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On 14 April 2020, the Hungarian government issued decrees on special taxes on retailers and credit institutions which will be effective from 1 May 2020. The new taxes are supposed to mitigate the economic harm caused by the COVID-19 crisis.
Special tax on Credit Institutions (Banks)
Credit institutions (i.e. banks) are subject to a special tax in respect of the 2020 tax year in addition to the existing special tax on financial institutions introduced during the financial crisis. The new additional tax rate is 0.19% payable on the amount of the tax base exceeding HUF 50 billion (approx. €140 million) as determined in accordance with Act LIX of 2006 on the Introduction of Special Tax and Bankers’ contribution Intended to Improve the Balance of Public Finances (“Bank Tax Act”). The tax shall be paid in three equal instalments during 2020 (the deadlines are 10 June 2020, 10 September 2020, and 10 December 2020). The payable tax can be decreased in accordance with the rules of the Bank Tax Act (i.e. with regard to provision of financial support to popular team sports).
Special tax on Retailers
A new tax is imposed on domestic and foreign retailers (i.e. retailers pursuing their business activity without having a subsidiary or branch in Hungary). The tax affects a wide circle of retailers, including foreign companies serving online purchasers in Hungary.
The tax is introduced in a banded, revenue-dependent progressive form, thus primarily affecting larger retailers. The tax rate is based on the turnover and payable for the term of the national emergency (which began on 11 March 2020 and continues until a government or parliamentary decision to end it). Foreign retailers shall be subject to the tax on the basis of the goods delivered to Hungary.
Tax rates are 0% on turnover up to HUF 500 million (approx. €1.4 million), 0.1% between HUF 500 million and HUF 30 billion, 0.4% between HUF 30 billion and HUF 100 billion and 2.5% above HUF 100 billion (approx. € 280 million) of the tax base. Anti avoidance provisions prevent the fragmentation of the business to reduce entity turnover below the thresholds.
The taxpayer shall declare the monthly amount of the tax advance to the State by 31 May 2020 and pay it thereafter on a monthly basis. The amount of tax advance is based on the data of the latest financial statement, however, reduction of the payable tax advance can be requested from the tax authority.
Who to contact
Please do not hesitate to contact any member of our team:
Balázs Kántor
Petra Rózsahegyi
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