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The Hungarian Government, in order to join the world in data asset management and to set data economy in action in Hungary, has established the National Data Asset Agency, which commenced its activities on 1 October 2020.

In 2014 Hungary introduced the advertisement tax as a direct business tax that must be paid by media content and service providers and publishers of advertisements. The tax base is the net sales revenue originating from the taxable activities in the tax year, i.e. the turnover and not the profit, and a progressive tax rate was established originally with six tax rates between 0% and 40%. After several amendments, since 1 July 2017 the tax rates were 0% up to HUF 100 million and 7.5% for the portion exceeding this amount. From 1 July 2019 the advertisement has been temporarily suspended and the tax rate was decreased to 0%.

The economic situation caused by the coronavirus pandemic has highlighted the need for regulations that protect jobs and can respond effectively to the challenges of the economic environment and the labor market of this unprecedented time. It is essential for labor market actors to maintain and promote jobs that provide legal employment and to create such jobs as widely as possible, therefore, the Hungarian Government issued a bill about employment services, subsidies and employment supervision to the Parliament for legislation.

Varga Mihály, Minister of Finance submitted the autumn tax changes package to the Hungarian Parliament, including the proposed changes for VAT in 2021. The draft contains detailed implementing rules for the EU e-commerce package and related administrative requirements, as well as several additional changes to the Hungarian VAT Act, as follows:

Handover of pubic investment – creating access roads, utilities, etc. – to the local municipality or to the state for free is required in many cases by law in Hungary. According to the current interpretation of the tax authority and courts in Hungary, such handover triggers VAT payment obligation for the real estate investor (given that VAT was previously deducted in this regard). Since – in most cases – the real estate investor is unable to charge the VAT to the municipality or the state respectively, VAT was practically its loss in such cases.

Due to the extended economic effects of the coronavirus epidemic, the October tax package announced by the Hungarian Government was aimed to stimulate the investing climate. According to the Hungarian ‘economic protection operational body’, there are three different ways to revive the economy (i.e.: tax reduction, simplification of the administration, boosting investments).

At the beginning of October 2020, the prime minister has announced that the Hungarian Government continues the family protection measures and for this purpose, the VAT tax rate of new flats will be again 5% instead of the general VAT rate of 27% in case of constructions commenced until 31 December 2022.

Economic recovery in Budapest (and Hungary) is predicted to follow an elongated L-shape curve, meaning that the effects of the pandemic are to be present and felt until at least 2023. As a kind of crisis management contribution by the sectors that were less affected by the pandemic, companies operating in these sectors would be expected to be temporarily more involved in public burden-bearing to alleviate the negative economic effects of COVID-19 in Budapest.

At the time of the COVID-19 pandemic, remote working became the “new normal” in many industries: large numbers of people who had previously worked and commuted across the border within the EU or Switzerland, had been forced to work from home. Telecommuting, however, worked out so well that most people would want to continue in this way. However, in terms of taxation, this can put them on thin ice, and not just them, but the companies employing these workers.

The extended deadline for implementing Strong Customer Authentication (“SCA”) expires on 31 December 2020. Originally, Hungarian laws prescribed 14 September 2019 as a deadline for the implementation of the new SCA, however, in parallel with the decision of the European Banking Authority, a new deadline has been set to 31 December 2020 by the Hungarian National Bank.

The coronavirus pandemic has an unprecedented effect on economy on a global level. Similarly to central European countries, the special situation caused by COVID-19 had an adverse effect on the performance of most branches of the national economy in Hungary as well. The Hungarian GDP declined with a historical 13.6% in the third quarter of 2020 compared to the same period of 2019.

The COVID-19 pandemic and the physical distancing measures force many employers to introduce telework (working from home) on a large scale. In order to respond the current challenges, in September 2020 the Hungarian Government set the objective to reform the regulations on teleworking. The purpose of the new rules is to allow more employers to introduce telework and also to make the regulation more flexible.

On 1 September 2020, a new government decree entered into force on travel restrictions during the pandemic period. Based on the new rules, Hungarian citizens arriving from abroad may get through a health inspection and in case of suspicion of contamination, the Hungarian citizen must be placed in quarantine. In case the suspicion of contamination has not been established by the health inspection, the Hungarian citizen also must be placed in official home quarantine or in quarantine determined by the pandemic authority for 14 days. In certain circumstances, the Hungarian citizen may be exempted from this quarantine obligation, if he/she arrives from the Czech Republic, the Slovak Republic or the Republic of Poland.

As of 1 January 2021, retailers are required to allow the so-called electronic payments, which means that customers will be able to pay for the products and services by credit or debit cards, mobile phones or instant payments instead of cash. This change would not only be more comfortable for customers, but also it may be an effective solution against black market.

Employees who have coronavirus tests paid for by their employer will not have to pay tax on them. The Hungarian tax authority published its official guidelines with regards the tax treatment of COVID tests.

The Architectural Copyright Register was started at the very beginning of January 2020, and is intended to contain information about the copyright related to architectural and technical design documentations and the buildings and structures realized based on them.

At the beginning of July 2020, the act on the termination of the undivided joint ownership on lands and the clarification of the data of the rightholders of properties deemed agricultural land in the land registry was published and will enter into force on 1 January 2021.

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The firm has a wealth of knowledge in corporate law, M&A, projects and construction, energy, real estate, tax, employment, litigation, privacy and forensics, securitization, estate planning and capital markets.

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