We have been waiting for a long time for the publication of the Government Decree on financial and procedural regulation, which will bring tax relief. On April 21, 2020, the 140/2020 (IV. 21.) Government Decree was published.
I. First, let us take a look at above-mentioned tax relief
Obligations for the assessment, declaration and payment of taxes and contributions due between 22 April and 30 September 2020, and the obligation to establish and declare tax and contribution advances to be fulfilled at the same time as the annual tax return may be fulfilled by taxpayers by 30 September 2020 in the following tax types:
- Corporate Income Tax
- Small Business Tax
- Local Business Tax
- Income Tax on energy suppliers
- Innovation Contribution
If the taxpayer decides to defer the tax return obligations, an important consequence is that (s)he has to pay the tax advances based on the last submitted tax return (FY 2018) till 30 September. Good news however, that application for tax advance relief is an option for any entity whose annual tax burden expectedly won’t reach the sum of tax advances.
II. Relief reporting obligation
The deadlines for the preparation, disclosure, deposit and publication, as well as submission of reports according to the Accounting Act, if they are due between 22 April and 30 September 2020, shall be extended until 30 September 2020. The deadline for additional accounting obligations based on these financial statements shall also be calculated from that date. This rule does not apply to the accounts of public interest entities.
III. The amounts that can be given in the form of SZÉP card – as fringe benefit – have been increased and its periodic exemption from the social contribution tax has come into force
Recreational amount doubled in 2020 – HUF 400 thousand in the case of national institutions, and HUF 800 thousand in the case of other employees.
In 2020, the followings are considered as fringe benefits:
- The amount transferred to the accommodation sub-account of the SZÉP card up to HUF 400 thousand per year (instead of the previous HUF 225 thousand)
- The amount transferred to the hospitality sub-account of the SZÉP card up to HUF 265 thousand per year (instead of the previous HUF 150 thousand)
- The amount transferred to the leisure activity sub-account of the SZÉP card up to HUF 135 thousand per year (instead of the previous HUF 75 thousand)
The employer does not pay social contribution tax on the amounts qualified as fringe benefits transferred to the SZÉP card between 22 April and 30 June 2020.
IV. Tourist tax based on guest nights is suspended between 22 April and 31 December 2020, but Municipalities receive budget support from the state up to the amount of missing tax
The tourist tax based on guest nights spent during the above period does not have to be paid by the taxpayer, the person liable to collect the tax does not have to collect and pay it, but the “not-collected” tax must be declared to the tax authority (unless the amount is zero).
V. Significant simplifications in tax administration rules
Reliable tax payer classification
Based on the classification performed during and after the emergency, the taxpayer’s qualification as a reliable taxpayer cannot be revoked during the emergency or within 30 days thereafter
by reference to the tax difference established against the taxpayer for breach of the tax liability, or during the above period
-with reference to the enforcement procedure initiated, and because
-a net tax debt exceeding HUF 500 thousand, or because
-the tax performance for the current year is not positive.
Risky taxpayer classification
During and after the emergency qualification, the state tax and customs authority in the examination of the conditions when classifying a risky taxpayer disregards the tax difference charged to the taxpayer due to a breach of tax liability during the emergency or within 30 days thereafter.
In addition to the general payment benefits, taxpayers can make additional special requests:
In addition to the payment reduction options that are already in force, the Government offers two payment relief options to tax payers under the Economic Protection Action Plan.
From 22 April until the 30th day after the end of the emergency, the taxpayer may request electronically,
- for a tax of up to HUF 5 million registered with the tax authority – once –
- up to 6 months interest-free postponement of payment, or
- up to 12 monthly interest-fee installments, if the taxpayer proves or it is probable that the payment difficulty is caused by the emergency.
- on one occasion, the reduction of a tax debt existing only in one type of tax by a maximum of twenty percent, but not exceeding HUF 5 million, if the payment of the tax debt would make the taxpayer’s economic activity impossible for reasons attributable to the emergency.
The procedure is duty-free, the tax authority has a deadline of 15 days for process of applications.
Disclosure of those with large tax deficits and large tax arrears
When disclosing taxpayers with large tax deficits, the tax authority shall disregard the amount of tax shortfalls and legal consequences imposed on the taxpayer for the breach of the tax liability during the emergency and within 30 days thereafter.
When disclosing taxpayers with a large amount of tax debt during the emergency and a quarter of the 30th day after the end of emergency, the tax authority shall disregard the tax debt due during the emergency and within 30 days thereafter.
EKAER – deposit exemption
The taxpayer shall be exempted from providing deposit during the period of the emergency and until the 30th day after the end of the emergency, when determining the EKAER number due to the activity of road transport of risky product. The tax authority shall immediately and ex officio arrange for the return of the amount of the deposit paid to the segregated deposit account before 22 April 2020 to the taxpayer.
Annual review of cash registers
The annual review of cash register must be carried out by the operator within 1 year after its commissioning or last annual service. If this period expires during the period of the emergency, the operator must carry out the review within 120 days of the end of the emergency.
Annual review of food vending machines without personnel
Also, within 120 days after the end of the emergency, the operator is obliged to carry out the mandatory inspection of food vending machines without handling personnel.
Health service in the case of unpaid leave
During the period of the emergency, an employee on unpaid leave due to an emergency will continue to be entitled to national health care service.
From 1 May 2020, until the 12th day of the following month, the employer asses, declares and pays the health care service contribution for this employee. At the request of the employer, the tax authority allows the employer to pay the established and declared amount of the health service contribution until the 60th day after the end of the emergency.
VI. Changes come into force from July 1, 2020:
- The rate of social contribution tax will be reduced by 2% to 15.5%.
- The payer pays 15.5% simplified tax (EKHO)
- If an individual is liable to pay social contribution tax, (s)he must consider 87% of the income as tax base, instead of the previous 85%.
- KATA: The basis for calculating benefits will be HUF 102.000 per month, and HUF 170.000 in case of higher itemized tax.
VII. Changes come into force from January 1, 2021:
- The rate of KIVA will be 11%.