A retail tax in Hungary will be introduced as of May 1,2020, as one of the sources funding the current epidemic. The exact rules of the retail tax are set out in the Government Decree of 109/2020 (IV. 14) (hereinafter Decree). The retail tax will affect a number of non-resident and resident taxpayers engaged in activities in the commercial sectors. Please find a list of these sectors covered by the Decree:

• Retail sale of cars and light motor vehicles
• Retail sale of fuel
• Retail sale of clothing, furniture, household appliances, hardware, cosmetics, jewellry, toys and sporting goods
• Retail sale of food, beverages and tobacco
• Retail sale of pharmaceutical and medical goods
• Mail order, internet based retail
• Retail sale of books, newspapers, stationery
• Retail sale of information and communication technology products

The tax is based on taxpayers’ net sales from retail activities, increased additional revenues specific to this sector from services provided to suppliers, which are not listed item by item in the Decree, but as an example they could be various bonuses, and revenues associated to marketing and logistics services. The tax base should also take into account the discounts granted by their suppliers to the retail partners.

Due to the exclusion of the possibility of tax evasion, the net sales of related companies (determined in CIT law) must be added together to determine the amount of the tax base.

The progressive rate of the retail tax is as follows:

• 0 percent for part of the tax base not exceeding HUF 500 million
• 0.1 percent for the part of the tax base exceeding HUF 500 million but not exceeding HUF 30 billion
• 0.4 percent for the part of the tax base exceeding HUF 30 billion but not exceeding HUF 100 billion
• 2.5 percent for the part of the tax base exceeding HUF 100 billion.

Tax payable is equal with the tax base multiplied with the rate and then proportionated with the days of emergency elapsed from 1st May compared to the sum number of days of calendar year.

Taxpayers are required to file the first tax return of monthly tax advance by 31 May 2020, the amount of which is as a general rule 1/12th of the net sales revenue from the last tax year closed before 1 May 2020, multiplied with the above-mentioned rate. Monthly tax advance must be paid by the last day of the calendar months in which the emergency lasts for at least one day.

An advance reduction may also be requested if the taxpayer’s net sales in the month preceding the due date of the monthly tax advance did not reach 60% of the net sales of the same month of the previous year, because in this case, the state tax authority proportionally reduces the advance.

Gábor Kertész

Head of Advisory | Accace Hungary

Get in touch with us