Tax Alert

Tax Alert

‘New Regulation’ on the changes to personal income tax and social security legislation



The Hungarian government has introduced its latest regulation to address the consequences of the global coronavirus pandemic to the national economy. The new regulation provides full details on the tax and social security amendments published on 18 March 2020. Below, we summarize the most important of the changes to personal income tax and social security legislation.

Social security

The new regulation provides specifics on the rules concerning social security liabilities outlined in the amendment published on 18 March. Special social security rules shall be applicable for the following activities (as designated by their technical codes):

a) Taxi services (TEÁOR/TESZOR #49.32)
b) Accommodation services (TEÁOR/TESZOR #55)
c) Hospitality services (TEÁOR/TESZOR #56)
d) Production and performance of art, entertainment (TEÁOR/TESZOR #90)
e) Sport, entertainment and free-time activities (TEÁOR/TESZOR #93)
f) Gambling and betting offices (TEÁOR/TESZOR #92)
g) Film, video and TV programme production and release of audio recordings (TEÁOR/TESZOR #59)
h) Organization of conferences/commercial events (TEÁOR/TESZOR #82.30)
i) Daily newspaper publishing (TEÁOR/TESZOR #58.13)
j) Publishing periodicals, magazines (TEÁOR/TESZOR #58.14)
k) Broadcasting (TEÁOR/TESZOR #60)

If the main activity of the taxpayer is one of the activities listed above, he/she may be subject to the favourable social security treatment which follows. Under “main activity” the activity should be understood to mean one that resulted in the most (but at least 30% of) income for the taxpayer in the 6-month period preceding the new regulation coming into effect (24 March 2020).

  • Employers, sole entrepreneurs and members of business partnerships who perform any of the activities outlined above as their main activity may be exempted from paying social tax from March – June 2020.
  • Professional contribution payment liability shall not occur in case of taxpayers in question in the March – June 2020 period.
  • Individuals employed by the taxpayer in question, sole entrepreneurs and members of business partnerships should pay only 4% healthcare contribution in the March – June 2020 period instead of the aggregated 18.5% social security contribution. Nevertheless, the upper limit of this healthcare contribution will be HUF 7,710/month.

Rehabilitation contribution

Special rules can be considered for the rehabilitation contribution for taxpayers having engaged in one of the aforementioned activities as a main activity. The amount of the payable rehabilitation contribution is two-thirds of the contribution arising under general circumstances. Furthermore, no advance payment must be arranged in this respect.

Amendments for simplified taxation (KATA, Kiva)

The new regulation grants exemption from paying simplified lump sum tax (known as “KATA”) in the March—June 2020 period to another 25 activities beyond those designated in the regulation published on 18 March 2020.

The exemption may be applicable for entrepreneurs who are covered under the simplified lump sum taxation (KATA) with respect to the given activity in February 2020.

The new regulation also entails exemption for small enterprises who opted for simplified taxation of small enterprises (known as “Kiva”). Such exemption may be applicable for small enterprises who are covered under the 26 activities mentioned above. Based on the amendments, personal payments occurring at such small enterprises in the March – June 2020 period can be disregarded when determining the Kiva tax base. 

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