The Hungarian government has announced a package of economic measures to support businesses that are suffering under the Coronavirus pandemic.
The Hungarian government has announced a major aid package to mitigate the economic impact of the coronavirus outbreak on the country’s businesses.
Major elements of the package include a loan repayment moratorium; a cap on interest rates; economic assistance to sectors already seriously affected; increasing the flexibility of employment laws; and providing support for companies on tax payments and administration.
Loan repayment moratorium
Capital and interest payment obligations for loans to private individuals and businesses signed before midnight on 18 March 2020 are being suspended until the end of the year.
This payment moratorium applies to all credit and loan agreements and financial leasing agreements but will expire on 31 December 2020 (although this may be extended by decree). However, the payment moratorium does not affect debtors’ rights to settle their payments within the contractual term.
All deadlines and commitments are extended by the payment moratorium and any contract which expires within the period of the emergency will be extended until 31 December 2020.
All these rules apply to loans already in place at midnight on 18 March 2020, and for any consumer credit loans concluded after these regulations come into force, the APR cannot exceed the central bank base rate (currently 0.9%) plus five percentage points.
Specific sector measures
Businesses operating in sectors that are in the most serious trouble will receive relief and support until 30 June 2020.
The affected areas include catering, tourism, gambling and lottery, the entertainment and film industries, sports services, event organisation and taxi services.
Employers in these sectors are exempt from the payment of the employer’s tax salary, while for employees only the health insurance and tax is compulsory to pay, provided the monthly amount exceeds the monthly healthcare contribution (HUF 7710).
For these sectors, leases for non-residential premises cannot be terminated before 30 June 2020 and this restriction may be extended by regulations (until the emergency is over). Rent applicable under such leases cannot be increased during an emergency, even if otherwise permitted by the contract.
The payment of Hungary’s tourism development contribution has been suspended from 1 March to 30 June 2020, during which time the tourism tax development won’t be assessed.
Labour law issues
Working regulations are being made more flexible to allow employers to implement remote working during the emergency.
This means different rules apply to the provisions of paragraphs 2 to 4 of the Labor Code 2012 , until the 30th day after the national emergency ends.
Under paragraph 2 of the Code, compliance with the prohibitions and restrictions imposed during the period of emergency under Decree I (III. 11.) of the Labor Code of 2012 (Mt) applies for a period of 30 days after the emergency ends.
The following exceptions apply, where an employer can:
- Modify formal working hours differently to the rules of communication in Article 97 (5) of the Labor Code.
- Unilaterally assign a worker to work from home or carry out teleworking.
- Take any necessary and justifiable measures to monitor a worker’s state of health.
Collective agreement provisions, other than those outlined above, don’t apply during the period covered by this emergency regulation.
Under Paragraph 4 of the code, by special agreement, the employee and the employer can be exempted from the provisions of the Labor Code.
Simplified tax rules
The Hungarian Tax Office (NAV) is handling fair payment requests from entrepreneurs, including reductions in tax advances, tax deferral or deferred payment.
Usually the amount of the quarterly corporate tax advance payment is based on the performance of the previous business year. However, businesses can ask for a reduction if the coronavirus epidemic has reduced revenues to the point where the corporate tax payable for the year will be less than the amount of the tax advance payable.
To make things easier, companies are able to fill in a form called ‘elolegmod ‘available on the NAV website, and submit it electronically.
Importantly, those required to pay monthly advances are able to apply for a reduction of the tax advance until March 2020, and for a reduction in quarterly advance payments by April 2020.
In addition to the corporate tax advance, the small business tax (Kiva), the innovation contribution and energy supplier income tax advance may also be reduced.
Due to the revenue-reducing effect of the coronavirus, deferral or payment by instalments can be requested.
For example, businesses that pay social contributions tax to their employees monthly, or farmers that pay VAT every month or quarterly, can request deferral or payment by instalments from the tax office, along with other special types of tax applicable to small business.
According to the tax (excise duty) and the specific tax (kata) of small taxing enterprises, taxpayers may also apply to the authority for an easier process and ask for facilitates from the NAV (the Hungarian Tax Office).
For more information, contact:
VGD Hungary Audit Kft
T: +36 1 225 7575
Date: March 2020