The Government Decree on tax reliefs has been released

The Government Decree on the new tax relief measures of the Economic Protection Action Plan, published last night, not only states that the planned tax cuts will continue despite the crisis, but also contains a number of new measures that will reduce the burden on businesses in difficulty due to the epidemic.

Corporate Income Tax, small business tax, local business tax and accounting statement

The corporate income tax-, small business tax-, and local business tax-, and innovation contribution returns must be sent to calendar year taxpayers and to taxpayers closing their business year by 30 April at the latest, by 30 September 2020. In connection with these tax types, the amount of tax and tax advance will also be due by that time. The same deadline applies to the publication of accounting statements.

Changes of the rate of social contribution tax and small business tax

From 1 July 2020, the rate of social contribution tax will be reduced by two percentage points, from 17.5% to 15.5%. From 1 January 2021, the small business tax will be reduced by one percentage point, from 12% to 11%.

Liquidity relief for all companies

Two types of reliefs are introduced, in which both have to be applied for, i.e. not determined automatically (ex officio). The application can be submitted no later than the 30th day after the end of the emergency.

• The first relief option provides assistance to taxpayers struggling with payment difficulties: the tax authority allows a tax payment of up to HUF 5 million (approx. EUR 14,285) registered with the tax authority, on a one-off basis, for up to 6 months free of payment deferral or up to 12 months without additional payment.

• The second relief option is for taxpayers who have already accumulated tax debts. In their case, the tax authority reduces the tax debt once, by a maximum of twenty percent, but in an amount not exceeding HUF 5 million (approx. EUR 14,285).

There is no passage between the two reliefs: the same taxpayer can only live with one. In the application, the taxpayer must show that the payment difficulty can be traced back to the emergency, or that the payment of the tax debt would make its economic activity impossible for a reason attributable to the emergency.

Road transporters do not have to pay EKÁER risk insurance during the emergency and until the 30th day after its last day, furthermore, they will get back the previously paid insurance amounts.

Workplace protection

It helps employees to remain entitled to healthcare even if they take unpaid leave due to the emergency. To this end, as of 1 May 2020, their employer sets, declares and pays a health service contribution in the amount of HUF 7,710 (approx. EUR 22) per month.

Until 30 June 2020, no social contribution tax liability will be charged on the amount of fringe benefits transferred to the so-called Széchenyi Pihenő (“SZÉP”) Card account (i.e. the tax burden will be reduced from the current 32.5% to 15%). In addition, the amount limits (up to they are qualified as fringe benefits) are changed as follows:

• the amount, transferred to the accommodation sub-account up to HUF 400,000 (approx. EUR 1,140) per year,
• the amount, transferred to the hospitality sub-account up to HUF 265,000 (approx. EUR 750) per year,
• the amount, transferred to the leisure sub-account up to HUF 135,000 (approx. EUR 385) per year.

In 2020, the annual recreational budget will increase from HUF 450,000 (approx. EUR 1,285) to HUF 800,000 (approx. EUR 2,280).

The tourist tax after a guest night spent in the period up to 31 December 2020 does not have to be paid. However, the tax established but not collected must be declared to the tax authority. It is not necessary to declare the established tax if its amount is zero.

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Should you have any questions regarding this newsletter, VGD’s tax expert team will gladly be at your disposal.