Economic protection measures of March 2021

Earlier we informed you on a weekly basis about the main tax measures of the economic relief packages regarding the first and second wave of COVID-19. In our current newsletter, we would like to highlight the measures recently introduced to ease the economic impact caused by restrictions entered into force on 8 March 2021.

The newly published Government Order No. 105/2021 (III. 5.) widens the measures of the previous Government Order No. 485/2020 (XI.10.) in order to expand the circle of beneficiaries worst hit by the restrictions.

Expanded sectoral wage subsidy

Under the modification, the list of eligible activities was expanded, therefore more businesses involved can live with the opportunity, which also allows the amount of subsidy to be paid out as advance payment.

Taxpayers engaged in these activities are eligible for a 50 percent subsidy after the employees’ wages capped up to 1.5 times the minimum wage (gross monthly amount of HUF 251.100 from 1 February 2021).

As for the conditions of the subsidy, the actual main activity of the employer must be one of the eligible activities (that is at least 30 percent of their revenue derived from this activity in a 6-month period preceding 11 November 2020). Furthermore, employer shall undertake the liability of paying wage for the employee and that it does not terminate the employment status of the employee by notice or mutual agreement until 30 April 2021.

Further condition of payment is the complete submission of application and its annexes (e.g., employment contracts, documents proving the payment of wage etc.) to the competent Employment Department of Government Office, where the employer’s registered seat or permanent establishment is situated.

The previously granted amount of subsidy may be increased for the period starting from 1 February 2021 having regard to the increase of minimal wage/guaranteed wage minimum and the change of monthly subsidy cap.

Expansion of payroll tax exemptions

In terms of payroll taxes – social contribution tax, vocational training contribution, rehabilitation contribution – tax reliefs are also applicable for March 2021 for the taxpayers engaged in one of the newly adopted 31 eligible activities as actual main activity. On the other hand, besides the employees, private entrepreneurs and members of the companies can be also exempted from paying social contribution tax for March 2021.

Exemption from Small taxpayers itemized lump sum tax (“KATA”) liability

Small taxpayers itemized lump sum tax is waived in March 2021 for those taxpayers, who had already carried out any of the eligible activities in February 2021. In this case, the above-mentioned actual main activity requirement is not applicable, it is enough that one of the taxpayer’s activities registered at the Hungarian State Tax Authority was an eligible activity at that time. The Tax Authority grants the exemption of its own motion without application.

The exemption covers only the itemized tax, it does not concern the supplementary 40 percent tax on income above HUF 12 million limit.

Expanded rent payment exemption

In line with above-mentioned expansion of eligible activities regarding wage and tax subsidy, the 31 eligible activities are added in the Government order on rent payment exemption, too. Tenants operating in one of the eligible activities is not required to pay rent for March 2021 on state or municipally – also including companies under major control by these – owned properties.

Exemption is only applicable if the tenancy contract entered into force before 6 March 2021 and the tenant carried out one of the eligible activities in the property on 3 March 2021.

The previously paid rent for March should be reimbursed by the lessor till 16 March 2021.

Should you have any further questions in this respect, please do not hesitate to contact us.

Vadkerti Krisztián, partner
Kőrös Regina, senior tax advisor