Economic Protection Measures in November

Dear Clients! Dear Readers!

At the beginning of the second emergency some government decrees containing new economic protection measures have been issued, from which the regulations concerning teleworking, sector-specific tax incentives and VAT reduction will be introduced below.

1. Reimbursement for teleworkers

From 12 November 2020 to 8 February 2021 for teleworkers under the Labour Code up to 10% of the minimum wage valid on the first day of the tax year may be reimbursed tax-free without certification (in 2020 HUF16,100 per month).

Additional conditions for tax-free reimbursement:

• if the telework does not affect the whole month, only part of the above amount in proportion to the days affected by the telework is tax-free,
• and no other costs can be charged in connection with telework (e.g. internet use, rent, overheads at the place of work).

2. Tax rebates in certain sectors

In November 2020 companies whose most income but at least 30 % of their income came from the following activities in the 6 months prior to the entry into force can be exempted.

1. Restaurants, mobile catering (TEÁOR 5610),
2. Event catering (TEÁOR 5621),
3. Beverage service (TEÁOR 5630),
4.Film screening (TEÁOR 5914),
5. Organization of conferences, trade shows (TEÁOR 8230),
6. Sports and leisure training (TEÁOR 8551),
7. Performing arts (TEÁOR 9001),
8. Complementary to performing arts (TEÁOR 9002),
9. Operation of arts facilities (TEÁOR 9004),
10. Museum activities (TEÁOR 9102),
11. Operation of botanical and zoological gardens and nature reserves activities (TEÁOR 9104),
12. Sports facility operation services
13. Sports association services (TEÁOR 9312),
14. Physical training services (TEÁOR 9313),
15. Other sports activities (TEÁOR 9319),
16. Amusement, theme park services (TEÁOR 9321),
17. Physical well-being services (TEÁOR 9604) or
18. N.e.c. other amusement and recreation activities (TEÁOR 9329)

Businesses in the above category (payers, small business taxpayers) will be exempt from the following tax obligations in November 2020:

• social contribution tax for employees
• vocational training contribution
• the amount of the rehabilitation contribution per month and the obligation to pay an additional advance for 2020
• in the case of KIVA (small business tax) taxation the amount of personnel costs is not considered as tax base.

Conditions for claiming tax relief

The payer

• pays wages under the employment contract already in existence on 11 November, and the employment contracts will not be terminated at the end of November 2020;
• the worker(s) would have been dismissed in view of the emergency,
• announces an application for exemption to the tax authorities.
• it shall keep the documents for 10 years after the grant decision.

Wage subsidy

The above mentioned enterprises can receive support under the labour market program amounting to 50 % of the gross wages of their employees for November if

• the employment relationship exists on the last day of the benefit period and
• the employer pays the employee the salary.

3. VAT reduction in the catering industry

During emergency the VAT on take-away and delivered food and beverages will be reduced to 5%, if the conditions for catering in the canteen still existed before 10 November 2020 or without the emergency the products to be sold would be subject to the 5% tax rate.

In this exceptional case 27% VAT will still have to be paid for the delivery costs of food and beverages.

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

Best regards:

ABT Treuhand Group