Measures of the tax authority in an emergency situation in Hungary

Dear Clients! Dear Readers!

The measures included in the financial bailout package of the government decrease the payment obligation of some enterprises, but the emergency situation adversely affects all the economic operators.

In our Newsletter those fair proceedings have been summarized, which may be requested from the tax authority in case of late or partial execution of tax payment obligations in the exceptional emergency situation caused by pandemic, and also if the operation of an enterprise is difficult, and temporarily becomes insolvent.

The forms and main regulations of the payment alleviation are as follows:

Payment deferment: the tax authority will grant the late payment of tax on request.

In instalments: on request of the enterprise the tax authority will grant the opportunity of tax debt to be paid in instalments.

The tax authority will establish the better-than-average rate of late payment surcharge in its decision on the request, but it may also make a decision on tax allowance.

Legal entities and other organizations may not request for writing-off or mitigating the tax debt, only the mitigation of sanctions (tax penalty, default penalty, late payment surcharge) even up to their maximum.

The requests for payment waivers may be submitted electronically to the tax authority on form FAG01, the levy to be paid for the process is HUF 10,000. Not only the enterprises based in Hungary but any foreign enterprise that is a registered taxpayer may request for a fair legal process from the tax authority.

In case the tax return is filed belatedly the enterprise may submit an application for proof to the tax authority in which the reason for the delay or default shall be justified (for instance the documents and data necessary for the preparation of the tax return were not available because of a pandemic). In such a case the application for proof may be submitted concurrently together with the replacement of tax return within 15 days after the termination of the setback.

In case of a bankruptcy procedure an application for the suspension of enforcement proceedings may be submitted regarding debts that are not affected by a moratorium on 120-365 day’s payment to be enforced by the tax authority. According to the information of the tax authority this financial difficulty is due to the conferring and reasonable condition caused by the enunciated emergency situation because of the spreading of coronavirus.

For the time being the tax authority has not published any other information on its website about other special and reasonable procedures due to the extraordinary rule of law. However, the latest financial bailout package of the government includes the suspension of tax executions.

Best regards,

ABT Treuhand Group