{"id":28447,"date":"2020-07-22T12:54:12","date_gmt":"2020-07-22T10:54:12","guid":{"rendered":"https:\/\/wplabs.hu\/demos\/wts\/2020\/07\/22\/2020-summer-tax-amendments\/"},"modified":"2020-07-22T12:54:12","modified_gmt":"2020-07-22T10:54:12","slug":"2020-summer-tax-amendments","status":"publish","type":"post","link":"https:\/\/wplabs.hu\/demos\/wts\/en\/2020\/07\/22\/2020-summer-tax-amendments\/","title":{"rendered":"2020 summer tax amendments in Hungary"},"content":{"rendered":"

On 3 July 2020 the Hungarian National Assembly accepted the bill on the 2021 budget. The law contains many material tax changes for 2020 and 2021. One of the main parts of the 2020 summer tax amendments is that following the abolition<\/a> of the top-up obligation for corporate tax and the innovation contribution, now the same also applies for local business tax. There are also significant changes to the rules on social security, the EKAER and the fixed-rate tax for low tax bracket entities (KATA). Below we have summarised the main details for local taxation, social security and the \u201csmall taxpayers\u201d in particular.<\/p>\n

Top-up obligation for local business tax<\/strong><\/h5>\n

According to the 2020 summer tax amendments, the paragraph of Act C of 1990 on Local Taxes that states \u201cany company subject to corporate tax and keeping double-entry accounting records (including the Hungarian branches of foreign-registered companies, and other foreign-based entities applying bookkeeping methods equivalent to the principles of double-entry bookkeeping), whose annual net sales revenue in the tax year prior to the given tax year exceeded HUF 100 million (roughly EUR 283,000), must top-up the amount of local business tax advances paid for the tax year to the amount of expected tax payable for the tax year\u201d, is to be revoked. This essentially means that the obligation to top up local business tax advances is no longer in force in Hungary for 2020 either<\/strong>. The abolition of the obligation also applies to companies that follow different financial years<\/a>.<\/p>\n

Other local taxes<\/strong><\/h5>\n

To simplify the tax system the building tax payment obligation for advertisement holding objects is to be abolished<\/strong>.<\/p>\n

Changes to social security, social contribution tax<\/strong><\/h5>\n

Amendments are also being made to Act CXXII of 2019 on the Eligibility for and Funding of Social Security Benefits. According to the amendment, the social security contribution payable on the<\/strong> difference<\/strong> between the lower threshold set by law for contribution payments (30% of the minimum wage) and the actual income paid forming the contribution base must be paid by employers for all employment relationships<\/strong>.<\/p>\n

From July this year, the in-kind health insurance contribution (4%), the cash health insurance contribution (3%), the labour market contribution (1.5%) and the pension contribution (10%) have been merged into a single-rate contribution <\/strong>in Hungary. The new contribution is called the social security contribution<\/a>, with a rate equal to the amount of the contributions listed above, i.e. 18.5%<\/strong>. The amendment means that almost every insured person has to pay the social security contribution of 18.5% on the income included in the contribution base.<\/p>\n

However, companies will obtain some relief by the fact that from 1 July 2020 the rate of the social contribution tax <\/strong>is to fall by another two percentage points, from 17.5% to 15.5%<\/strong>.\u00a0<\/strong><\/p>\n

KATA: 40% special tax<\/strong>\u00a0<\/strong><\/h5>\n

For those in the KATA system the government introduced some transitional measures<\/a> in the emergency situation announced because of the coronavirus, but the 2020 summer tax amendments have put in place some long-term changes for these taxpayers.<\/p>\n

Act CXLVII of 2012 on the Fixed-Rate Tax of Low Tax-Bracket Enterprises (KATA) and on the Small Business Tax (KIVA) has been supplemented in that from 2021 private individuals can only be registered in the low tax bracket for one business relationship<\/strong>. As of 1 January 2021, with the exception of the first registered relationship, the NAV will delete the private individual from the list of those in the small tax bracket for all other business relationships.<\/p>\n

The 2020 summer tax amendments introduce an extra 40% tax for those who invoice more than HUF 3 million (roughly EUR 8,500) to any given business partner during a year<\/strong>. The Hungarian Ministry of Finance is quite open about the fact that this is intended to limit hidden employment. From 2021 this special tax must be paid<\/p>\n