The delayed appearance and somewhat slower spread of COVID-19 in Hungary compared to other regions allowed the government to anticipate many social and economic measures we have seen in other countries. In an attempt to lessen the impact of the pandemic, the main focus of these measures are the worst hit industries and companies already in difficult situation.
Amongst the most important of these are the delay of submission deadline and reduction of taxes payable by self-employed individuals and companies, along with the possible suspension of ongoing enforcement proceedings, and special reliefs for the most threatened industries.
Tax Reliefs
Companies have the option to request the following payment benefits if the current situation has a demonstrably negative effect on their business activities:
- Delay of the payment obligation
- Payment in installations over a set period of time
- Reduction of the payable amount
This reduction or cancellation is only possible in case of already overdue and unsettled obligations (including tax, penalty and interest payments), with a clear exception when it comes to the payment of Social Security and Income Tax payments deducted from employees, as these remain outside of the scope of these benefits.
In addition to the above, individuals have the option to request the reduction or complete remission of new tax obligations, again with the exception of amounts withheld from other individuals.
It is also possible to apply for further extensions on reliefs already granted, if the circumstances caused by the pandemic make it impossible for the taxpayer to fulfill their previously revised payment plan.
Self-employed individuals can file the related forms free of charge while companies are to pay a processing fee of 10.000 HUF (approximately 30 EUR).
Additionally, the percentage of Social Security Contributions will be lowered from 17,5% to 15,5% from July 1, 2020 until further notice.
Suspension of Enforcement Proceedings
Entities under enforcement proceedings affected negatively by the pandemic can request the temporary suspension of said proceedings, if during the process they have not been penalized for incompliance previously. Late payment interests accrued over the suspension period on outstanding liabilities would still be payable once the enforcement process restarts.
Special Reliefs for The Most Threatened Industries
After a review of the effects of the disease on the economy of the country, a list of the most threatened industries and lines of business has been published along with additional measures for these. The list is subject to update with the inclusion of new categories, but currently consists of the following:
- Taxi and other personal transport
- Hotel industry
- Restaurant industry
- Artistic and entertainment activities
- Sport and other leisure related activities
- Gambling and lottery
- Film, television and audio-recording industry
- Event organization
- Newspaper and periodical publishing companies
- Television and radio broadcasting
- Intermediary, organizational and other travel related services
- Personnel transportation on inland waters
- Services related to physical wellbeing (public baths and spas, etc.)
- Planting seed raising and growing if the activity is carried out in order to resell the produce
- Other plant raising and growing activities, if the company’s incomes in the six months before March 24 were attributed at least in 30% to the sale of flowers, plants and other derived products
- Wholesale stores selling decorative plants
- Retail stores selling only decorative plants
- Hunting related activities, if the entity has at least one employee that is registered with the National Chamber of Hunting and the competent authorities
- Distillation of alcoholic beverages if the base of the production is fruits or marc
- Winemaking
- Independent beer brewers (a production of at least 200.000 hectoliters per year, economically and legally independent from other brewing companies, operating on an independent site, and not under license from another commercial brand)
- Viticulture
Companies and self-employed individuals can apply for the below reliefs if at least 30% of their revenues in the past 6 months originated from one of the above activates.
- No Social Security Contribution payments are to be made for the months of March, April, May and June. This affects companies’ liabilities after their employees, and self-employed individuals’ own contributions
- The affected parties remain exempt from all other related contribution payments including State Pension Fund Contribution, Monetary Health Contributions and Unemployment Contributions as well for the same period. Only the 4% contribution on Health-related Benefits in Kind shall be paid, with a limit of 7.710 HUF
- No Professional Training Contributions shall be paid in the same period
- The annual amount of the Rehabilitation Contribution of 1.499.000 HUF is reduced to 966.000 HUF, and no advance payment is to be made for the fiscal year
- Establishments officially classified as small businesses will be able to deduct all personnel related payments in the cited period from their Corporate Income Tax Returns
- Companies subject to Tourism Development Contributions shall exclude the affected period from their quarterly and annual declarations
It is important to highlight that the employees of affected businesses will still be able to receive social benefits from the state in spite of the exemption from the indicated contribution payments.
The Coronavirus crisis is causing businesses to face huge challenges and, in this context, reliable and up-to-date information is essential. At Auxadi, we are experts in providing accounts, tax compliance and international payroll management to our clients. If you would like us to expand on the above information, please do not hesitate in getting in touch with us.
All information contained in this publication is up to date on 2020. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.