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Hungary: Legislation to enact tax relief, as previously included in decrees (COVID-19)

Hungary: Legislation to enact tax relief

Draft legislation is intended to amend certain tax laws in an effort to mitigate the economic effects of the coronavirus (COVID-19) pandemic.


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The draft legislation has been published on the website of Hungary's Parliament, and reflects the proposals submitted by the government on 28 April 2020.

Retail tax: One part of the draft legislation reflects an intention by the government to make permanent a retail tax that was originally introduced on a temporary basis by Decree 109/2020. (IV. 14.). The draft legislation further addresses procedural rules that were already introduced by the decree. Under general rules, tax advances would be payable in two equal instalments. For 2020, if the date of the second advance payment were to occur after the balance sheet date, then the total amount would be due and paid in one lump sum by the date of the first advance. Also, if both the first and second advance payment dates occur after the balance sheet date, the tax advance would be payable by the last day of the tax year.

Surtax on credit institutions: Under the draft legislation, the provisions of Decree 108/2020. (IV. 14.) would be transposed without modification into law, and supplemented by a provision allowing credit institutions to deduct 20% of the amount of their exceptional tax burden from their usual “bank tax” in equal instalments over the five tax years from 2021 onwards. Read TaxNewsFlash

Corporate income tax: According to the draft legislation, the tax base-decreasing item in relation to the development reserve would be capped at the amount of the total pre-tax profit for the tax year—instead of the previous 50% limit—but would still not be allowed to exceed HUF 10 billion per tax year. A transitional provision would provide that this treatment could already be applied to the 2019 tax year, on election by the taxpayer.

Read a May 2020 report prepared by the KPMG member firm in Hungary

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