With a view to the pandemic situation, the Government of Hungary promulgated a decree on two special taxes levied. These taxes are to be paid by banks and major retail companies from 1 May until the end of the state of alarm declared due to the pandemic. In our present newsletter, we provide an overview of the new rules. If you need further information concerning the details, please do not hesitate to contact our experts.
The special pandemic tax of major retailers
The special tax is levied on companies engaged in retail trade activities whose net revenue in the given tax year from such activities was HUF 500 million or more. It is important to note that the method of retail trade activity is not relevant, which means that the decree also applies to online commerce. Further, the tax is also to be paid by non-resident companies engaged in retail trade activities in Hungary.
For the purposes of the special tax, the following shall be considered as retail sale activities (on the basis of the TEÁOR’08 classification shown in brackets):
- Sale of motor vehicles (45.1)
- Retail sale of motor vehicle parts and accessories (45.32)
- Sale and repair of motorcycles and related parts (45.40) – excluding the repair and wholesale trade of motorcycles
- Retail sale in non-specialised stores (47.1)
- Retail sale of food, beverages and tobacco (47.2)
- Retail sale of motor vehicle fuels (47.3)
- Retail sale of information and communication equipment (47.4)
- Retail sale of other household equipment (47.5)
- Retail sale of cultural and recreation goods (47.6)
- Retail sale of other goods in specialised stores (47.7)
- Retail sale via stalls and markets (47.8)
- Retail sale not in stores, stalls or markets (47.9)
The special tax introduced is a progressive tax with brackets. The tax base is fundamentally the sales revenue. The tax rate is:
- 0% of the tax base up to HUF 500 million;
- 0.1% of the part of the tax base between HUF 500 million and HUF 30 billion;
- 0.4% of the part of the tax base between HUF 30 billion and HUF 100 billion; and
- 2.5% of the part of the tax base above HUF 100 billion.
As a main rule, the tax liability is to be established and the tax returns filed by the 30th day after the end of the tax year in which the state of alarm was lifted; however, a monthly tax advance is to be paid. The first tax advance is due on 31 May 2020, by which date the companies concerned must also file a tax return (for the tax advance). The amount of the tax advance is to be determined as 1/12 of the tax calculated on the basis of their revenue from retail sale activities in the last tax year closed by way of a financial report before 1 May 2020.
It is important to note that in case the net revenue from the retail sale activities in the month preceding the date when the monthly tax advance is due did not reach 60% of the net revenue in the same month of the previous year, the amount of the tax advance due may be reduced by the tax authority proportionately, at the request of the company.
The special pandemic tax of credit institutions
The tax base is the same as that of the special tax introduced for credit institutions by way of Act LIX of 2006. Accordingly, the tax base is the adjusted balance-sheet total calculated based on the annual financial statement for the second year preceding the 2020 tax year. The tax rate is 0.19% of the part of the tax base above HUF 50 billion. The tax return for the special pandemic tax is to be filed by 10 June 2020, electronically, with the use of a form introduced for this purpose. The amount of the tax is to be paid in three instalments: the first by 10 June 2020, the second by 10 September 2020, and the third by 10 December 2020.
We do hope that we could be at your service with this information. Should you have any further queries, please feel free, to contact us!