Tax reliefs available after the COVID-19 pandemic

The latest tax decree of the Hungarian Government (Government Decree 318/2021 (VI. 9.) on tax measures to help restart the economy following the COVID-19 pandemic) introduced additional tax relief measures that will remain in force from the date of entry into force of the Government Decree, i.e. from 10 June 2021, until 31 December 2021. We summarise these reliefs in our newsletter.

Favourable tax rules for the SZÉP Card benefits

The fringe benefits paid into certain sub-accounts of the SZÉP Card continue to be exempt from social contribution tax and vocational training contribution.

Increased amounts may be paid as fringe benefits on SZÉP Card sub-accounts, separately per employer:

• accommodation sub-account: up to HUF 400 000 per year,
• catering sub-account: up to HUF 265 000 per year,
• leisure sub-account: up to HUF 135 000 per year.

If, for example, the employer granted his employee a HUF 200,000 fringe benefit for the accommodation sub-account in the first half of 2021, it can provide the same amount in the second half of 2021, too. There is also no obstacle if the employee received a HUF 200,000 subsidy for the catering sub-account in the first half of 2021 and then their new employer in their new job grants a further HUF 265,000 fringe benefit for the catering sub-account in the second half of 2021.

In 2021, the increased annual recreation amount threshold remains in effect for the entire year:

• HUF 400 000 per year for employers in public sector, and
• HUF 800,000 per year for employers in other sectors.

Business representation costs and business gifts

Neither social contribution tax, nor vocational training contribution are payable on the business representation costs and business gifts if these costs are incurred between 10 June and 31 December 2021.

Therefore, the tax burden on these benefits is more than halved: compared to 35.99% at the beginning of 2021, companies will only have to declare and pay 15% personal income tax during this period.

(Companies still have to declare social contribution tax on the business representation costs and business gifts incurred before 9 June 2021 in their June tax return, although vocational training contribution liability should not arise on such costs).

Easing the conditions for tax relief for labour market entrants

In the case of employment relationships entered into between 10 June 2021 and 31 December 2021, the tax relief on social contribution tax and vocational training contribution for labour market entrants also applies to persons who have been in social insurance for a maximum of 92 days in the 183 days preceding the month in which the employment started. This is a relaxation of the otherwise applicable legal requirements, which provide for an "observation" period of 275 days. 

Tourism development contribution

No tourism development contribution is payable for the period from 1 January 2021 to 31 December 2021. Thus, providers of services that would otherwise be subject to the levy do not have to assess, declare or pay the tourism development contribution for the year 2021.

Payment facilities

The existing payment facilities (deferred payment, instalment facility, automatic instalment facility) have been extended to include:

• Upon the taxpayer's application submitted by 31 December 2021, the HTA will allow a single payment deferral of up to six months or an instalment payment of up to twelve months for the tax amount of up to HUF 5 million, if the applicant, when submitting the application, assumes that the payment difficulty is due to the emergency situation;
• Contrary to the legal requirements otherwise in force, the HTA may also reduce the tax debt of a legal person taxpayer upon the taxpayer's request submitted by 31 December 2021. The reduction may be granted once, by a maximum of twenty percent, but not exceeding HUF 5 million, only in respect of one kind of tax, if the payment of the tax debt in full would make the applicant's business activities impossible for reasons attributable to the emergency situation.

The above payment facilities cannot be combined.

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If you have any further questions on the post-COVID tax relief measures, please contact our tax experts.

This newsletter provides general information and does not constitute tax advice.