Up Again Hungary: Government Relief and Tax


1. What is the position with respect to the applicability of emergency tax measures , including

a. what they are and apply to;

b. when they are expected to be phased out on or following a return to business; and

c. whether any transitional periods are likely to apply.

Sector-specific payroll tax, tourism development contribution and tourist tax benefits were introduced during the crisis. Administrative reliefs and suspensions were also enacted to help taxpayers cope with the economic burdens of the pandemic.

Most of the tax benefits phase out at one month after the end of the emergency measures (emergency measure officially ended on 18 June). Certain reporting obligation deadlines are extended to 30 September.

There is no general rule for a transitional period or extension of benefits (see exceptions below).

2. Are there specific steps that businesses should take to prepare for these tax measures being phased out – for example new timing of

a. payment obligations (and therefore likely pressure on cash flow); and/or

b. filing of returns?

It is still possible to defer the obligation to file a tax return and pay the tax until 30 September 2020 with regard to corporate tax, small business tax, income tax of energy suppliers, innovation contribution, and local business tax. The submissions deadline for annual reports has also been extended to 30 September.

3. Should the impact of emergency tax measures be reconsidered by businesses – e.g. are there certain legal transactions (such as sales or reorganisations) that parties should preferably postpone or accelerate?

From a strictly tax perspective, no such reconsideration is necessary.

4. Are there any additional measures proposed, in particular any that are targeted at particular sectors (e.g. aviation)?

Social tax rate is to be decreased generally as of 1 July 2020, while small business tax rate is to be decreased as of 1 January 2021.

Certain tax benefits only phase out at the end of 2020, as follows:

  • Enterprises operating in the aviation industry are exempted from social tax, vocational training contribution and (pro rata) rehabilitation contribution from May 2020 to 31 December 2020.
  • Certain fringe benefits remain tax exempt until 31 December.
  • As noted above, businesses are generally exempted from paying the tourism development contribution and tourist tax until 31 December. This is most relevant to the tourism and hospitality industry.

5. Are there any sectors or interest groups that are now putting forward, or may in the near future request, special tax measures?

We have no knowledge of such initiatives.

6. Which taxes might be increased to address the financial burden caused by the crisis, for example,

a. are there political commitments or policy trends that might indicate the likely focus of any tax increase in the future (e.g. to maintain low corporation tax, but to increases taxes on personal wealth)

b. measures to broaden the tax base, such as digital services taxation and a pre-emptive response to the OECD/ G20 Inclusive Framework on BEPS (“BEPS 2.0”)

Specific surtaxes on large retail corporations and credit institutions (that were introduced earlier this year and address the financial burden caused by the pandemic) remain in effect.

7. Are there other actions that ought to be considered by businesses in your country e.g.

a. revisit past tax filings to claim carry back of losses;

b. revise or update preliminary tax assessments;

c. claim bad debt relief for VAT output tax

As a general rule, no such action is necessary.


8. What do you need to consider in terms of your funding requirements for returning to business and are there any return to business financial assistance packages being made available by government?

The Hungarian Government has introduced an Economy Recovery Action Plan (Gazdaságvédelmi Akcióterv) to help the Hungarian economy and enterprises recover from the  COVID-19 outbreak. As part of this action plan, the government is providing funding through special financing programmes through, among others, the Hungarian Development Bank and the Hungarian Export-Import Bank. The National Bank of Hungary has also launched its new lending programme for SMEs (NHP Hajrá) and extended its special bond programme for larger companies (NKP).