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Tax Alert

Recent changes impacting individuals' daily work to address the consequences of the global coronavirus pandemic upon the national economy

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The Hungarian government has introduced its latest regulation to address the consequences of the global coronavirus pandemic upon the national economy. We hereby summarize the most relevant regulations and changes impacting individuals' daily work.

Social security and rehabilitation contribution

The list of activities for special social security and rehabilitation contribution rules has been expanded to include the following:

  • Plant propagation (TEÁOR/TESZOR #01.30),
  • Raising of non-perennial crops (TEÁOR/TESZOR #01.19),
  • Raising of perennial crops (TEÁOR/TESZOR #01.29),
  • Wholesale of ornamental plants (TEÁOR/TESZOR #46.22),
  • Retail of ornamental plants, sowing, fertilizers, pet foods (TEÁOR/TESZOR #47.76),
  • Hunting, wildlife services (TEÁOR/TESZOR #01.70),
  • Production of distilled alcoholic beverages (TEÁOR/TESZOR #11.01),
  • Production of grape wine (TEÁOR/TESZOR #11.02),
  • Beer production (TEÁOR/TESZOR #11.05),
  • Grape cultivation (TEÁOR/TESZOR #01.21).

 

State support

Support provided to employees

In accordance with the Hungarian government regulation, employees may be provided with state support based on a joint request from the employee and the employer.

Main conditions for receiving support

  • Employees shall be employed at reduced working hours to prevent downsizing of the workforce.
  • The employer shall provide:
    • an economic rationale behind applying reduced working hours;
    • a direct and strong correlation between that rationale and the economic issue due to the pandemic; and
    • implemented and prospective measures to counter economic difficulties.
  • The applicable time frame cannot be applied later on due to its requirements as defined by another regulation.

The rules of support cannot be applied for labour lending or for employment when the activity has to be performed in a specific place, at an employer, or in a position other than the ones defined by the employment contract.

Details of the support

  • Support may be provided up to three months.
  • The support equals the 70% of the monthly absence fee reduced by the mandatory personal income tax and by the employee portion of the social security contribution. Calculation of the support amount shall be prorated by considering the level of working time reduction (30, 40 or 50%).
  • The considerable absence fee (reduced by the aforementioned burdens), however, shall not exceed two times the mandatory minimum wage reduced by the mandatory personal income tax and the employee portion of the social security contribution.
  • The support is free of liabilities and contributions.

Undertakings in connection with the support

The employee undertakes:

  • to work in reduced working hours and at reduced earnings; and
  • that any new employment relationship established besides the one included in the request will not be an obstacle in returning to current employment status after the termination of the supporting period; as well as
  • to be available to the employer in the personal professional development time.

The employer undertakes:

  • to fulfil the workforce retaining obligation for the duration of the support period and an additional one month;
  • that there will be no extraordinary working hours enacted for the duration of supporting period; and
  • that via the support received, the remuneration during the support period matches the absence fee of the employee;
  • to pay remuneration for the personal development time.


Support to employers in the research and development sectors

In accordance with a Hungarian government regulation, the research and development (R&D) sector may receive state support in regard to their employees.

Main conditions for receiving support

  • The employee does not receive any other employment support in connection with his/her relevant employment,
  • The employer shall introduce:
    • the economic rationale behind the request;
    • a direct and strong correlation between the reasons above and the economic issue caused by the pandemic; and
    • the implemented and prospective measures to counter economic difficulties.

The rules of support cannot be applied for labour lending or for employment when the activity has to be performed in a specific place, at an employer, or in a position other than the ones defined by the employment contract.

Details of the support

  • Support may be provided up to three months.
  • The support shall not exceed HUF 318,920 HUF per employee by taking into account the following considerations:
    • if the monthly gross remuneration of the employee reaches or exceeds HUF 670,000, the support shall be HUF 318,920; or
    • if the monthly gross remuneration of the employee is lower than HUF 670,000, the amount of support should be determined proportionately.

Undertakings in connection with the support

The employer undertakes:

  • to maintain the employees’ average headcount determined in the month preceding the submission of request;
  • to employ the employee after the termination of the support period. The duration of such employment should last the length of support period (minimum employment term);
  • to refrain from reducing the employee’s salary during the support period and in the aforementioned minimum employment period.

 

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