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Economic relief measures in Hungary due to the coronavirus pandemic

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Economic relief measures in Hungary due to the coronavirus pandemic

On 20 March 2020, the Hungarian government announced a set of economic relief measures, complemented on 23 March, that intend to alleviate the economic burdens of companies and self-employed persons operating in the sectors most affected by the coronavirus pandemic.

Hospitality industry is the most affected

By hospitality, we usually mean all the various sectors that are involved in where and how people spend their free time. In Hungary, more than 500,000 people are concerned. Current measures to promote social distancing and hinder the spread of the coronavirus include the closing of theaters, cinemas, gyms, schools and universities, while restaurants and shops are open in reduced hours, which mean significant income losses.

The below economic relief measures concern economic operators in the hospitality industry in the sectors of tourism, lodging, event planning, sports, entertainments, the film industry, and gambling.

  • Contribution for the development of tourism is waived from 1 March to 30 June
  • Employer’s payroll taxes are waived from 1 March to 30 June
  • Employee’s payroll contributions are waived from 1 March to 30 June. Only the personal income tax (15%) and the 4% healthcare contributions (max. HUF 7,710, ca. EUR 23) / month) are still to be paid.
  • For non-residential real estate (e.g. restaurants, shops), rental agreements cannot be cancelled or raised until 30 June or the end of the current state of emergency.

An economic operator is concerned if they have been generating at least 30% of their income over the preceding 6 months by one or more of the below activities (with codes according to TEÁOR and TESZOR):*

  • 49.32: taxi operation
  • 55: providing accommodation
  • 56: food and beverage service activities
  • 58.13: publishing of newspapers
  • 58.14: publishing of journals and periodicals
  • 59: motion picture, video and television programme production, sound recording and music publishing activities
  • 60: programming and broadcasting
  • 82.30: organization of conventions and trade shows
  • 90: creative, arts and entertainment activities
  • 92: gambling and betting
  • 93: sports activities and amusement and recreation activities

*If your small business in not operating in the sectors listed but it is affected by the pandemic, you can ask for a payment delay or payment in instalments for some taxes and contributions in case justififed. Consult your accountant about your options.

On a similar note, contributions are also waived for the period between 1 March and 30 June for self-employed persons paying taxes and contributions in bulk (in the KATA construction) in various sectors. Here healthcare contributions are usually part of the KATA fee, which is now waived; accordingly, KATA entrepreneurs are considered insured.

The TEÁOR and TESZOR codes concerned are as follows:

  • 43.21: Electrical installation
  • 43.22: Plumbing, heat and air-conditioning installation
  • 43.32: Joinery installation
  • 43.33: Floor and wall covering
  • 43.34: Painting and glazing
  • 43.91: Roofing activities
  • 49.32: Taxi operation
  • 55.10: Hotels and similar accommodation
  • 55.20: Holiday and other short-stay accommodation”
  • 55.90: Other accommodation
  • 56.29: Other food service activities
  • 82.30: Organisation of conventions and trade shows
  • 85.51: Sports and recreation education
  • 86.10: Hospital activities
  • 86.21: General medical practice activities
  • 86.22: Specialist medical practice activities
  • 86.23: Dental practice activities
  • 86.90: Other human health activities
  • 88.10: Social work activities without accommodation for the elderly and disabled
  • 90.01: Performing arts
  • 90.02: Support activities to performing arts
  • 92.00: Gambling and betting activities
  • 93.13: Fitness facilities
  • 93.19: Other sports activities
  • 96.02: Hairdressing and other beauty treatment
  • 96.04: Physical well-being activities

Moratoria and financial measures

In order to let economy pick up from where things were left before, it is essential that debtors do not lose their collaterals because of the coronavirus pandemic. The economic relief measures let us ensure that it does not become impossible to get out of the red for those in an already tight financial situation.

  • Collection is suspended for tax arrears in the KATA construction generated before 1 March until after the emergency, and then it can be paid in instalments.
  • Forced collection of tax arrears will be suspended until after the emergency.
  • Evictions and seizure of goods is suspended until after the emergency.

The measures introduced also concern banks and loans, credit agreements, and finance lease contracts made before 18 March midnight.

  • All fees, interests and capital payments receive a reprieve until 31 December 2020. Of course, debtors may choose to keep paying regardless, but they cannot be required to do so,
  • Related deadlines are also extended to 31 December, 2020.

At the same time, interest on unsecured loans (mostly personal loans) is maximized in 5% + the base rate of the central bank, which is 0.9% right now. This will affect easy small loans, where APRC (the annual percentage rate of charge) has been above 13% lately. An 5.9% cap may just not be worth it for the banks.

Labor law, working hours, employment

The top priority of handling the coronavirus emergency is to keep people healthy and businesses operational at the same time. In order to support that, a few regulations of the labor law were loosened to make the organization of work easier.

  • Until now, working time had to bee agreed upon at least 96 hours (4 days) in advance. Now the schedule is allowed to be changed within these last 96 hours as well.
  • The employer may instruct employees to work remotely (from home)
  • The employer may check on the health of employees
  • The employer and the employee may sign a labor contract that is not in accordance with the labor law is both of them wish to do so.

These alterations to the labor law remain in force until 30 days after the state of emergency.

At the same time, in order to protect and support families, maternity leaves (GYES, GYED, GYET) that would expire during the state of emergency are extended until the end of the state of emergency.

What to do next?

Are you affected by the economic relief measures listed above? Then do not hesitate: contact your accountant and make sure you can take advantage of the options now available to you and your Hungarian company.

The post Economic relief measures in Hungary due to the coronavirus pandemic appeared first on Helpers Finance.

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