In order to enhance the financial sources of the Government to be spent on the actions against the coronavirus pandemic, special surtaxes have been introduced for banks and retailer chains. The surtaxes are practically the ‘copy-paste’ of those special surtaxes that the Hungarian Government has already introduced in the past and have been subject to controversial interpretations.
Special bank tax
Pursuant to Government Decree 108/2020 (IV. 14.), which enters into force on 1 May 2020, credit institutions will be required to assess, declare and pay a new special tax for the 2020 tax year. Although the new provisions are essentially in line with 2006 LIX Act. (Special Tax Act), the new special tax is levied only on credit institutions.
The special tax related to the epidemiological situation must be declared by credit institutions by 10 June 2020. The tax must be paid in three equal instalments by 10 June 2020, 10 September 2020 and 10 December 2020.
The basis of the newly introduced special tax shall be determined in accordance with the rules applicable to the special tax on financial institutions under the Special Tax Act.
The new special tax must be paid only for the part of the 2020 tax base (defined by the Special Tax Act) exceeding HUF 50 billion.
The rate of the new special tax is 0.19%.
The new special tax may also be reduced by the amount of the spectator team sport support in accordance with the rules for the special tax on financial institutions under the Special Tax Act.
Although the government decree does not contain a rule to this effect, the Ministry of Finance has informed the banks that the amount of the special tax, which will now be introduced, will be reimbursed, equally deducted from the bank tax over the next five years.
Special tax on retail companies
Pursuant to Government Decree 109/2020 (IV. 14.), which enters into force on 1 May 2020, companies engaged in retail activities will also be required to pay a special tax. The basic rules of the newly introduced special tax date back to the special tax provisions of 2010 for the retail sector (Act XCIV of 2010).
For the purposes of the Decree, an activity is considered to be a retail activity if it can be classified in the sectors listed in the Decree as defined in the TEÁOR in force on 1 January 2020 and if the buyer can also be a private individual.
The obligation to pay the special tax does not depend on the method of sale (it also covers internet merchants, sellers via vending machines) and non-resident persons or organizations selling in Hungary via not a branch are also subject to the tax.
The tax is based on the total net sales revenue for the tax year (income of a small business taxpayers, income without VAT according to the Personal Income Tax Act, the consideration without VAT from the domestic sale of products performed by non-resident persons not having a branch). The tax base also includes the amount of sales revenue from the service provided to the supplier of the goods intended for retail sale and the amount of the discount granted by the supplier.
The tax rate is determined in bands:
- 0% for the part of the tax base not exceeding HUF 500 million,
- 0.1% for the part of the tax base exceeding HUF 500 million but not exceeding HUF 30 billion,
- 0.4% for the part of the tax base exceeding HUF 30 billion but not exceeding HUF 100 billion,
- 2.5% for the part of the tax base exceeding HUF 100 billion.
The tax is the proportion of the amount of the tax base calculated with the banded tax rate that corresponds to the ratio of the days of the period between 1 May 2020 and the date of cessation of the emergency to the calendar days of the entire tax year.
If a related party relationship is established by division or spin-off after the promulgation of the Decree, or if a taxable person transfers or makes available its retail assets to its related company after the promulgation date, the tax bases of the related companies shall be taken into account together when calculating the tax (then the tax has to be divided proportionally among the enterprises). Taxpayers are also obliged to pay and declare tax advances.
Taxpayers must declare the amount of the tax advance per month by 31 May 2020, based on 1/12 of the net sales for the tax year for which the accounts have been closed.
The tax advance shall be paid by the last day of each month in which the emergency lasted for at least one day, for the first time on 31 May 2020. If the monthly net sales revenue prior to the due date of the tax advance did not reach 60% of the net sales revenue of the same month of the previous year, the tax authority shall, upon request, reduce the amount of the tax advance in proportion to the decrease in sales revenue.
The tax must be assessed and declared by the 30th day after the end of the emergency or, if the tax year ends at the time of the emergency then by the 30th day after the end of the tax year. If the amount of tax advances paid exceeds the amount of tax, the difference can be reclaimed from the time the tax return is filed.
Those who are not obliged to pay taxes (i.e. whose net sales do not exceed HUF 500 million) do not have to submit a tax or tax advance return.