Tax and financial measures associated with COVID-19
16 April 2020
- The social contribution tax paid by employers will be reduced by 2 percentage points to 15.5% from 1 July 2020, as previously agreed.
- To save workplaces, the Hungarian government will support shortened working hours (Kurzarbeit). If production is temporarily suspended (the exact definition of temporary has not yet been specified), the government will pay 70% of the lost wages for a maximum of three months. This assumption of expenses is bound to a set of conditions.
- The government shall provide a 40% wage supplement for employees and engineers working in the fields of research and development for no more than three months.
- The process of VAT refunds will be accelerated: for regular taxpayers, the procedure will take 30 days instead of 75 days, while for reliable taxpayers the 30-day period will be reduced to 20 days.
- As part of the economy protection action plan, special payment relief, instalment payments, payment deferral and tax reduction options will be available, and forms will be simplified too.
Financial reports and related tax returns can be submitted until 30 September, instead of the end-May deadline set for businesses whose financial year follows the calendar year.
Exemption from social contribution tax and other contributions for special sectors
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. These entities are exempted from their liability to pay social contribution tax (employer’s contribution). For the above, as part of the employee’s contribution, 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 are applicable for tax and contribution payment obligations pertaining to March, April, May and June 2020.
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.
Labour law measures
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.
New taxes are introduced to partly finance the rescue packages: Retail tax and special credit institution tax
- The Government 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.
- Special tax on credit institutions is also introduced.
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