High anticipation has preceded the newly announced package of actions developed for job preservation, which is introduced below. Several proposals and restrictions were announced earlier in the press and at various press conferences, which were not finally included in the legislation (e.g. that the provided aid would not be available above a certain amount, or that it could not be applied to the home office), therefore, we consider it important to emphasize that decisions in this regard should also be discussed in advance with a tax advisor, because there is a vast amount of news circulating in the press that is not entirely factual and may lead to wrong decisions.
Support for part-time employment
Detailed rules for supporting reduced working hours during emergency period are laid down in Decree 105/2020. (IV. 10.), the most important provisions are the followings:
- The support can be received in the case of employees employed according to the Labor Code, if the employee does not receive other support for part-time work, or the employer does not receive job creation, job retention support or employment support for employees engaged in research and development.
- The benefit can be claimed if the employer and the employee agree on reduced working hours, where the reduced working hours must reach half of the earlier working hours, but may not exceed 70%. (So working hours are reduced by 30-50%.)
- The employer and the employee must also agree on individual development time beyond the reduced working hours for at least the duration of the support. Individual development time is the time during which the employee is exempted from the obligations to work in order to improve his performance or the activity of the employer. Individual development time should be equivalent to thirty per cent of the hours lost due to reduced working hours.
- The amount of the allowance is 70% of the proportional part of the monthly net absence allowance (which is normally the amount of the basic salary, increased by a supplement) determined by the due date of 11 March 2020 for lost working time.
- When calculating the support, the maximum net absence allowance that can be taken into account cannot be more than twice the net minimum wage (107,065 * 2 = HUF 214,130). Thus, the amount of support can be up to HUF 74,946 (214,130 * 50% * 70%) per employee in the case of the maximum 50% reduction in working hours.
- The allowance is paid to the employee subsequently, and is free of common charges, PIT and contributions.
- The employer must pay the wage for reduced working hours, as well as the wage for individual development time (30% of the time lost due to reduced working hours). The wage for the individual development period must be determined in such a way that the amount of wages, together with the allowance, must reach the employee’s absence allowance during the period of the support.
- The allowance can be claimed with the joint application of employee and employer for the period following the submission of the application. The application must be submitted electronically by the employer at the capital and county government offices.
- The support lasts for three months.
- The employer must undertake a headcount commitment for the period of support and for an additional month thereafter, maintaining the existing statistical headcount at the time of the application (calculated for all premises).
- The application must provide information about the economic circumstances justifying the employment in part-time work, their direct and close connection with the emergency, and the measures already taken and expected to overcome the economic difficulties. Furthermore, the employer must substantiate in a credible manner that the retention of employees is in the national economic interest in connection with its continuous economic activity.
- The Government Decree enters into force on 16 April 2020.
Support for researchers and developers
Decree no. 103/2020. (IV. 10.) specifies the rules on support for the employment of workers carrying out research and development activities during the emergency period. The most important provisions are as follows:
- The benefit can be received by the employer for employees engaged in research and development activities, regardless of the sector in which the enterprise operates. The employment contract and the employee’s job description must be presented in the application.
- The support is non-refundable and can be claimed for up to 3 months. The support is paid to the employer.
- The monthly amount of the allowance may not exceed HUF 318,920 per employee (this amount decreases proportionally if the employee’s gross monthly salary does not reach HUF 670,000) and together with other benefits the total allowance may not exceed the eighty per cent of wages calculated together with employers’ contributions.
- The application may be submitted by the employer to the competent government office during the emergency period or within one month after the cessation of the emergency.
- The employee must be employed as a researcher and developer at least from the day of the declaration of emergency period and must not receive any other employment-promoting support (including part-time employment support) in connection with the same employment relationship;
- The employer has been operating for at least 6 months at the time of the application, and does not receive job-creating, job-retaining benefits for the employee. Furthermore, the application must present the economic circumstances underlying the application, their connection with the emergency and the measures taken and expected to overcome the economic difficulties;
- The employer must undertake to maintain its average statistical headcount for the period of support, to continue to employ the employees for at least the duration when the benefit is received, and not to reduce the wages.
- Subsidy may be claimed from 15 April 2020.
The range of sectors supported with contribution reductions is expanding
The Decree no. 97/2020. (IV. 10.) expanded the range of taxpayers who can benefit from tax and contribution reductions based on Decree no. 61/2020 (III. 23.) on the measures necessary to mitigate the impact of the coronavirus on the economy.
The facilitations thus already cover, inter alia, activities in the fields of crop production, plant propagation, ornamental plant trade, seed, fertilizer trade, game management, viticulture, the production of various spirits, provided that the specific criteria set out in the regulation are met.
According to the previous rules companies which carry out the above activities as their principal activity receive the following tax and contribution benefits:
- The social security contribution is not payable in March, April, May and June 2020.
- Only the 4% in-kind health insurance contribution is payable and the payable monthly amount may not exceed the monthly health care contribution of HUF 7,710 in March, April, May, and June 2020.
- Contribution to vocational training is not payable for the months of March, April, May and June 2020.
- For those liable to pay the rehabilitation contribution, the amount of the rehabilitation contribution is reduced, and only two thirds of the required contribution is payable.
- Personnel costs are not considered as tax base for small business tax in the months of March, April, May, and June 2020.