What are the main rules?

Content-wise, the special retail tax included in the government decree and the tax in the bill are identical. Rate of the special retail tax, calculated based on annual net sales revenue:

• between HUF 500 million (roughly EUR 1.4 million) and HUF 30 billion (roughly EUR 86 million): 0.1%,
• between HUF 30 billion (roughly EUR 86 million) and HUF 100 billion (roughly EUR 285 million): 0.4%, and
• more than HUF 100 billion (roughly EUR 285 million): 2.5%.

The companies assess and declare the tax by the last day of the fifth month following the end of the fiscal year. Tax advances do not have to be declared in the first fiscal year, since the companies already did so upon submitting their special tax returns prescribed due to the state of emergency, so there is no need for extra administration in this respect. The advances must be paid in two equal instalments.

What activities are affected by the special retail tax?

Taxable retail activity is construed to be market trade as well as parcel delivery and online retail, alongside actual retail in shops, regardless whether some of these are actually non-store retail. It makes no difference either whether the taxpayer has a TEÁOR (activity) classification, and if so then which, nor whether the enterprise conducts the given taxable activity as its core activity or not.

According to the bill, retail activity is taken to mean the sale of products or goods without change to the general public, including mainly – but not exclusively – households. The entire revenue derived from sales available to everyone constitutes the tax base, regardless whether a business entity or business organisation may be the buyer in certain cases. Sales by wholesale manufacturers and resellers to wholesalers, resellers and retailers do not fall into this category if the sale is not made via a sales channel that is easily available to anyone.

The scope of sold goods is limited to consumer goods and does not include products that are not commercially available (cereals, minerals, etc.).

What about foreign companies?

The tax liability also applies to retail activity in which, or as a result of which, a foreign-registered person or entity – irrespective of whether they have a Hungarian branch office or not – sells goods handed over in Hungary to its customers via channels other than a branch office.

According to the government’s announcement, foreign entities conducting online trading activity cannot evade payment of the special retail tax. Based on data received by the National Tax and Customs Administration in Hungary, the tax authority can check whether foreign companies meet their registration and tax payment obligations in Hungary.

Entry into force

The law shall enter into force on the day after its promulgation, given that the special retail tax promulgated with the state-of-emergency government decree is already in force, and the tax proposed by the bill, content-wise, is exactly the same as this existing tax.

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.

A Special retail tax: even after the state of emergency bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Special tax on credit institutions

• Taxpayer: credit institutions
• Tax assessment, payment: The special tax obligation shall be assessed on a separate form by 10 June 2020 and shall be paid in three equal instalments until 10 June, 10 September and 10 December.
• Tax base: The base of the special tax is the amount exceeding the HUF 50 billion (roughly EUR 143 million) tax base threshold for the 2020 fiscal year assessed according to the 2006 special taxes act.
• Rate:19%

Retail tax

Pursuant to Government Decree 109/2020 introducing the retail tax, any retail activity as well as the sale of goods to a customer in Hungary by a person or organisation resident abroad is taxable. 

Payer of retail tax

The payer of the retail tax is the Hungarian or foreign person or organisation conducting the above taxable activities in a business-like manner.

Base of retail tax

The base of the retail tax is the net sales revenue (sales revenue defined separately in the decree) for the entire fiscal year that includes the period from the regulation taking effect until the end of the state of emergency. The tax base includes the sales revenue stemming from services provided by the taxpayer – in connection with the sale of the acquired goods – to the supplier (manufacturer, distributor) of the goods acquired for retail sale, as well as the amount of any discount granted by the supplier to the taxpayer on the goods acquired for retail sale. For persons or organisations resident abroad and not operating through a branch office in Hungary, any consideration less VAT received for the sale of goods in Hungary is considered sales revenue. The decree specifies special detailed rules for the tax assessment of related companies.

Rate of retail tax

The rate of the tax on retail activities shall be defined as follows:

• 0% on any amount not exceeding the tax base threshold of HUF 500 million (roughly EUR 1.4 million),
• 1% on any amount exceeding the tax base threshold of HUF 500 million (roughly EUR 1.4 million), but not exceeding HUF 30 billion (roughly EUR 86 million),
• 4% on any amount exceeding the tax base threshold of HUF 30 billion (roughly EUR 86 million), but not exceeding HUF 100 billion (roughly EUR 285 million),
• 5% on any amount exceeding the tax base threshold of HUF 100 billion (roughly EUR 285 million).

The tax payable is the amount determined based on the tax assessed with the above rates, Considering the sales revenue of related companies too (but only in certain cases), for the period from when the decree takes effect until the end of the state of emergency, in proportion to the amount this represents in relation to all the calendar days of the entire fiscal year.

Procedural provisions

The retail tax obligation shall be determined and declared on a special form by the 30^th day after the end of the year including the state of emergency, or if the fiscal year ends during the state of emergency, then by the 30^th day after the end of the state of emergency. The monthly amount of the tax advance shall be declared until 31 May 2020. Its calculation shall be based on the provisions of the decree. Any taxpayer not subject to paying the tax is not bound by an obligation to file a tax advance return.

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.

A Retail tax and special credit institution tax on the way bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.