TAXATION MEASURES TO RE-LAUNCH THE ECONOMY

Social contribution tax 


On 9 June 2021, Government Decree No. 318/2021 (VI.9) was published. According to the Decree, as a tax measure to help the revive of the economy, the previously accepted legal provision that the amount transferred to the Széchenyi Recreation Card as fringe benefits is not subject to social contribution tax, is valid not only until 30 June 2021, but for the whole year 2021  and thus this benefit is only subject to 15% personal income tax,. 

In addition, no social contribution tax must be paid on the payment of entertainment and business gifts that qualify as certain specified benefits if the payment is made between the date when the Government Decree came into force, 10 June 2021 and 31 December 2021. As a result of the amendment, only 15% personal income tax is payable on these benefits, calculated on a taxable amount of 1.18 times. 

Since 1 January 2021, the base of the vocational training contribution will be the social contribution tax base of the person liable for the vocational training contribution. This means that from 1 January 2021, not only income from activities defined in the legislation will be subject to the vocational training contribution payment obligation, but also all income subject to social contribution tax, such as fringe benefits and certain specified benefits. 

However, only during the emergency situation, from 1 January 2021, fringe benefits transferred to the Széchenyi Recreation Card and certain specific benefits under Article 70 of the Act on Personal Income Tax  are not subject to vocational training contributions, nor to social contribution tax. 


Increase in the amount that can be given by Széchenyi Recreation Card 


The annual limit of the recreation allowance for non-budgetary employers was originally set at HUF 800,000 per year (for full-year employment) until 30 June 2021, but the new Government Decree maintains this higher amount for the whole of 2021.


In 2021, notwithstanding Section 71 (1) of the Act on Personal Income Tax, the Széchenyi Recreation Card shall be considered as fringe benefits if it is under the following limits:


a) in case of the benefit transferred to the accommodation sub-account the maximum is HUF 400 000 per year,


b) in case of the benefit transferred to the catering sub-account the maximum is HUF 265 000 per year,


c) in case of the benefit transferred to the leisure-time sub-account the maximum is HUF 135 000 per year. 


Measures to support the tourism sector

As a measure to support the revive of the economy, in particular in the tourism sector, from 1 January 2021 until 31 December 2021, businesses liable to pay tourism development contributions shall not be subject to the obligation to pay such contributions. The contribution shall not be assessed, declared and paid. 

In addition, no tourism tax will have to be  paid on the number of overnight stayed during the period 1 January 2021 and 30 June 2021, and will not be collected and paid by the person liable for the tax. However, the tax assessed but not collected must be declared to the tax authorities, unless its amount is zero. 


Tax payment reliefs 


According to the Government Decree published on 9 June 2021, in addition to the deferred payment, instalment payment and automatic instalment facility for natural persons provided in the Act on the Rules of Taxation, the tax authority may grant a deferment of payment of up to six months or an instalment payment of up to twelve months without surcharge at the request of both legal entities and natural persons, for once, for a tax, up to HUF 5 Million registered at the tax authority, if the applicant proves or is likely to prove, at the same time as submitting the application, that the payment difficulty is due to the emergency situation.  

According to the Act on the Rules of Taxation, the tax authority can only reduce or waive the liability of legal entities for fines and surcharges.

This regulation eased by the Government Decree to the extent that the tax authority may reduce the tax debt owed by the taxpayer, who is not a natural person, upon its request, in respect of a tax type, by a maximum of 20 percent, but  not exceeding HUF 5 Million on one occasion. 


Such reduction is possible if the payment of the tax debt would make the applicant's business activity impossible for reasons attributable to the emergency situation.  


However, it is important to note that it is not possible to allow both types of reduction together. 


Both types of application can be submitted until 31 December 2021 under the general rules, with an administrative deadline of 15 days.