HUF 200,000 (roughly EUR 547) – both the almost HUF 33,000 (roughly EUR 90) rise and the 20% difference – is the most significant measure in Hungary over the last decade to improve the incomes of the lowest paid employees. The increase in the guaranteed wage minimum for skilled workers from the gross HUF 219,000 (roughly EUR 600) to HUF 260,000 (roughly EUR 710) is also significant. With these two measures, the government would have imposed burdens on employers leading to a large number of them being forced into near bankruptcy or having to implement significant redundancies.

To avoid this, the government abolished the 1.5% vocational training contribution, reduced the social contribution tax by 2.5 percentage points to 13% and lowered the small business tax rate from 11% to 10%. This latter measure was adopted because in Hungary, small and medium-sized enterprises registered under the small business tax pay social contribution tax on their employees through the small business tax. Since the size of the cost savings achieved by these measures will depend to a large extent on how many people the employers have on the books, and the composition of their income, it is difficult to determine the winners and potential losers of this package. Based on some assumptions, the following picture emerges.

What does this mean for a specific company?

If we simplify the situation by assuming that the rise in the guaranteed wage minimum and the minimum wage increase resulted in an average additional cost of HUF 40,000 (roughly EUR 110) per employee per month, and assuming that the average gross monthly income of employees not in these two categories is around HUF 400,000 (roughly EUR 1,100), then we can conclude the following: if for every two lower-income employees (2 x HUF 40,000 – roughly EUR 2 *110 – extra costs) there are five higher-income workers (5 x HUF 16,000 – roughly EUR 5 * 44 – cost reduction) in a company, the measures will not have affected the company’s costs. If the proportion of employees earning the minimum wage or the guaranteed wage minimum is higher than the above, the firm may face additional costs. If the proportion is lower, it will save costs.

Of course, this rough calculation could be inaccurate because it assumes that the wages of higher-paid employees do not increase. Yet it is precisely the rise in the guaranteed wage minimum and the minimum wage increase that could force these companies to raise the salaries of their higher-paid employees above the average. If we assume that the company would have applied a salary increase of around 5% for all its employees even without the government’s measures, the calculation above changes and a further 4-5% is added to the 5% salary increase for those having a higher income (depending on the proportion of the minimum wage and guaranteed wage minimum earners), because the reduction in taxes and contributions for such a large additional increase will offset the additional burden of the gross wage increase. I would not make any predictions as to whether a 9-10% salary increase is sufficient at a company, or whether the rise in the guaranteed wage minimum and the minimum wage increase might substantially reduce or eliminate the income advantage of those in higher salary categories, which might justify higher salary increases at these levels as well.

Is there any difference depending on the size of the company?

In general perhaps, the larger a company the more likely it is that they employ a smaller proportion of employees earning the minimum wage or the guaranteed wage minimum. This suggests that small and medium-sized enterprises are more affected by the rise in the guaranteed wage minimum and the minimum wage increase.

This disadvantage is addressed by the government’s measure to extend to 2022 the local business tax ceiling at 1% introduced for 2021 to small and medium-sized enterprises with fewer than 250 employees and annual net sales revenue or total assets of no more than HUF 4 billion (roughly EUR 11 million).

Again, I am making the following assumptions based on a rough calculation.

A typical Hungarian company that meets the above criteria has net sales revenue of HUF 2 billion (roughly EUR 5.5 million), its local business tax base is 50% of sales revenue, and 50% of its 80 employees earn the minimum wage or the guaranteed wage minimum. In this example, the additional cost of HUF 40,000 (roughly EUR 110) per month as calculated in the previous section of this article will be HUF 1.6 million (roughly EUR 4,400) per month for 40 employees, resulting in an additional cost of about HUF 20 million per year. The 4% tax and contribution saving for the company’s higher-paid employees amounts to HUF 640,000 (roughly EUR 1,750) per month, or about HUF 7.5 million per year. The company’s local business tax will generate additional savings of HUF 10 million (roughly EUR 27,300) per year compared to the maximum rate of 2%. In total, the government’s package of measures will reduce the company’s earnings by HUF 2.5 million (roughly EUR 6,800).

However, assuming again that the company would have decided to raise the salaries of its higher-paid employees by 5% even without the government’s measures, the savings of a few hundred thousand HUF (roughly a few thousand EUR) from a four-percentage-point reduction in taxes and contributions would mitigate the above-mentioned deterioration in earnings.

What does this mean for the national economy?

Of course, the above examples do not mean that there cannot be companies, or even entire sectors, that will incur much higher additional costs than the average as a result of the government’s package of measures. A number of other market conditions can also affect the profitability of companies. At the level of the national economy, however, we can probably say that the additional burden of the rise in the guaranteed wage minimum and the minimum wage increase will be largely offset by further measures taken by the government in 2022.

If you are uncertain about how your company will be affected by the rise in the guaranteed wage minimum and the minimum wage increase as well as the tax measures to compensate for them, and you need an expert to help you optimise your employees’ wages in 2022, our colleagues are here to help.

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Surpassing the record figures of last year, World Tax 2022, the publication prepared in cooperation with ITR, ranked 3,100 firms from 100 countries. The printed publication to be released this week will also be much thicker, since it contains the detailed introduction of some 1,000 firms, 300 more than last year.

Similarly to previous years, the editors asked the opinions of more than 10,000 clients and 2,700 tax professionals while compiling the lists. In the World Tax 2022 ranking, member firms of WTS Global were included 54 times, including WTS Klient, which, just like in previous years, is ranked in the “Tier 2” category, i.e. it is positioned among the best tax advisory firms.

World TP 2022, prepared alongside World Tax 2022 containing the best and most efficient tax advisory firms, ranks transfer pricing advisory firms all around the world. This year, the list contains more than 850 firms from 84 countries based on the opinions of 13,000 clients and 2,700 professionals. WTS Klient was again rated excellent here, which means it is listed in the “Tier 2” category.

A International Tax Review 2022 rankings announced bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.