Coronavirus – Changes in taxation and accounting in Hungary

Dear Clients! Dear Readers!

On 7 April, 2020 the government announced another economic rescue package, the details of which have already been reviewed in our entry.

In this newsletter, the rules related to additional taxation and accounting published on 21 April are described.

1. Increasing the value limits of the SZÉP Card as a non-wage fringe benefit

As of 22 April 2020, the employer may transfer the following higher benefits to certain sub-accounts of employees

• for accommodation a maximum HUF 400,000 a year instead of HUF 225,000,
• for catering a maximum of HUF 265,000 per year instead of HUF 150,000,
• for leisure services, a maximum of HUF 135,000 per year instead of HUF 75,000.

In addition to the above mentioned, the annual allocation for recreation will increase to HUF 800,000.

Between 22 April 2020 and 30 June 2020 the non-wage fringe benefits transferred to the SZÉP Card accounts of employees are not subject to social contribution tax.

*According to a modification of this regulation introduced 23 May 2020 the fringe benefits paid to SZÉP Cards are free of social contribution tax until 31 December 2020.

2. Reduction of social contribution tax as of 1 July 2020

The rate of social contribution tax as of 1 July 2020 is 15.5%.

The reduction also applies to the social contribution tax to be paid by the employer on non-wage fringe benefits. On 1.18 fold of certain defined benefits that do not qualify as non-wage fringe benefits, the paying employer is obliged to pay a 15.5% social contribution tax from July.

In connection with the change, the personal income tax base is 87% of the income if the individual is liable to pay social contribution tax on the income (unless it is eligible as an expense or has been reimbursed).

The rate of simplified public burden-sharing contribution will also be reduced to 15.5% as of 1 July 2020.

3. Entitlement to health care during unpaid leave

Employees on unpaid leave due to an emergency situation are also entitled to health care.

As of 1 May 2020 the employer is obliged to pay the health service contribution (HUF 7,710 per month per capita) during the emergency situation. However, the employer may request that it be paid until the 60th day after the end of the emergency situation.

4. Deferral of annual tax return and tax payment deadlines

The annual corporate tax due between 22 April and 30 September 2020, KIVA, trade tax and innovation contribution declaration and payment obligations have to be uniformly fulfilled by 30 September 2020. The deferral also applies to advance declarations due during this period.

Tax advances due by 30 September in the absence of an annual declaration have to be paid in the amount of the previous tax return formerly declared. The taxpayer may request a reduction of this tax advance instalment before it fails due, if the taxpayer calculates that the tax for the tax year beginning in 2020 does not reach the amount of the tax advance for the tax year.

Concerning local taxes the tax exemption declarations and applications for the reduction of advances can also be submitted by 30 September.

5. Deferral of reporting deadline

Accounting reports can also be prepared and submitted by 30 September.

6. Application for deferral and payment in instalments

In the period of emergency situation and until the 30th day after the end of emergency a six-month deferral free of charge can be claimed for a tax of up to HUF five million at a time or a 12-month surcharge-free instalment payment. In the application it has to be proved that the payment difficulty was due to the emergency situation. The administration is free of charge, the deadline for assessment is 15 days.

At the request of a legal entity taxpayer and the person liable to pay the tax submitted until the thirtieth day after the end of emergency the tax debt due to him is reduced once by at least a maximum of twenty percent, but not exceeding HUF five million, if the payment of the tax debt would make the applicant's business impossible for a reason attributable to the emergency situation. The tax relief can only be claimed for one type of tax. The administration is free of charge, the deadline for assessment is 15 days.

7. The taxpayer rating will be retained

Reliable taxpayer ratings will be maintained during the emergency period and until the 30th day after the emergency,if enforcement proceedings are instituted against the company during this period or it fails to comply with a tax debt of maximum HUF 500,000 or the conditions for a so-called positive tax performance or a tax difference is established against him for breaching the obligations due during that period.

Taxpayers who accumulate tax debts of more than HUF 100 million are also exempted from disclosing their data, if this limit is exceeded during the emergency period.

8. EKAER

As of the entry into force of the regulation, no risk insurance is required to be paid for risky consignments either until the 30th day after the end of emergency. The risk security currently registered with the tax authority will be returned immediately by the tax authority During the emergency situation, the previously authorized road section exemption will remain valid.

9. Suspension of tourist tax

Tourist tax for guest nights spent between 26 April 2020 and 31 December 2020 is not required to be collected and paid but the established tax must be declared to the tax authority. If the amount of tax assessed is 0, no tax return is required to be submitted either.

10. Cash register inspection

It is also sufficient to carry out a mandatory inspection of cash registers and vending machines within 120 days after the end of the emergency situation.

11. VAT

The Secretary of State for Taxation has announced that the deadline for VAT refunds will also be shortened. In the case of reliable taxpayers, the allocation deadline will be changed to 20 days instead of the previous 30 days, while in the case of a general taxpayer, the allocation deadline will be changed to 30 days instead of the previous 75 days. However, the official government decree on this has not yet been published in the Hungarian Gazette.

If you have any questions about the practical application of the above rules, please feel free to contact us.

Best regards,

ABT Treuhand Group