Tax benefits, Wage Support 3.0, expense reimbursement of accommodation providers and 5% VAT on food and drink were included in the first autumn economic package compensating for Covid effects. The package of measures contained in Government Decree 485/2020 are divided into three parts but for the time being, it only offers temporary solutions for coping with declining revenues and retaining the workforce in certain sectors only for November. Pursuant to government decree 498/2020, the reduced VAT rate of 5% can be applied to food and non-alcoholic beverages ordered to be taken away or to be delivered home (excluding the VAT cost of the delivery fee, which is still subject to 27% VAT) until 8 February 2021, provided that the conditions for in-house preparation are met in the case of their sale in catering facilities.
1. Tax benefits
Employers and KIVA (small business tax) taxpayers pursuing their actual primary activities in the sectors listed below are exempted from their social contribution, vocational training contribution, rehabilitation contribution and KIVA payments due for November. The exemption is conditional on the companies concerned about maintaining the employment of their employees in November and paying their full wages.
The above tax exemption applies to the following activities:
- Restaurant, mobile catering (TEÁOR 5610)
- Event catering (TEÁOR 5621)
- Beverage supply (TEÁOR 5630)
- Film projection (TEÁOR 5914)
- Organisation of conventions and trade shows (TEÁOR 8230)
- Sports and leisure training (TEÁOR 8551)
- Performing Arts (TEÁOR 9001)
- Activities ancillary to performing arts (TEÁOR 9002)
- Operation of art facilities (TEÁOR 9004)
- Museum activities (TEÁOR 9102)
- Botanical and zoological gardens and nature reserves activities (TEÁOR 9104)
- Operation of a sports facilities (TEÁOR 9311)
- Activities of sports clubs (TEÁOR 9312)
- Fitness service (TEÁOR 9313)
- Other sports activities (TEÁOR 9319)
- Amusement park, entertainment park (TEÁOR 9321)
- Physical well-being improvement activities (TEÁOR 9604)
- Other amusement and recreation activities not elsewhere specified (TEÁOR 9329)
The familiar conceptual element of the spring package is the "Actual primary activity", which is not necessarily the same as the principal activity indicated in the register of companies, as it refers to the activity from which the payer, the KIVA taxable person, received the highest income or at least 30% of the total income in the six months prior to 11 November 2020.
Due to the epidemic, a number of accommodation providers (e.g., some hotels in the capital) may have found themselves in a situation where they did not earn most of their revenues from their main business activity according to the company register in the last 6 months, but restaurant hospitality dominated in their sales revenues. They may be eligible for tax benefits.
An additional condition of eligibility for the benefit is that the payer does not dismiss the employees due to the emergency situation and notifies the tax authority of the request for exemption.
The aid may be accompanied by the “wage subsidy 3.0” described below, provided that the aid accumulated in this way does not exceed the amount of wage costs for the employer.
2. Framework and conditions of Wage Subsidy 3.0. and its conditions
A new wage subsidy program was launched as a sectoral version of a form of aid known as short work. The wage subsidy can be claimed by those entitled to the tax benefits presented above (employers who have been pursuing their actual primary activities in the beneficiary sector in the last six months).
As a wage subsidy, a non-refundable labour market subsidy of up to 50 per cent of the gross salary of the employed person in November, but not more than 150 per cent of the minimum wage (gross HUF 241,500) may be granted, with subsequent disbursement. The condition of the wage subsidy is that the employee's employment should be active on the last day of November and the salary is paid by the employer, and that the employment cannot be terminated by mutual agreement until 31 December 2020.
The application package can be submitted from 11 November 2020 to 11 December 2020 to the Budapest and county government office competent according to the employer's registered office or business site.
3. Expense reimbursement for accommodation providers
A new element of support is that in the case of accommodation facilities registered at the National Tourist Information Centre, the state compensates for 80 percent of the net sales calculated for bookings for the period up to 11 December 2020 registered by 8 November 2020 in relation to actual primary activities pursued under certain TEÁOR codes. In this case, too, it is a condition that the legal relationship of the employees employed on 8 November 2020 continues for the month of November and that the wages are paid to them.
The activities concerned:
- Hotels and similar accommodation (TEÁOR 5510)
- Holiday and other short-stay accommodation (TEÁOR 5520)
- Camping grounds, recreational vehicle parks and trailer parks (TEÁOR 5530)
- Other accommodation services (TEÁOR 5590).
This new form of measure constitutes state aid. If the beneficiary's sales revenue decreases by at least 30 percent in November this year compared to the same period in 2019, then this form of aid will constitute aid for uncovered fixed costs. In the absence of this condition, the aid will be temporary support in the EU support system.
This classification is relevant in terms of the maximum amount of aid to be calculated per undertaking and the cumulation of aid, which needs to be examined separately!
The publication of a government decree on the detailed rules for the use of subsidies is still pending.